Morning Notes – Friday August 11, 2017

/ August 11, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Were lower for Asian session, early European session and most of NYSE pre-open
  • Broke above a horizontal channel and achieved 100% extension target of 2439.25
  • A bounce, perhaps a dead-cat bounce, is possible
  • Odds are for a sideways to an up day – watch for break below 2430.25 for a change of fortunes
  • Key economic data due:
    • CPI (0.1% vs. 0.2% est.) at 8:30 AM
    • Core PPI (0.1% vs, 0.2% est.) at 8:30 AM

Markets Around The World

  • Markets in the East closed lower; Tokyo was closed
  • European markets are down
  • Dollar index, and EUR/USD are down; USD/JPY and GBP/USD are up
  • Commodities are mostly mixed – crude oil and NatGas are down; gold, silver and copper are up
  • 10-yrs yield is at 2.205% down from August 10 close of 2.212%; 30-years is at 2.794% up from 2.787%

Key Levels:

  • Critical support levels for S&P 500 are 2435.75, 2429.30 and 2412.79
  • Critical resistance levels for S&P 500 are 2455.05, 2465.38 and 2474.41
  • Key levels for eMini futures: break above 2442.75, the low of 12:30 PM on August 10 and break below 2430.25, the low of 7:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (September contract) closed at 2436.75 and the index closed at 2438.21 – a spread of about 1.50 points; futures closed at 2437.50 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures price action is to the upside – at 8:45 AM, S&P 500 futures were up by +4.00; Dow by +11.00; and NASDAQ by +1.75

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up
  • 120-Min: Side-to-Down
  • 30-Min: 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:
  • A large red candle after few weeks doji candles the week ending on August 11
  • Last week’s pivot point 2456.65; R1=2475.54, R2=2509.77; S1=2422.42, S2=2403.53
  • A down week, second in five weeks; fourth 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
  • At 10-week EMA; above 39-week SMA and 89-week SMA
  • Confirmed uptrend, though pulling back
Daily
  • A large red candle with no upper shadow and lower shadow;
  • Last pattern was down-sloping flag in June; was broken to the upside on July 13; the first target (100%) extension is near 2507.00; pattern will be relevant is futures do not fall below 2430.00
  • Pattern before that was a horizontal channel, resulting in upside break, with a 100% extension target near 2480.00, which was achieved on August 8
  • Below 20-day EMA; at 50-day EMA; above 100-day and 200-day
  • Confirmed Uptrend
2-Hour (e-mini future)
  • At a support level – high on July 10; possible morning start candlestick pattern; need a break above 2438.00 for the bounce to be relevant
  • Sequence of lower highs and lower lows since 12:00 PM high on August 8
  • Below falling 20-bar EMA, which is below 50-bar EMA
30-Minute (e-mini future)
  • Broadening pattern after a big fall; break above 2438.00 will signal a bounce;
  • Lower lows and lower highs since12:00 PM high on August 8
  • Targets from previous few day’s bearish pattern were achieved
  • Rising above a falling 20-bar EMA but below falling 50-bar EMA

Previous Session

Major U.S. indices closed sharply lower on Thursday, August 10 following many days of bearish chart formations. All except Dow Jones Transportation Average broke below recent support levels.

 

Utility was the only S&P 500 sector to be up for the day.

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