Morning Notes – Wednesday, July 5, 2023

/ July 5, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM. Trending down since 9:20 PM on Tuesday – down more than 25 points
  • The odds are for a down day with a good chance of a sideways to up move from pre-open levels around 4470.00 – watch for a break above 4473.25 for clarity
  • The major economic data reports due during the day:
    • Factory Orders ( 0.7% est.; prev. 0.4%) at 10:00 AM
    • IBD/TIPP Economic Optimism ( 45.3 est.; prev. 41.7)
    • FOMC Meeting Minutes at 2:00 PM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Up-Side
  • 30-Min: Side-Down
  • 15-Min: Down
  • 6-Min:  Down

Key Levels:

  • Critical support levels for S&P 500 are 4435.93, 4422.44, and 4398.39
  • Critical resistance levels for S&P 500 are 4442.29, 4455.69, and 4488.29
  • The key levels for E-mini futures are 4473.25, the high at 6:30 AM, and 4466.75, the low at 8:00 AM

Pre-Open

  • On Monday at 1:00 PM, S&P futures (September 2023) closed at 4492.25, and the index closed at 4455.59 – a spread of about +36.75 points; the futures closed at 4492.25; the fair value is 0.0
  • Pre-NYSE session open, futures were lower – at 8:45 AM, S&P 500 futures were down by -23.75, Dow by -184, and NASDAQ by -85.25

Markets Around The World

  • Markets in the East closed lower
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • NZD/USD
  • EUR/USD
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.874, up +14.5 basis points from two weeks ago;
    • The 30-year is at 3.897%, up + 7.9 basis points
    • The 2-year yield is at 4.925%, up +22.5 basis points;
    • The 10-Year-&-2-Year spread is at -1.051, down from -0.971
    • The 30-Year-&-10-Year spread is at 0.023, down from +0.089
  • VIX
    • At 14.49 @ 8:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 21.33 on May 4; low = 12.73 on June 22
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on June 30 was a green Bullish Engulfing breaking above the year’s high and at the highest level since April 2022.
    • Stochastic (9,1, 3): %K is above the %D;
    • RSI-9 is just above 70
  • The week was up +02.05 or +2.3%; the 5-week ATR  is 130.40
  • An up week, fourth in the last five weeks, and seventh in the previous ten weeks;
  • The weekly pivot point=4412.31, R1=4496.55, R2=4542.71; S1=4366.15, S2=4281.91; R1/R2/R3 pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A small green candle with small upper and lower shadows and a real body that was entirely contained within the upper shadow of Friday’s candle

    • Stochastic (9, 1, 3): %K is above the %D; above 90
    • RSI-9 is above 70; above 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving sidewyas to down since 10::00 AM on June 30
    • RSI-21 has declined to 20 from around 90
    • Below EMA20, but at/below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting lower since 9:30 PM on Tuesday after moving sideways from 10:00 AM on Junes 30
    • RSI-21 has declined to 25 from around 80 on June 30
    • Below EMA 20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 2:00 AM
  • The Bollinger Band has been expanding since 2:00 AM, with the price walking down the lower band.
  • Bias: Down

Previous Session

Major U.S. indices closed a little higher on Monday, July 3, in lower volume. The trading session ended early on the day before the July 4th holiday.

The major indices opened flat and then traded in a narrow range. All but two S&P sectors – technology and Healthcare – closed higher. The day after Independence Day is generally bearish.

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