Morning Notes – Friday, August 4, 2023

/ August 4, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM. Futures first declined from 4547.00 at 4:00 AM to 4519.25 at 7:45 AM, then bounced up to 4535.75 at 8:30 AM, and then started to decline following the release of the Non-Farm, Payroll report at 8:30 AM.
  • The odds are for an up day with elevated volatility – watch for a break below 4514.25 for a change of sentiments
  • The major economic data reports due during the day:
    • Non-Farm Employment Change ( 187K vs. 205K est.; 185K) at 8:30 AM
    • Unemployment Rate ( 3.5% vs. 3.6% est.; prev. 3.6%) at 8:30 AM
    • Average Hourly Earnings ( 0.4% vs. 0.3% est.; prev. 0.4%) at 8:30 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Under Pressure
  • 120-Min: Side-Down
  • 30-Min: Down-Side
  • 15-Min: SideDown
  • 6-Min: Down

Key Levels:

  • Critical support levels for S&P 500 are 4485.96, 4481.31, and 4466.00
  • Critical resistance levels for S&P 500 are 4512.81, 4519.37, and 4526.26
  • The key levels for E-mini futures are 4535.75, the high at 8:30 AM, and 4514.25, the low at 8:35 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2023) closed at 4520.25, and the index closed at 4501.89 – a spread of about +18.25 points; the futures closed at 4521.75; the fair value is -1.50
  • Pre-NYSE session open, futures were higher- at 8:30 AM, S&P 500 futures were up by +12.75, Dow by +42, and NASDAQ by +48.75

Markets Around The World

  • Markets in the East closed mostly higher – Seoul and Singapore closed down
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.189, up +33.5 basis points from two weeks ago;
    • The 30-year is at 4.304%, up +39.4 basis points
    • The 2-year yield is at 4.880%, up +2.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.699, up from -1.012
    • The 30-Year-&-10-Year spread is at 0.115, down from +0.056
  • VIX
    • At 16.11 @ 8:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 17.42 on August 3; 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 July 28 was a green candle with almost no lower and upper shadows below a resistance level created by the high of the week of March 28, 2022.
    • Stochastic (9,1, 3): %K is crisscrossing the %D above 80;
    • RSI-9 is above 75
  • The week was up +45.89 or +1.0%; the 5-week ATR  is 98.34
  • An up week, fourth in the last five weeks, and eight in the previous ten weeks;
  • The weekly pivot point=4579.49, R1=4616.68, R2=461.13; S1=4538.17, S2=4494.1; R1 pivot level was breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A small green tear-drop spinning top candle just below the previous day’s close.

    • Stochastic (9, 1, 3): %K is below %D; below 15
    • RSI-9 is below 45; below 8-DMA
  • Below 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Broke below a Horizontal Channel bounded between 4609.25 and 4553.75 – bouncing up from near the 100% extension target around 4498.00; the 161.8% extension target is near 4463.95. These levels are -2.5%, -2.9%, and -3.7% below the high of 4634.50 reached on July 27.
    • RSI-21 has declined to around 35
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Downtrend since 9:30 PM on July 31; breaking below an upsloping flag following the bounce from a low of 4506.25 at 10:00 AM on Thursday
  • RSI-21 is just above 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting down since 5:15 AM
  • The Bollinger Band has been expanding since 5:15 Am with the price walking down the lower band
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly lower on Thursday, August 3, in mostly lower volume.  Dow Jones Transportation Average closed higher in higher volume.

The major indices gapped down but closed the gap during the day.  Only three S&P sectors – Energy, Consumer Discretionary, and Financials – closed higher.

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