Market Diary – Friday Aug 26, 2016

Sunil Sharma

8 years ago

Directional Bias For The Day:

The futures are directionless and awaiting Chair Yellen’s speech at Jackson Hole at 10:00 AM
Swing low of 2168.50 is critical for S&P 500
On Thursday at 4:00 PM, S&P future (Sept contract) closed at 2171.75 and the index closed at 2172.47 – a spread of about 0.75 points

Key Levels:

Critical support levels for S&P 500 are 2168.50, 2164.48, and 2159.21
Critical resistance levels for S&P 500 are 2179.72, 2183.00 and 2186.99
Pre-NYSE session open, futures price action is sideways; at 8:45 AM, S&P 500 future was up by +0.50, Dow was up by +2 and NASDAQ was down by -2.75

Economic Data:

Report	Current	Est.	Prev.
U.S. Prelim GDP (8:30 AM)	1.1%	1.1%	1.2%
U.S. Prelim GDP Price Index (8:30 AM)	2.3%	2.2%	2.2%
U.S. Goods Trade Balance	-59.3B	-62.3B	-63.3B

The trend and patterns on various time frames for S&P 500 are:

Monthly	Up trend since Feb 08, 2016
Weekly	Up trend since Feb 08, 2016 with one pullback; broke out of a 2-year trading range in July, 2016
*Daily*	A narrow range Thursday at the lows of Wednesday, which was an abandoned baby top reversal near all time high 9-period RSI is diverging and showing a downtrend line Uptrend since June 28th with one pullback; last swing low 2147.58 on Aug 2 Mostly sideways move since August 5.
*2-Hour (e-mini future)*	Uptrend – higher under pressure; next swing low of 2165.50 is critical Last pattern – a symmetrical triangle, which was broken to the upside – is nullified Also failed to materialize is an ascending triangle, which was emerging The current pattern is a rectangle trading range – high 2191.50 and low 2165.50 – with price bouncing off the lower bound
*30-Minute (e-mini future)*	Downtrend since 10:00 AM Aug 23; lower lows, lower highs Since 3:30 PM on Aug 24, a rectangle trading box is emerging with high of 2177.25 and low of 2167.50 reached at 11:00 AM and 3:00 PM respectively on Thursday A narrow band since 4;00 PM NYSE close on Thursday

Before NYSE Session Open

Major U.S. indices traded in a narrow range following the abandoned baby top pattern on Wednesday. Thursday started with S&P 500 future -5.00 below previous close. The Index made a low of 2167.75 within the first half of trading, which was tested during the last hour and was not broken. The high was reached at 11:00 AM and then the markets generally drifted lower.

On Thursday:

	Up	Down	Last	Notes
S&P 500		-2.97 (-0.1%)	2172.47	Thursday low of 2169.74 and previous swing low of 2168.50 are critical
Dow Jones Industrial Average		-33.07 (-0.2%)	18448.41	Is at the lowest point since Aug 5, which was a gap-up open day Gap between 18402 and 18397.87 is critical
NASDAQ Composite		-5.49 (-0.1%)	5212.20	Is at the previous swing low of 5197.23
Russell 2000	+2.75 or +0.2%		1240.00	Critical level is 1221.72, low reached on Aug 17

Still Asian Session

Asian bourses were mixed on Friday:

	Up	Down	Last	Notes
Shanghai Composite	+1.98 or +0.1%		3070.31	A down-sloping flag is in progress since Aug 15, which was 2016 high
Hang Seng	+82.67 +0.4%		22909.54	Facing resistance at down trend line from Aug 17 high on 30-minute charts
Nikkei 225		-195.24 (-1.2%)	16360.71	Gap-down open and a large red candle day Next support at 15921.04, low of Aug 4
S&P/ASX 200		-26.40 (-0.5%)	5515.50	At the uptrend line from the low of Aug 3; if broken it will form a up-sloping flag with target near 5428
Sensex		-53.66 (-0.2%)	27782.25	Near the lower limit of a rectangle trading box in progress since Jul 12
Kospi Composite		-5.42 (-0.3%)	2037.50	Still in a uptrend on daily timeframe; last swing low 1993.00 reached on Aug 3

European Session

In pre-US session, the European stock markets are mixed at 7:30 AM, most forming a doji in a narrow trading range

	Up	Down	Last	Notes
DAX		-25.12 (-0.2%)	10504.47	A doji with high and low so far 30 points away
FTSE-100	+3.13 or +0.06%		6820.03
CAC-40	+0.11 or +0.0%		4406.72
IBEX		-8.40 (-0.1%)	8599.50
FTSE MIB		-80.03 (-0.5%)	16630.75
Swiss Market Index		-26.25 (-0.3%)	8115.03
STOXX 600		-0.32 (-0.1%)	342.02

Currencies

	Up	Down	Last	Notes
US Dollar Index		-0.238	94.505
EUR/USD	+17.4 pips		1.13014
GBP/USD	+27.0 pips		1.32140
USD/JPY		-29.5 pips	100.239

Commodities

	Up	Down	Last	Notes
WTI Crude	+0.15 or +0.3%		47.48
Natural Gas		-0.028 or -1.0%	2.817
Gold	+8.6 or +0.6%		1333.20
Silver	+0.171 or +0.9%		18.66
Copper	+0.0065 (+0.3%)		2.0830

Yields

U.S. Treasury yields are down for the day so far
30-year yield is down by -2.4 basis points to 2.240% and 10-year is down by -1.6 basis points to 1.561%

Pivot Levels:

S&P 500 is belo 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.

	S&P 500 Cash		eMini Futures
Daily	Level	Break Chance	Level	Break Chance
Pivot	2173.74		2172.75
R1	2177.73	27%	2178.00	25%
R2	2183.00	41%	2182.50	30%
R3	2186.99	45%	2187.75	25%
S1	2168.47	25%	2168.25	25%
S2	2164.48	51%	2163.00	42%
S3	2159.21	45%	2158.50	34%

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