Market Diary – Friday Aug 12, 2016

Directional Bias For The Day:

• S&P 500 future was almost unchanged before 8:30 release of Retail Sales data but declined four points post data-release
• On daily charts, S&P future is in an uptrend; on 2-hour timeframe, it is in a rectangle trading range; on 30-minute, it broke below an uptrend line and made first lower high and lower low since the lows of 2:30 PM on August 10th
• Critical support levels for S&P 500 are 2179.69, 2173.59, and 2169.21
• Critical resistance levels for S&P 500 are 2188.45, 2194.55 and 2200.65
• Pre-NYSE session open, futures price action is slightly to the downside; at 8:45 AM, S&P 500 future was down by -2.00, Dow was down by -23.00 and NASDAQ was by -13.50

Before NYSE Session Open

Major US indices gained on Wednesday reaching all time highs. Dow Jones Industrial Average closed at the highest point ever. On daily charts, it is in the process of completing an elevated handle for a cup-with-handle pattern. It is also in the midst of an ABCD pattern, with a 61.8% extension target of 19211.21 and AB=CD target of 19806.72.

On Thursday, S&P 500 opened with a gap-up and stayed up for rest of the day closing near the highs.

• S&P 500 gained +1-.30 or +0.5% to close at 2185.79;
• Dow Jones Industrial Average was up by +117.86 or +0.6% to 18613.52;
• NASDAQ Composite gained +23.82 or +0.5% to close at 5228.40;
• Russell 2000 was up +5.84 or +0.5% to 1229.12;.

Asian Session

Asian bourses were mostly up on Friday.

• Shanghai Composite was up by +48.03 or +1.60% to 3050.67; for the day, it reversed Thursday’s shooting star candle and made a large bullish engulfing candle; the next significant resistance is at 3097.16
• Hang Seng closed up by +186.36 or +0.83% to 22766.91; it gapped up but made a spinning top, which looks more like a doji; the next significant resistance on weekly chart is at 23423.64, 2.88% away;
• Nikkei 225 closed up by +184.80 or +1.10% to 16919.92; it is at a resistance level of 16938.96 – July 21st high; the nest resistance is at 17251.36, May 20916 high
• Sydney’s S&P/ASX 200 was up by +22.90 or +0.42% to 5530.90;
• Sensex was up by +292.72 or +1.05% to 28152.40; it is going back to the high of a rectangle trading box;
• South Korea’s KOSPI gained +1.67 or +0.08% to close at 2050.47; the next resistance on weekly timeframe is at 2064.72;

European Session

In pre-US session, the European stock markets are mostly down

• DAX is down by -39.97 or -0.37% to 10702.87;
• FTSE-100 is down by -13.38 or -0.20% to 6901.13;
• CAC-40 is down by -9.83 or -0.22% to 4494.12;
• Spanish IBEX is down by -13.20 or -0.15% to 8707.20;
• Italian FTSE MIB is down by -4.24 or -0.02% to 16965.45;
• Swiss SMI-SWX is down by -12.42 or -0.15% to 8283.72;
• STOXX-600 is down by -0.85 or -0.25% to 345.81

Currencies

• U.S. Dollar index is down by -0.468 to 95.370;
• EUR/USD is up by +68.7 pips to 1.12091;
• GBP/USD is up by +47.0 pips to 1.3005;
• USD/JPY is down by -89.5 pips (Yen is stronger) to 101.070;

Commodities

• WTI Crude is up by +0.33 or +0.76% to 43.82; it maybe making its first higher high on daily charts since May 13;
• Natural Gas is up by +0.47 or +1.84% to 2.598; it is still in a down ABCD pattern with and AB=CD target of 2.538
• Gold is up by +6.9 or +0.51% to 1356.90;
• Silver is up by +0.135 or +0.67% to 20.155;
• Copper is down by -0.0335 or -1.53% to 2.1575

Yields

• U.S. Treasury yields are down for the day so far
• 30-year yield is down by -6.3 basis points to 2.222% and 10-year is down by -7.8 basis points to 1.495%

Pivot Levels:

S&P 500 is above its 10-D EMA, 10-D EMA is above 20-D EMA and its 20-D EMA is trending above 50-D EMA since March 9, 2016.

Note: The probability of a level breaking is shown above is for the current condition when the price is above 20-D EMA, 10-D EMA is above 20-D EMA and 20-D EMA is above 50-D EMA. R2 break probability comes in picture only when R1 is broken. So are the probabilities calculated for R3, S2 and S3