Morning Notes – Thursday, January 25, 2024

Directional Bias for the Day:

  • S&P Futures are little change at 8:30 AM – moving within a trading range between 4904.75 and 4889.00 since 4:00 PM.
  • The odds are for a sideways to a down day – watch for a break above 4904.75 or a break below 4889.00 for clarity.
  • The major economic data report due during the day:
    • Advance GDP (3.3% vs. 2.0% est.; prev. 4.9%) at 8:30 AM.
    • Advance GDP Price Index (1.5% vs. 2.3% est.; prev. 3.3%) at 8:30 AM.
    • Unemployment Claims (214K vs. 199K est.; prev. 189K) at 8:30 AM.
    • Durable Goods (0.0% vs. 1.2% est.; prev. 5.4%) at 8:30 AM
    • Core Durable Goods (0.6% vs. 0.2% est.; prev. 0.4%) at 8:30 AM
    • Good Trade Balance (-88.5B vs. -88.7B est.; prev. -90.3B) at 8:30 AM
    • Prelim Wholesale Inventories (0.4% vs. -0.2% est.; prev. -0.2%) at 8:30 AM.
    • ECB Press Conference at 8:45 AM.
  • Weekly: Up
  • Daily: Uptrend
  • 120-Min: Up-Side
  • 30-Min: Side
  • 15-Min: Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for the S&P 500 are 4865.94, 4844.37, and 4829.19.
  • Critical resistance levels for the S&P 500 are 4886.14, 4903.68, and 4917.13.
  • The key levels for E-mini futures are 4904.75, the high at 2:15 AM, and 4889.00, the low at 4:00 PM on Wednesday.

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2024) closed at 4898.75, and the index closed at 4868.55 – a spread of about +29.75 points; the futures closed at 4898.00; the fair value is +0.75.
  • Pre-NYSE session open, futures were mixed – at 8:15 AM, the S&P 500 futures were up by +0.25, Dow down by -58, and NASDAQ up by +20.25.

Markets Around the World

  • Markets in the East mostly closed higher – Mumbai and Singapore closed lower.
  • European markets are lower.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed.
    • Precious metals are lower.
    • Industrial metals are mostly lower.
    • Soft commodities are higher.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.178, up +14.8 basis points from two weeks ago.
    • The 30-year is at 4.413%, up +21.3 basis points.
    • The 2-year yield is at 4.398%, up +3.6 basis points.
    • The 10-Year-&-2-Year spread is at -0.220, up from -0.332
    • The 30-Year-&-10-Year spread is at 0.235, up from +0.170
  • VIX
    • At 13.31 @ 8:15 AM; up from the last close; above the 5-day SMA
    • Recent high = 15.40 on December 17; low = 12.35 on January 11; Sentiment: Risk-Neutral-Off

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

Weekly:
  • The week ending on January 19 was a green candle closing at the all-time high.
  • Broke above a down-sloping Flag on November 14 – the 61.8% extension target 4597.07 is achieved, the 100% extension target is around 4901.99, and the 161.8% extension target is near 5395.00.
    • Stochastic (9,1, 3): %K is above the %D.
    • RSI-9 is above 70.
  • The week was up +55.98 or +1.2%; the 5-week ATR is 88.33.
  • Fourth up week in the last five weeks and ninth in the previous ten weeks
  • The weekly pivot point=4798.90, R1=4882.98, R2=4926.15; S1=4755.73, S2=4671.65; R1/S1 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A red spinning top at all-time highs. A break below its lows will be bearish.
  • Above a Horizontal Channel between 4802.40 and 4682.11, forming since December 14, 2023 – the 61.8% extension target is near 4876.00, the 100% extension target is near 4922.00, and the 161.8% extension target is near 4997.00. 
    • Stochastic (9, 1, 3): %K crossed below %D from above 90.
    • RSI-9 is above70; above 8-day EMA.
  • Above 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA – in sequence.
  • Uptrend
2-Hour (E-mini futures)
  • Moving sideways around 4895.00. Above a Horizontal Trading Channel between 4841.25 and 4702.00 – the 61.8% extension target near 4927.00, the 100% extension target near 4981.00, and the 161.8% extension target near 5067.00.
    • RSI-21 has declined to just above 40 from above 80.
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways between 4905.00 and 4889.00 since 3:30 PM.
    • RSI-21 has been moving below 50.
    • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways since 9:45 PM on Tuesday.
  • The Bollinger Band is relatively stable and narrow.
  • Bias: Side

Previous Session

Major U.S. indices closed mostly lower on Wednesday, January 24 in mixed volume. S&P 500 and NASDAQ Composite closed higher. Dow Jones Transportation Average and Russell 2000 traded in higher volume. The major indices gapped up at the open and traded in morning before turning around by mid-day and then traded lower for the rest of the day.

The S&P sectors also closed mixed – five up and seven down. The dollar index closed down, the energy futures were up, precious metals were mixed, the industrial metals were up, and most soft commodities closed up. The US Treasury Yields inched higher.

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