Morning Notes – Friday, September 29, 2023

/ September 29, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 8:45 AM, breaking above a cup-with-handle pattern on the 15-minute chart;
  • The odds are for an up day – watch for a break above 4350.00 for a change of sentiments
  • The major economic data reports due during the day:
    • Core PCE Price Index ( 0.1% vs.2.2% est.; prev. 0.2%) at 8:30 AM
    • Personal Income (0.4% vs. 0.4% est.; prev. 0.2%) at 8:30 AM
    • Personal Spending ( 0.4% vs. 0.5% est.; prev. 0.9%) at 8:30 AM
    • Good Trade Balance ( -84.3B vs. -91.4B est.; prev. 090.9B) at 8:30 AM
    • Prelim Wholesale Inventories (-0.1% vs. -0.1% est.; prev. -0.2%) at 8:30 AM
    • Chicago PMI ( 47.5 est.; prev. 48.7) at 9:45 AM
    • Revised UoM Consumer Sentiments (667.7 est.; prev. 67.7) at 10:00 AM
    • Revised UoM Inflation Expectations ( prev. 3.1%) at 10:00 AM
  • Weekly: Uptrend Under Pressure
  • Daily: Correction
  • 120-Min: Down-Side
  • 30-Min: Side-Up
  • 15-Min: Side-Up
  • 6-Min: Side-Up

Key Levels:

  • Critical support levels for the S&P 500 are 4317.18, 4290.33, and 4264.38
  • Critical resistance levels for the S&P 500 are 4338.51, 4357.40, and 4375.70
  • The key levels for E-mini futures are 4383.50, the high at 4:00 PM on September 25 and 4350.00, the low at 8:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2023) closed at 4338.25, and the index closed at 4299.70 – a spread of about +38.50 points; the futures closed at 4337.50; the fair value is +0.75
  • Pre-NYSE session open, futures were mixed – at 8:30 AM, S&P 500 futures were up by +24.25, Dow by +204, and NASDAQ by +133.25

Markets Around The World

  • Markets in the East closed mostly higher – Tokyo was down; Shanghai and Seoul were closed
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • NZD/USD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • USD/CAD
  • 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 4.626, up +37.7 basis points from two weeks ago;
    • The 30-year is at 4.750%, up +41.3 basis points
    • The 2-year yield is at 5.142%, up +15.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.516, down from -0.741
    • The 30-Year-&-10-Year spread is at 0.124, down from +0.088
  • VIX
    • At 16.69 @ 7:45 AM; down from the last close; below the 5-day SMA;
    • Recent high = 19.71 on September 27; low = 12.68 on September 15
    • Sentiment: Risk-On

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

Weekly:
  • The week ending on September 22 was a relatively large red candle with almost no lower and upper shadows at a support level near 4335.00, the low of the week ending on August 18, 2023
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 has declined to below 45
  • The week was down -130.26 or -2.9%; the 5-week ATR  is 107.50
  • Third down week in the last five weeks and sixth in the previous ten weeks;
  • The weekly pivot point=4367.64, R1=4418.78, R2=4517.51; S1=4268.91, S2=4217.77; S1/S2/S3 pivot levels were breached
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A green candle with a small lower shadow and an upper shadow that is slightly bigger than half of the real body. A three-day Morning Star pattern is forming at a support level – the low on June 2, when the index gapped up at the open. 
  • Gapped down on September 21 and broke below a symmetrical triangle – the 61.8% extension target near 4250.00 is achieved; the 100% extension target is around 4150.00. A convincing move above the gap will nullify the pattern targets.

    • Stochastic (9, 1, 3): %K is above the %D after forming the Bullish Divergence on September 27
    • RSI-9 moved above 30; above 8-DMA; Bullish Divergence on September 27
  • Below 20-day EMA, 50-day EMA, and 100-day SMA; above 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • The downtrend since 2:00 AM on September 15. Broke below a horizontal channel on September 21 – the 100% extension target near 4305.00 is achieved, and the 161.8% extension target is around 4224.66;
  • Bouncing up since 6:00 AM on September 27, moved above a resistance level of 4350.00, the low on August 18; the next resistance is around 4390.00
  • The chart action since early June shows an uneven Head-and-Shoulder pattern. The neckline was broken on September 25. The 61.8% extension target is around 4210.00, the 100% extension target is near 4110.00, and the 161.8% extension target is around 3950.00. A convincing move above 4400.00 will nullify the pattern
    • RSI-21 has bounced up above 60 from 25 after making Bullish Divergence
    • At/above EMA10 of EMA50, which is above EMNA20
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Drifting up since 1:30 PM on September 27 – forming a rounding bottom pattern. A break above 4399.00 will complete the pattern.
    • RSI-21 has been moving around just below 60
    • Above EMA20, which is above  EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 1:45 AM.
  • The Bollinger Band has been expanding since 8:15 AM, with the price walking up the upper band.
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Thursday, September 28, in mixed volume. The Dow Jones Transportation Average and NASDAQ traded in higher volume. The Dow Jones Industrial Average, S&P 500, and Russell 2000 traded in lower volume.

The major indices opened flat but started to advance after the first hour of trading. They closed off their highs. All but one S&P sector – Utilities – closed up.

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