Morning Notes – Thursday, August 17, 2023

Directional Bias For The Day:

  • S&P Futures are a little higher at 8:00 AM; moving up within an up-sloping flag since 9:15 PM
  • The odds are for an up day with elevated volatility – watch for a break below 4419.25 and the break below the up-sloping flag for a change of sentiments
  • The major economic data report due during the day:
    • Unemployment Claims ( 239K vs. 240K est.; prev. 248K) at 8:30 AM
    • Philly Fed Manufacturing Index¬† ( 14 vs. -9.8 est.; prev. -13.5 ) at 8:30 AM
    • CB Leading Index ( -0.4% est.; -0.7%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4403.55, 4389.92, and 4385.05
  • Critical resistance levels for S&P 500 are 4414.22, 4438.12 and 4449.95
  • The key levels for E-mini futures are 4431.00, the high at 6:00 AM, and 4419.25, the low at 3:45 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2023) closed at 4419.75, and the index closed at 4404.33 – a spread of about +15.50 points; the futures closed at 4420.00; the fair value is -0.25
  • Pre-NYSE session open, futures were higher- at 7:45 AM, S&P 500 futures were up by +10:75, Dow by +54, and NASDAQ by +35.00

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai closed higher
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • EUR/USD
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • 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 4.258, up +18.0 basis points from two weeks ago;
    • The 30-year is at 4.361%, up +19.6 basis points
    • The 2-year yield is at 4.965%, up +6.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.707, up from -0.818
    • The 30-Year-&-10-Year spread is at 0.103, up from +0.087
  • VIX
    • At 16.74 @ 7:30 AM; down from the last close; above the 5-day SMA;
    • Recent high = 18.14 on August 8; low = 12.73 on June 22
    • Sentiment: Risk-Neutral-Off

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

Weekly:
  • The week ending on August 11 was a relatively small Spinning Top candle near the close of the prior week’s large red candle.
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 declined to just above 60 from above 75
  • The week was down -13.98 or -0.3%; the 5-week ATR¬† is 98.39
  • A down week, second in the last five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=4478.47, R1=4512.95, R2=4561.86; S1=4429.56, S2=4395.08; no pivot levels were breached
  • At/above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • Another red candle with no lower shadow and a lower shadow one-half the size of the real body. The index closed down nine out of the past twelve trading days. Broke below the lower bound of an up channel that has been forming since March 10, 2023

    • Stochastic (9, 1, 3): %K crossed below the %D; near zero
    • RSI-9 is around 30; below 8-DMA
  • Below 20-day EMA and 50-day EMA; above 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Trending down since July 27 making a sequence of lower highs and lower lows; broke below a Horizontal Channel bounded between 4609.25 and 4553.75 on August 2 – the 161.8% extension target is achieved; at a support level around 4410.00
    • RSI-21 has bounced up to 40 from below 20
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Drifting up since 9:00 PM making an up-sloping flag within a downtrend; broke below a horizontal channel between 4517.00 and 4459.00 – the 61.8% extension target is achieved; the 100% and 161.8% extension targets are near 4401.00 and 4365.00 respectively.
    • RSI-21 has drifted up to near 50 from 30;
    • Above EMA20, but below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 10:15 PM, forming an up-sloping flag.
  • The Bollinger Band has been narrowing since 7:00 Am with the price near the upper band.
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Wednesday, August 16, in mostly higher volume. Dow Jones Transportation Average traded in lower volume.

The market opened lower and then mostly traded lower for the rest of the day with a couple of small upswings. All S&P sectors but one – Utuilities – closed lower.

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