Morning Notes – Wednesday, February 7, 2024

Directional Bias for the Day:

  • S&P Futures are higher at 8:45 AM – up more than 20 points since 7:00 AM
  • The odds are for an up day – watch for a break below 4970.00 for a change of sentiments.
  • The major economic data report due during the day:
    • Trade Balance ( -62.2B vs. -62.0B est.; prev. -63.2B) at 8:30 AM
  • Weekly: Up
  • Daily: Uptrend
  • 120-Min: Side-Up
  • 30-Min: Side-Up
  • 15-Min: Side-Up
  • 6-Min: Side-Up

Key Levels:

  • Critical support levels for the S&P 500 are 4935.66, 4918.09, and 4907.99.
  • Critical resistance levels for the S&P 500 are 4975.29, 4985.93, and 4999.74.
  • The key levels for E-mini futures are 4997.75, the high at 3:00 PM on February 2, and 4970.00, the low at 7:15 AM.

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2024) closed at 4975.00, and the index closed at 4954.23 – a spread of about +20.75 points; the futures closed at 4974.75; the fair value is +0.25.
  • Pre-NYSE session open, futures were higher – at 8:30 AM, the S&P 500 futures were up by +13.50, Dow by +48, and NASDAQ by +83.25.

Markets Around the World

  • Markets in the East closed mixed – Shanghai, Syndey, Seoul, and Singapore closed up. Hong Kong Tokyo, and Mumbai closed down.
  • European markets are mostly lower – Switzerland is up.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/CAD
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower.
    • 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 4.117, down -2.5 basis points from two weeks ago.
    • The 30-year is at 4.322%, down -5.6 basis points.
    • The 2-year yield is at 4.412%, up +4.6 basis points.
    • The 10-Year-&-2-Year spread is at -0.295, down from -0.224
    • The 30-Year-&-10-Year spread is at 0.205, down from +0.236
  • VIX
    • At 13.00 @ 8:00 AM; down from the last close; below the 5-day SMA
    • Recent high = 15.40 on December 17; low = 12.41 on January 24; Sentiment: Risk-On

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

Weekly:
  • The week ending on February 2 was a green candle with small upper and lower shadows closing at the all-time high.
  • Broke above a down-sloping Flag on November 14 – the 100% extension target around 4901.00 is achieved, and the 161.8% extension target is near 5395.00.
    • Stochastic (9,1, 3): %K is below the %D above 90.
    • RSI-9 is around 75.
  • The week was up +67.64 or +1.4%; the 5-week ATR is 103.43.
  • Fourth up week in the last five weeks and ninth in the previous ten weeks
  • The weekly pivot point=4929.35, R1=5007.55, R2=5056.49; S1=4877.41, S2=4796.21; R1/R2/S1 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A relatively small red Doji Harami candle within another Harami candle.
  • Broke above a Horizontal Channel between 4802.40 and 4682.11 on January 19 – the 100% extension target around 4922.00 is achieved and the 161.8% extension target is near 4997.00.
    • Stochastic (9, 1, 3): %K crossed above %D.
    • RSI-9 is just above 65 after making a Bearish Divergence; below 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 to up since 2:00 PM on February 2 within 4997.75 and 4937.75.
  • Broke above a Horizontal Trading Channel between 4841.25 and 4702.00 on January 19 – the 100% extension target near 4981.00 is achieved and the 161.8% extension target is near 5067.00.
    • RSI-21 has been drifting higher since 10:00 AM on February 6.
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Drifting higher since 6:30 AM on Tuesday – up more than 35 points from the low of 4955.00
    • RSI-21 is above 65.
    • 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 sideways to up since 9:00 PM on Monday.
  • The Bollinger Band has been expanding a bit since 7:15 AM with the price walking up the upper band.
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Tuesday, February 6 in mostly lower volume.  Dow Jones Transportation Average traded in higher volume. The major indices opened lower and then traded sideways to up for the rest of the day. Most major indices made small indecisive candles.

All but two S&P sectors – Technolgy and Communication Services – closed higher. The dollar index closed down and the energy futures closed mixed. The precious metals were up and so were the most industrial metals and the soft commodities closed mixed. Bonds rose and the US Treasury Yields closed down.

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