Morning Notes – Wednesday February 8, 2017

/ February 8, 2017

Directional Bias For The Day:

  • The futures are almost unchanged
  • In the middle of a horizontal channel since 9:30 AM on February 3
  • Rising after touching the lower bound at 6:00 PM on February 7
  • Odds are for a sideways day; watch for break above 2295.00 or break below 2284.00  for change of fortunes

Markets Around The World

  • Markets in the East were mixed – Mumbai and Seoul were down and others were higher
  • European markets are higher
  • Dollar index, EUR/USD and GBP/USD are up; USD/JPY is down
  • Commodities are mixed – crude oil, NatGas are down; gold, silver and copper are up
  • 10-yrs yield is at 2.389%, down from February 6 close of of 2.413%; 30-years is at 3.019%, down from February 6 close of 3.048%

Key Levels:

  • Critical support levels for S&P 500 are 2290.16, 2283.97 and 2275.14
  • Critical resistance levels for S&P 500 are 2299.40, 2300.99 and 2303.45
  • Key levels for eMini futures: break above 2295.00, high of 9:30 AM on February 7 and break below 2284.25, the low of 6:00 PM on February 7

Pre-Open

  • Pre-NYSE session open, futures price action is almost unchanged – at 6:45 AM, S&P 500 futures were up +0.50, Dow is up by +14.00 and NASDAQ by +3.75
  • On Tuesday, at 4:00 PM, S&P future (March contract) closed at 2287.75 and the index closed at 2293.08 – a spread of about 5.25 points; futures closed at 2288.50 for the day; the fair value is -1.75

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

Monthly
  • Confirmed Uptrend
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2%
Weekly:
  • Candlestick for the last week, January 30, was a green candle following a large green body, which followed two weeks of near dojis bodies with small range within the large green body of January 2 week
  • Broke above a down-sloping flag on November 14, 2016; first target of 2285.92 is met; next target is near 2363.14
  • Last swing low, 2083.79, was the low on November 4, 2016
  • Above 39-week SMA and 89-week SMA
Daily
  • Another small body candle within the larger green candle of February 3
  • Intraday range less than 1.00% since December 29
  • Still maintaining the island chart pattern
  • The emerging broadening pattern since December 12, is getting nullified, a break below 2233.62 will resuscitate it
  • Above 100-day, 200-day, 50-day, and 20-day SMA/EMA
  • Sequence of higher highs and higher lows
  • Last swing low 2263.62
2-Hour (e-mini future)
  • Emerging descending triangle just above the upper bound of a symmetrical triangle that it broke above
  • Trending higher since 10:00 AM on January 31 but not crossed above the high of 2299.50 made at midnight January 25-26;
  • Broken above the downtrend line from January 6 high, that it was hugging for many days
  • Uptrend paused – moving sideways
30-Minute (e-mini future)
  • In the middle of a horizontal channel that is emerging since 8:30 AM on February 3; three touches to the upper bound and three to the lower bound; target near 2307.00
  • Just above a flattening 50-bar EMA and 20-day EMA

Previous Session

U.S. indices were mixed on Tuesday February 7. S&P 500, Dow Jones Industrial Average and NASDAQ Composite were positive for the day. Russell 2000, NYSE Composite and Wilshire 5000 Total Market Index declined.

The day’s action was within a narrow range. The S&P 500 has not moved for more than 1.00% intraday since December 29. For the last two days the S&P 500’s real body was within the large green candle of February 3.

The chart pattern on daily timeframe did not change materially for indices. NYSE Composite is trying to fill the gap-up open of February 3.

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