Morning Notes – Thursday, August 3, 2023

/ August 3, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 9:0 AM. The bounce up from a low of 4510.25 at 3:45 AM is faltering
  • The odds are for a down day – watch for a break above 4531.75 and 4547.50 for a change of sentiments
  • The major economic data reports due during the day:
    • Unemployment Claims ( 227K vs. 226K est.; 221K) at 8:30 AM
    • Prelim Nonfarm Productivity ( 3.7% vs. 2.1% est.; prev. -2.1%) at 8:30 AM
    • Prelim Unit Labor Costs (1.6% vs. 2.5% est.; prev. 4.2%) at 8:30 AM
    • Final Services PMI ( 52.4 est.; prev. 52.4) at 9:45 AM
    • ISM Services PMI ( 53.1 est.; prev. 53.9) at 10:00 AM
    • Factory Orders ( 2.0% est.; prev. 0.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4489.36, 4481.31, and 4466.00
  • Critical resistance levels for S&P 500 are 4520.79, 4526.26, and 4550.92
  • The key levels for E-mini futures are 4531.75, the high at 7:00 AM, and 4510.25, the low at 3:45 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2023) closed at 4536.25, and the index closed at 4513.39 – a spread of about +22.75 points; the futures closed at 4537.25; the fair value is -1.00
  • Pre-NYSE session open, futures were down – at 9:00 AM, S&P 500 futures were down by -17.25, Dow by -73, and NASDAQ by -94.75

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai closed up
  • 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 4.167, up +42.5 basis points from two weeks ago;
    • The 30-year is at 4.273%, up +43.4 basis points
    • The 2-year yield is at 4.895%, up +11.4 basis points;
    • The 10-Year-&-2-Year spread is at -0.728, up from -1.039
    • The 30-Year-&-10-Year spread is at 0.106, down from +0.097
  • VIX
    • At 16.72 @ 8:30 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 relatively large red candle that gapped down with almost no upper shadow and small lower shadow.

    • Stochastic (9, 1, 3): %K is below %D;
    • RSI-9 is around 45; below 8-DMA
  • At/below 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Broke below a Horizontal Channel bounded between 4609.25 and 4553.75 – the 61.8% extension target near 4519.00 is achieved; the 100% extension target is near 4498.00, and the 161.8% extension target is near 4463.95. These levels are -2.5%, -2.9%, and -3.7% below the high of 4634.50 reached on July 27.
    • RSI-21 has declined to around 35
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Downtrend since 9:30 PM on July 31 – down more than 100 pints during this leg
  • RSI-21 is moving around below 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been flattening since 7:30 AM
  • The Bollinger Band has been stabilizing since 7:30 AM with the price around the middle band
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Wednesday, August 2, in mostly higher volume.  Dow Jones Transportation Average traded in higher volume.

The major indices gapped down at the open and then mostly traded lower for most of the day. All but three S&P sectors – Consumer Staples, healthcare, and Utilities – closed lower.

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