Morning Notes – Tuesday, August 8, 2023

/ August 8, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM. Futures are down more than 50 points since 4:45 PM on Monday.
  • The odds are for a down day with elevated volatility – watch for a break above 4520.25 and 4529.25 for a change of sentiments
  • The major economic data reports due during the day:
    • Trade Balance ( -65.5B vs. -65.1B est.; prev. -69.08) at 8:30 AM
    • Final Wholesale Inventories ( -0.3% est.; prev. -0.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4484.98, 4474.55, and 4463.23
  • Critical resistance levels for S&P 500 are 4491.58, 4501.42, and 4519.84
  • The key levels for E-mini futures are 4529.25, the high at 4:00 AM, and 4495.50, the low at 8:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2023) closed at 4538.25, and the index closed at 4518.44 – a spread of about +19.75 points; the futures closed at 4537.75; the fair value is +0.50
  • Pre-NYSE session open, futures were lower- at 8:00 AM, S&P 500 futures were down by -35.00, Dow by -256, and NASDAQ by -126.00

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai, and Seoul closed down; Tokyo, Sydney, and Singapore closed higher
  • 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 higher
    • Precious metals are mixed
    • Industrial metals are lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.078, up +22.1 basis points from two weeks ago;
    • The 30-year is at 4.258%, up +33.8 basis points
    • The 2-year yield is at 4.770%, down -17.1 basis points;
    • The 10-Year-&-2-Year spread is at -0.692, up from -1.084
    • The 30-Year-&-10-Year spread is at 0.180, up from +0.063
  • VIX
    • At 16.55 @ 6:15 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 August 4 was a relatively large red candle just below a resistance level created by the high of the week of March 28, 2022.
    • Stochastic (9,1, 3): %K crossed below the %D;
    • RSI-9 declined to just above 60 from above 75
  • The week was down -104.20 or -2.3%; the 5-week ATR  is 96.19
  • A down week, second in the last five weeks, and third in the previous ten weeks;
  • The weekly pivot point=4515.60, R1=4556.65, R2=4635.27; S1=4436.98, S2=4395.93; S1/S2 pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A green Harami candle near the open of the previous day’s Bearish Engulfing candle.

    • Stochastic (9, 1, 3): %K crossed above %D from below 10
    • RSI-9 turned up to just below 50; below 8-DMA
  • At/above 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Lower highs and lower lows since 8:00 AM on July 27; broke below a Horizontal Channel bounded between 4609.25 and 4553.75 on August 2 – 100% extension target near 4498.00 is achieved and the 161.8% extension target is near 4463.95; a bounce from around 4493.00 failed at 4541.00 at the 50-bar EMA.
    • RSI-21 has declined to around 30 from above 60
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • A new down-leg since 4:30 PM on Monday; at support  around 4504.00
  • RSI-21 is around 35 from above 60
    • Below EMA20, 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 9:45 PM.
  • The Bollinger Band has been expanding with the price walking down since 5:00 AM.
  • Bias: Down

Previous Session

Major U.S. indices closed higher on Monday, August 7, in lower volume.

The major indices opened higher and then after a brief retracement moved higher for the rest of the day. All but one S&P sector – Utilities – closed higher.

 

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