Morning Notes – Wednesday July 12, 2017

/ July 12, 2017

Directional Bias For The Day:

  • Futures are higher
  • Drifting up since 11:30 PM on July 11; broke above a downtrend time from 3:30 PM high on July 10
  • Finding resistance near 2429.00, which was previous support; triple top being formed
  • Odds are for a sideways to up day; watch for break below 2422.50 for a change of fortunes;
  • Key economic data due:
    • Fed Chair Yellen’s testimony to Congress at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai, Tokyo, Sydney and Seoul were down; Hong Kong and Mumbai were up
  • European markets are higher
  • Dollar index and GBP/USD are up; USD/JPY and EUR/USD are down
  • Commodities are mostly higher – NatGas is down
  • 10-yrs yield closed at 2.362% on July 11, down from July 10 close of 2.371%; 30-years closed at 2.923% unchanged

Key Levels:

  • Critical support levels for S&P 500 are 2419.10, 2412.79 and 2405.70
  • Critical resistance levels for S&P 500 are 2432.00, 2434.90 and 2439.17
  • Key levels for eMini futures: break above 2430.00, the high of 3:30 PM on July 11 and break below 2422.50, the low of 11:30 PM on July 11

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (September contract) closed at 2423.25 and the index closed at 2425.53 – a spread of about 2.25 points; futures closed at 2424.50 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures price action is to the upside – at 7:30 AM, S&P 500 futures were up by +4.25; Dow by +36.00; and NASDAQ by +17.50

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up-to-Side
  • 120-Min: Side-to-Down
  • 30-Min: Side-to-Down

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, Friday July 7 was a red harami
  • Last week’s pivot point 2424.02; R1=2440.33, R2=2455.49; S1=2408.86, S2=2392.55
  • An up week – third in last five weeks; sixth in last ten weeks
  • Broke above a down sloping flag (2378.36) on April 24, which has bullish implications; first target is near 2520.00 and the second target is near 2640.00
  • Broke above a down-sloping flag on November 14, 2016; first target of 2285.92 is achieved; second target is near 2467.50
  • Last swing low, 2322.25, was the low on March 27, 2017
  • Above 39-week SMA, 89-week SMA and 10-week SMA
  • Confirmed uptrend, though pulling back
Daily
  • A small red doji near the high; very small upper shadow and larger lower shadow
  • Forming down sloping flag on daily timeframe since June 5 with high point made on June 19; need a move above 2442.73 for upside break
  • Bouncing off the upper limit of a horizontal channel that it broke above in May – high 2400.58 and low 2322.25 – 100% extension target near 2480.00
  • At 20-day EMA; above 50-day EMA; above 100-day and 200-day
  • Uptrend under pressure
2-Hour (e-mini future)
  • Mostly moving sideways since 2:00 PM on July 7 with one sharp dip on July 11 that lasted few hours; forming triple top
  • Moving to upper limit from the middle of a non-standard descending triangle – start on May 31; the first top made in June 19
  • Sequence of lower highs and lower lows since 2:00 PM on June 19; a move above 2436.50 will break it
  • Above flat 20-bar EMA, which is rising above a flat 50-bar EMA
30-Minute (e-mini future)
  • At prior support near 2428.00, also forming a triple top; bouncing off the sharp decline mid-day on July 11
  • Above recently rising 20-bar EMA, which is above 50-bar EMA

Previous Session

Major U.S. indices closed mixed on Tuesday. Markets dipped substantially mid-day due to political news but then recovered. S&P 500, Dow Jones Transportation Average and NYSE Composite closed lower.

Only two S&P 500 sectors were up and five down – Energy and Technology. The worst performing sector was Finance with -0.9% decline.

 

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