Market Diary – Monday Aug 15, 2016

Directional Bias For The Day:

• S&P 500 future was drifting higher and odds are high for an up day
• On daily charts, S&P future is in a uptrend; on 2-hour timeframe, it is at the upper limit of a rectangle trading range and attempting to break above it;
• Critical support levels for S&P 500 are 2179.42, 2176.39, and 2173.36
• Critical resistance levels for S&P 500 are 2188.45, 2197.95 and 2207.45
• Pre-NYSE session open, futures price action is to the upside; at 8:45 AM, S&P 500 future was up by +5.25, Dow was up by +50 and NASDAQ was up by +10.00

Before NYSE Session Open

Major US indices traded within a narrow band on Friday. For the week, the indices were mixed – S&P 500 gained +1.18 or +0.1% points, Dow Jones Industrial Average gained +32.94 or +0.2%, NASDAQ gained +11.77 or +0.2% and extended its winning streak to seven weeks, Russell 2000 lost -1.48 or -0.1% and stopping its winning streak to six.

On Friday at 9:30 AM, S&P future was -3,50 points below its 4:00 PM close on Thursday. The index first declined five points, then rallied to break even, then it declined to new low for the day before closing close to previous close.

• S&P 500 lost -1.74 or -0.1% to close at 2184.05;
• Dow Jones Industrial Average was down by -37.05 or -0.2% to 18576.47;
• NASDAQ Composite gained +4.49 or +0.1% to close at 5232.89;
• Russell 2000 was up +0.70 or +0.1% to 1229.82;.

Asian Session

Asian bourses were mixed Monday.

• Shanghai Composite broke above a resistance level and gained +74.5 or +2.44% to 3125.19; the next significant resistance is at 3256.26
• Hang Seng closed up by +165.60 or +0.73% to 22932.51; Friday was doji day; the next significant resistance on weekly chart is at 23423.64;
• Nikkei 225 closed down by -50.36 or -0.30% to 16869.56; it is facing a resistance at 16938.96 – the July 21st high; the next resistance is at 17251.36, May 20916 high
• Sydney’s S&P/ASX 200 was up by +9.10 or +0.16% to 5540.00;
• Sensex was closed on account of Independence Day; it is on track to going back to the high of a rectangle trading box;
• South Korea’s KOSPI was closed too;

European Session

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

• DAX is up by +45.85 or +0.43% to 10759.28; it is pulling away from the broken down-trend line of a down-sloping flag on weekly timeframe
• FTSE-100 is up by +28.91 or +0.42% to 6944.93; it broke out of an inverse head-&-shoulder pattern on weekly timeframe during the week of June 27, following the Brexit vote, when it broke above 6427.32; the next resistance is at 7122.74
• CAC-40 is up by +4.60 or +0.10% to 4504.79; it is breaking above the downtrend line of a down-sloping flag on weekly timeframe
• Spanish IBEX is up by +15.60 or +0.18% to 8732.10; it is at the upper-limit of the post-Brexit day gap-down
• Italian FTSE MIB is up by +28.14 or +0.17% to 16997.83; it is near the resistance of 17122.82, the high of August 1st
• Swiss SMI-SWX is up by +3.31 or +0.04% to 8298.35;
• STOXX-600 is up by +0.44 or +0.13% to 346.53

Currencies

• U.S. Dollar index is down by -0.067 to 95.615;
• EUR/USD is up by +16.6 pips to 1.11789;
• GBP/USD is down by -41.0 pips to 1.2877;
• USD/JPY is down by -7.6 pips (Yen is stronger) to 101.174;

Commodities

• WTI Crude is up by +0.37 or +0.83% to 44.86; on Friday, it made its first higher high on daily charts since May 13; next resistance is at 45.83
• Natural Gas is down by -0.016 or -0.62% to 2.570; on August 9th, it made first lower high on daily charts since May 26th; it is still in a down ABCD pattern with and AB=CD target of 2.538
• Gold is down by -1.9 or -0.14% to 1341.30;
• Silver is up by +0.067 or +0.34% to 19.75;
• Copper is up by -0.002 or +0.09% to 2.1420

Yields

• U.S. Treasury yields are up for the day so far
• 30-year yield is up by +1.9 basis points to 2.254% and 10-year is up by +1.7 basis points to 1.532%

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