Morning Notes – Wednesday, October 11, 2023

/ October 11, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM – moving higher since 2:15 and forming the right side of a cup-pattern
  • The odds are for an up day with elevated volatility – watch for a break below 4395.25 for a change of sentiments
  • The major economic data reports due during the day:
    • PPI ( 0.5% vs. 0.3% est.; prev. 0.7%) at 8:30 AM
    • Core PPI (0.3% vs. 0.2% est.; prev. 0.2%) at 8:30 AM
  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend
  • 120-Min: Side-Up
  • 30-Min: Up-Side
  • 15-Min: Side-Up
  • 6-Min: Up

Key Levels:

  • Critical support levels for the S&P 500 are 4365.65, 4339.64, and 4312.48
  • Critical resistance levels for the S&P 500 are 4385.46, 4401.38, and 4425.95
  • The key levels for E-mini futures are 4409.75, the high at 9:00 AM, and 4395.25, the low at 8:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2023) closed at 4391.50, and the index closed at 4358.24 – a spread of about +33.25 points; the futures closed at 4391.50; the fair value is 0.0
  • Pre-NYSE session open, futures were higher – at 9:00 AM, S&P 500 futures were up by +12.50, Dow by +102, and NASDAQ by +59.50

Markets Around The World

  • Markets in the East closed mostly higher – Singapore was down
  • European markets are mostly higher – France is lower
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • INR/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 4.579, up +2.1 basis points from two weeks ago;
    • The 30-year is at 4.732%, up +3.2 basis points
    • The 2-year yield is at 4.974%, down -16.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.395, up from -0.578
    • The 30-Year-&-10-Year spread is at 0.153, up from +0.138
  • VIX
    • At 16.73 @ 8:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 20.88 on October 4; low = 15.83 on September 129
    • Sentiment: Risk-On

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

Weekly:
  • The week ending on October 6 was a relatively small green candle with a small upper shadow and a lower shadow more than twice the size of the real body. The index is just below a resistance, which was acting as a support before September 22.
    • Stochastic (9,1, 3): %K crossed above the %D;
    • RSI-9 has turned up above 40
  • The week was up +20.45 or +0.6%; the 5-week ATR  is 101.50
  • First up week in the last five weeks and third in the previous ten weeks;
  • The weekly pivot point=4283.02, R1=4349.58, R2=4390.67; S1=4241.93, S2=4175.37; S1 pivot level was breached
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A green candle with almost no lower shadow and an upper shadow bigger than the real body. On Monday, the index followed through after Friday’s one-day reversal candle at a support level – a junction of the uptrend line since October 13, 2022, and the lows of June 1, 2023.
  • 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.

    • Stochastic (9, 1, 3): %K turned down above the %D
    • RSI-9 is above 56, above 8-DMA;
  • Above 20-day EMA; below 50-day EMA and 100-day SMA; above 200-day SMA;
  • Uptrend Confirmed
2-Hour (E-mini futures)
  • Bounced up from support around 4245.00 to above a resistance level around 4370.00. Also, broke the sequence of lower highs and lower lows since 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;
  • 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 zigzagged up to near 70
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Forming a cup pattern since 12:00 PM on Tuesday after breaking above a horizontal channel between 4381.00 and 4365.00
    • RSI-21 is above 60
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 3:15 AM
  • The Bollinger Band has been expanding since 4:30 AM, with the price walking up the upper and lower bands.
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Tuesday, October 10, in mixed volume. S&P 500 and Dow Jones Transportation Average traded in lower volume.

The indices opened higher and moved up until Noon when they gave up some of the gains for the day and moved sideways until the close.

All S&P sectors closed higher. The dollar index closed down. The energy futures were mixed, the precious metals were up, and hard and soft commodities closed mixed.

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