Morning Notes – Thursday, September 21, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 8:45 AM; resumed the downtrend after a sideway move over the Asian session – down more than 35 points since 3:00 AM
  • The odds are for a down day with elevated volatility – watch for a break above 4439.25 for a change of sentiments
  • The major economic data reports due during the day:
    • Unemployment Claims ( 201K vs. 224K est.; prev. 220K) at 8:30 AM
    • Philly Fed Manufacturing Index ( -13.5 vs. -1.1 est.; prev. 12.0) at 8:030 AM
    • Current Account ( -212B vs. -220B est.; prev. -219B) at 8:30 AM
    • Existing Home Sales ( 1.0M est.; prev. 4.07M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for the S&P 500 are 4356.29, 4335.31, and 4328.08
  • Critical resistance levels for the S&P 500 are 4401.38, 4425.95, and 4461.03
  • The key levels for E-mini futures are 4422.00, the high at 7:00 AM and a break below 4389.00, the low at 1:30 PM on August 25, 2023

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2023) closed at 4448.00, and the index closed at 4402.20 – a spread of about +45.75 points; the futures closed at 4447.00; the fair value is +1.00
  • Pre-NYSE session open, futures were lower – at 8:15 AM, S&P 500 futures were down by -36.25, Dow by -214, and NASDAQ by -177.00

Markets Around The World

  • Markets in the East closed lower
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • Dollar index
  • EUR/USD
  • GBP/USD
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.349, up +5.9 basis points from two weeks ago;
    • The 30-year is at 4.401%, up +4.2 basis points
    • The 2-year yield is at 5.191%, up +16.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.842, down from -0.739
    • The 30-Year-&-10-Year spread is at 0.052, down from +0.069
  • VIX
    • At 16.02 @ 7:45 AM; up from the last close; above the 5-day SMA;
    • Recent high = 18.88 on August 18; low = 12.68 on September 15
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on September 15 was a red candle with almost no lower shadow and a small upper shadow closing a little below the previous week’s red candle but still within the real body of the large green candle of the week ending of September 1
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 is around 55
  • The week was down -7.17 or -0.2%; the 5-week ATR¬† is 108.53
  • Third down week in the last five weeks and fifth in the previous ten weeks;
  • The weekly pivot point=4469.84, R1=4492.47, R2=4534.62; S1=4427.69, S2=4405.06; R1 pivot level was breached
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A relatively large red candle which engulfed the full Dragonfly Doji-like candle of the previous day. Breaking below symmetrical triangle. The next support level is around 4335.3, the low of August 18, 2023. If that support is broken, then the 61.8% extension target -around 4250.00 – and the 100% extension target – around 4150.00 – of the broken symmetrical triangle will come into play.

    • Stochastic (9, 1, 3): %K is below the %D – near zero
    • RSI-9 is around 35; below 8-DMA
  • Below 20-day EMA and 50-day EMA; above 100-day SMA and 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • The downtrend since 2:00 AM on September 15 has resumed after a sidewyas move from Monday to Wednesday. Broke below support level around 4435.00 – which was the lower bound of a horizontal channel. The next meaningful support levels are around 4365.00 and 4350.00. The downward 61.8% extension target of the broken horizontal channel pattern is around 4355.00, and the 100% extension target is around 4305.00
    • RSI-21 has declined to below 15 from above 60
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Broke below a two-day-long sideway move at 2:00 PM on Wednesday, resuming the downtrend that started last week.
    • RSI-21 has declined to 20 from above 60 on Wednesday
    • Below EMA20, which is below¬† EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 4:30 AM
  • The Bollinger Band has been expanding since 4:30 AM, with the price walking down the lower band
  • Bias: Down

Previous Session

Major U.S. indices closed mostly lower on Wednesday, September 20, in mostly higher volume. The Dow Jones Transportation Average closed higher in higher volume.

The major indices opened higher and then traded sideways to down until the FOMC rate decision at 2:00 PM when they gave up the ghost and plunged to the lows for the day by the close. The futures declined even more later in the Far East market sessions.

Only four S&P sectors – Consumer Staples, Utilities, Healthcare, and Real Estate – closed lower.

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