Market Diary – Friday Aug 19, 2016

Directional Bias For The Day:

• The futures are lower but above the lows reached at 4:30 AM
• Odds are high for a sideways or a down day – break above 2185.00 will increase the odds for an up day whereas a break below 2176.00 will increase the odds for a down day;
• On Thursday at 4:00 PM, S&P future closed at 2184.25 and the index closed at 2187.02
• Critical support levels for S&P 500 are 2180.49, 2172.39, and 2168.50
• Critical resistance levels for S&P 500 are 2186.80, 2189.97 and 2195.78
• Pre-NYSE session open, futures price action is to the mixed; at 8:45 AM, S&P 500 future was up by +0.25, Dow was down by -9 and NASDAQ was up by +5.00

The trend and patterns on various time frames are:

Before NYSE Session Open

Major US indices traded in a narrow range on Thursday. At NYSE open, futures were slightly above previous close. S&P 500 started the day with a rally to 2186.28 by 11:00 AM, then it declined to 2180.49 by 12:30 PM before closing the day at the high of 2186.79. Other major indices had similar price-action, however, they all are below the gap down open of August 16th. The lower limit of the gap is acting as resistance.

The three-day candlestick pattern shows short bullishness but overcoming the gap resistance is critical.

• S&P 500 gained +4.80 or +0.2% to close at 2187.02;
• Dow Jones Industrial Average was up by +23.76 or +0.1% to 18597.70;
• NASDAQ Composite gained +11.49 or +0.2% to close at 5240.15;
• Russell 2000 was up by +9.17 or +0.7% to 1236.85;.

Asian Session

Asian bourses were mixed on Friday.

• Shanghai Composite was up by +3.99 or +0.13% to close at 3108.10;
• Hang Seng closed down by -85.84 or -0.37% to 22937.22;
• Nikkei 225 closed up by +59.81 or +0.36% to 16545.82;
• Sydney’s S&P/ASX 200 was up by +18.9 or +0.34% to 5526.70;
• Sensex was down by -46.44 or -0.17% to close at 28077.00;
• South Korea’s KOSPI was up +0.77 or +0.04% to close at 2056.24;

European Session

In pre-US session, the European stock markets are mostly down at 8:00 AM and are near the lows for the day.

• DAX is down by -70.15 or -0.66% at 10532.88; Thursday was a doji-harami within a large red-candle of Wednesday; Friday’s low has already broken Thursday’s low;
• FTSE-100 is down by -17.12 or -0.26% to 6851.84; it is retracing from 2016 high reached on August 15th;
• CAC-40 is down by -46.15 or -1.04% to 4390.91;
• Spanish IBEX is down by -127.30 or -1.49%  to 8422.80;
• Italian FTSE MIB is down by -444.95 or -2.54% to 16250.63;
• Swiss SMI-SWX is down by -54.98 or -0.67% to 8134.75;
• STOXX-600 is down by -2.87 or -0.84% to 340.04

Currencies

• U.S. Dollar index is up by +0.358 to 94.495; it is trying to regain the uptrend line, which is in progress on daily timeframe since May 3rd;
• EUR/USD is down by -24.1 pips to 1.13278; on August 16th, it broke above a short-tern down trend line since May 3rd and the next resistance is 1.14242;
• GBP/USD is down by -72.0 pips to 1.3089; it is turned back from the resistance of 1.3175;
• USD/JPY is up by +35.3 pips (Yen is weaker) to 100.274; it is struggling at the support – a congestion area that lasted for more than six months in 2013

Commodities

Yields

• U.S. Treasury yields are up for the day so far
• 30-year yield is up by +2.6 basis points to 2.285% and 10-year is up by +2.9 basis points to 1.565%

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