Morning Notes – Friday, October 27, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM – moving up since 8:00 Am within a trading range between 4185.00 and 4161.00 since 6:00 PM on Thursday
  • The odds are for an up day with elevated volatility – watch for a break below 4161.00 for a change of sentiments
  • The major economic data reports due during the day:
    • Core PCE Price Index ( 0.3% vs. 0.3% est.; prev. 0.1%) at 8:30 AM
    • Personal Income ( 0.3% vs. 0.4% est.; prev. 0.4%) at 8:30 AM
    • Personal Spending (0.7% vs. 0.5% est.; prev. 0.4%) at 8:30 AM
    • Revised UoM Consumer Sentiment ( 63.0 est.; prev. 63.0) at 10:00 AM
    • Revised UoM Inflation Expectations ( prev. 3.8%) at 10:00 AM
  • Weekly: In Correction
  • Daily: In Correction
  • 120-Min: Down
  • 30-Min: Down-Side
  • 15-Min: Down-Side
  • 6-Min: Side-Down

Key Levels:

  • Critical support levels for the S&P 500 are 4127.90, 4103.98, and 4084.73
  • Critical resistance levels for the S&P 500 are 4170.33, 4183.60, and 4195.60
  • The key levels for E-mini futures are 4185.00, the high at 5:00 AM and 4161.00, the low at 8:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2023) closed at 4156.75, and the index closed at 4137.23 – a spread of about +19.50 points; the futures closed at 4156.50; the fair value is +0.25
  • Pre-NYSE session open, futures were higher – at 9:00 AM, S&P 500 futures were up by +19.50, Dow by +37, and NASDAQ by +135.75

Markets Around The World

  • Markets in the East closed mostly higher – Singapore closed lower
  • European markets are mostly lower – Germany and Spain are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • EUR/USD
  • USD/JPY
  • AUD/USD
  • USD/CAD
  • GBP/USD
  • USD/CHF
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.888, up +17.6 basis points from two weeks ago;
    • The 30-year is at 5.050%, up +17.9 basis points
    • The 2-year yield is at 5.046%, down -2.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.158, up from -0.363
    • The 30-Year-&-10-Year spread is at 0.162, down from +0.159
  • VIX
    • At 20.57 @ 8:00 AM; down from the last close; above the 5-day SMA;
    • Recent high = 23.08 on October 23; low = 15.44 on October 12; Sentiment: Risk-On

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

Weekly:
  • The week ending on October 20 was a relatively large Bearish Engulfing candle with almost no lower shadow and an upper shadow one-third the size of the real body. The index is breaking below an uptrend line from the October 2022 low.
    • Stochastic (9,1, 3): %K crossed below the %D;
    • RSI-9 has declined below 40
  • The week was down -103.62 or 2.4%; the 5-week ATR  is 126.00
  • Third down week in the last five weeks and sixth in the previous ten weeks;
  • The weekly pivot point=4280.25, R1=4337.48, R2=4450.79; S1=4166.94, S2=4109.71; R1/S1/S2 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • Another relatively large red candle broke below a support level – the low on October 3; broke below a horizontal trading range between 4385.00 and 4311.00 – the 161.8% extension target near 4192.43 is achieved; the next support is at 4103.98
  • Broke below an uneven Head-&-Should pattern on September 22, and a bounce in October did not last – the 61.8% extension target is near 4135.66, the 100% extension target is near 4029.09, and the 161.8% extension target is near 3856.67
    • Stochastic (9, 1, 3): %K is below the %D, near zero
    • RSI-9 is around 30 and below 8-DMA;
  • Below 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Broke below a horizontal trading channel on October 4 – the 61.8% extension target is near 4122.100, the 100% extension target is near 4052.00, and the 161.8% extension target is near 3938.50
    • RSI-21 has declined to below 40 after rising to above 45 from near 10
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Trending down since 12:00 PM on October 17; moving sideways to down since 6:00 PM on October 25
    • RSI-21 has been moving around 50 since 7:00 PM
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 11:15 PM.
  • The Bollinger Band is expanding a little – the price rebounding from the lower band to the middle band.
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mostly lower on Thursday, October 26, in higher volume. The Russell 2000 closed in higher.

The major indices opened lower and traded down until the afternoon, when they bounced for an hour or so before declining and closing near the day’s low.

All but three S&P sectors – Materials, Utilities, and Real Estate – closed down. Crude oil closed down, gold closed up, and the US Treasury Yields closed down.

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