Morning Notes – Tuesday, October 17, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM – moving down since 3:15 PM on Monday – down more than 35 points
  • The odds are for a down day with elevated volatility – watch for breaks above 4393.25 and 4402.50 for a change of sentiments
  • The major economic data reports due during the day:
    • Retail Sales ( 0.7% vs. 0.3% est.; prev. 0.8%) at 8:30 AM
    • Core Retail Sales (0.6% vs. 0.2% est.; prev. 0.9%) at 8:30 AM
    • Industriual Production ( 0.0% est.; prev. 0.4%) at 9:15 AM
    • Capacity Utilization ( 79.6% est.; prev. 79.7%) at 9:15 AM
  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend Under Pressure
  • 120-Min: Up-Side
  • 30-Min: Side-Down
  • 15-Min: Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for the S&P 500 are 4356.84, 4342.37, and 4311.97
  • Critical resistance levels for the S&P 500 are 4371.64, 4385.46, and 4401.38
  • The key levels for E-mini futures are 4393.25, the high at 8:00 AM, and 4367.25, the low at 8:00 AM on Monday

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2023) closed at 4402.50, and the index closed at 4373.63 – a spread of about +29.00 points; the futures closed at 4401.00; the fair value is +1.50
  • Pre-NYSE session open, futures were lower – at 8:45 AM, S&P 500 futures were down by -18.25, Dow by -83, and NASDAQ by -86.75

Markets Around The World

  • Markets in the East closed higher
  • European markets are mostly lower – the UK is up
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.809, up +12.6 basis points from two weeks ago;
    • The 30-year is at 4.950%, up +15.5 basis points
    • The 2-year yield is at 5.110%, down -0.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.299, up from -0.429
    • The 30-Year-&-10-Year spread is at 0.147, up from +0.112
  • VIX
    • At 17.67 @ 8:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 20.78 on October 13; low = 15.44 on October 12; Sentiment: Risk-Off

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

Weekly:
  • The week ending on October 13 was a relatively small green candle with small lower and upper shadows. The index is just above a support level, which briefly acted as a resistance level
    • Stochastic (9,1, 3): %K is above the %D;
    • RSI-9 is near 50
  • The week was up +19.28 or +0.4%; the 5-week ATR  is 101.50
  • Second up week in the last five weeks and fourth in the previous ten weeks;
  • The weekly pivot point=4332.47, R1=4381.16, R2=4434.53; S1=4279.10, S2=4230.41; R1 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 upper shadow and lower shadows. At a resistance level created by the 50-day EMA, the high of October 12, and the gap created on September 21
  • 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 crossed above the %D
    • RSI-9 is above 55, above 8-DMA;
  • Above 20-day EMA; at/below 50-day EMA; below 100-day SMA; above 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moved above a resistance level around 4370.00 on October 10, breaking the sequence of lower highs and lower lows since September 15, staying just above that level, with a down bias, since then
  • The chart action since early June shows an uneven Head-and-Shoulder pattern. The neckline was broken on September 25, but the move above 4400.00 nullified the pattern.
    • RSI-21 has turned down to below 50
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting lower since 11:00 AM on Monday
    • RSI-21 has drifted to near 40 from above 70
    • Below EMA20, which is at/above EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 3:30 PM.
  • The Bollinger Band has been expanding since 4:30 AM, with the price walking down the lower bands.
  • Bias: Down

Previous Session

Major U.S. indices closed higher on Monday, October 16, in lower volume. The major indices opened up and moved higher until afternoon, before moving sidewyas for the rest of the day. S&P 500, NYSE Composite, and Wilshire 5000 Total Market Index at resistance levels created by last week’s highs.

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

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