Morning Notes – Wednesday, August 2, 2023

/ August 2, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 8:15 AM. Futures have bounced up more than 25 points from the 4:00 AM low of 4552.25 but are still below the down gap created at 6:00 PM
  • The odds are for a down day – watch for a break above 4583.50 and 4593.50 for a change of sentiments
  • The major economic data reports due during the day:
    • ADP Non-Farm Employment Change ( 324K vs. 191K est.; 497K( at 8:30 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Side
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min:  Down-Side

Key Levels:

  • Critical support levels for S&P 500 are 4555.62, 4543.87, and 4528.56
  • Critical resistance levels for S&P 500 are 4567.53, 4581.92, and 4589.60
  • The key levels for E-mini futures are 4583.50, the high at 7:00 AM, and 4552.25, the low at 4:15 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2023) closed at 4601.00, and the index closed at 4576.73 – a spread of about +24.25 points; the futures closed at 4601.25; the fair value is -0.25
  • Pre-NYSE session open, futures were down – at 8:00 AM, S&P 500 futures were down by -22.25, Dow by -105, and NASDAQ by -112.50

Markets Around The World

  • Markets in the East 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 mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.051, up +26.2 basis points from two weeks ago;
    • The 30-year is at 4.105%, up +20.4 basis points
    • The 2-year yield is at 4.917%, up +15.3 basis points;
    • The 10-Year-&-2-Year spread is at -0.866, up from -0.975
    • The 30-Year-&-10-Year spread is at 0.054, down from +0.112
  • VIX
    • At 15.10 @ 7:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 17.08 on July 6; low = 12.73 on June 22
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on July 28 was a green candle with almost no lower and upper shadows below a resistance level created by the high of the week of March 28, 2022.
    • Stochastic (9,1, 3): %K is crisscrossing the %D above 80;
    • RSI-9 is above 75
  • The week was up +45.89 or +1.0%; the 5-week ATR  is 98.34
  • An up week, fourth in the last five weeks, and eight in the previous ten weeks;
  • The weekly pivot point=4579.49, R1=4616.68, R2=461.13; S1=4538.17, S2=4494.1; R1 pivot level was breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A small Doji candle below the previous day’s small Doji within a resistance zone.

    • Stochastic (9, 1, 3): %K crossed below %D;
    • RSI-9 is at 60; below 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • At the lower bound of a Horizontal Channel bounded between 4609.25 and 4557.75, that was once broken to the upside.
    • RSI-21 has bounced up to 40 from below 20
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Bouncing up since 4:00 AM from Drifted down from  a low near 4550.00 within a downtrend since 9:30 PM on July 31
  • The futures gapped down at 6:00 Pm on Tuesday following a downgrade of US bonds by Fitch
  • RSI-21 is near 45 after declining below 25
    • Above EMA20, but below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 3:30 AM on Tuesday
  • The Bollinger Band has been expanding since 3:45 AM – the price first walked down the lower band and then bounced up to the upper band
  • Bias: Down

Previous Session

Major U.S. indices closed mostly lower on Tuesday, August 1, in mixed volume.  Dow Jones Industrials Average closed higher. Dow Jones Transportation Average and Russell 2000 traded in higher volume.

The major indices opened lower and then mostly traded sideways to down for most of the day before recovering a little in late trading.

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