Morning Notes – Thursday, August 10, 2023

/ August 10, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM. Higher volatility following the CPI report at 8:30 AM
  • The odds are for an up day – watch for a break below 4492.00 for a change of sentiments
  • The major economic data report due during the day:
    • CPI m/m ( 0.2% vs. 0.2% est.; prev. 0.2%) at 8:30 AM
    • CPI Y/Y ( 3.2% vs. 3.3% est.; prev. 3.0%) at 8:30 AM
    • Core CPI ( 0.2% vs. 0.2% est.; prev. 0.2%) at 8:30 AM
    • Unemployment Claims ( 248K vs. 231K est.; prev. 227K) at 8:30 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Under Pressure
  • 120-Min: Down-Side
  • 30-Min: Side-Up
  • 15-Min: Up
  • 6-Min: Choppy

Key Levels:

  • Critical support levels for S&P 500 are 4489.17, 4464.29, and 4443.64
  • Critical resistance levels for S&P 500 are 4499.50, 4503.31, and 4519.84
  • The key levels for E-mini futures are 4525.00, the high at 8:30 AM, and 4492.00, the low at 8:42 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2023) closed at 4486.25, and the index closed at 4467.71 – a spread of about +18.50 points; the futures closed at 4485.75; the fair value is +0.50
  • Pre-NYSE session open, futures were higher- at 8:45 AM, S&P 500 futures were up by +28.50, Dow by +187, and NASDAQ by +130.00

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai and Seoul closed lower
  • European markets are higher
  • 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 higher
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.980, up +12.9 basis points from two weeks ago;
    • The 30-year is at 4.165%, up +23.7 basis points
    • The 2-year yield is at 4.803%, down -5.3 basis points;
    • The 10-Year-&-2-Year spread is at -0.823, up from -1.005
    • The 30-Year-&-10-Year spread is at 0.185, up from +0.077
  • VIX
    • At 15.22 @ 8:30 AM; down from the last close; below the 5-day SMA;
    • Recent high = 18.14 on August 8; low = 12.73 on June 22
    • Sentiment: Risk-On

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

Weekly:
  • The week ending on August 4 was a relatively large red candle just below a resistance level created by the high of the week of March 28, 2022.
    • Stochastic (9,1, 3): %K crossed below the %D;
    • RSI-9 declined to just above 60 from above 75
  • The week was down -104.20 or -2.3%; the 5-week ATR  is 96.19
  • A down week, second in the last five weeks, and third in the previous ten weeks;
  • The weekly pivot point=4515.60, R1=4556.65, R2=4635.27; S1=4436.98, S2=4395.93; S1/S2 pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A Bearish Engulfing with almost no upper and lower shadows

    • Stochastic (9, 1, 3): %K crossed below the %D; below five
    • RSI-9 is below 40; below 8-DMA
  • At/below 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Lower highs and lower lows since 8:00 AM on July 27; broke below a Horizontal Channel bounded between 4609.25 and 4553.75 on August 2 – 100% extension target near 4498.00 is achieved and the 161.8% extension target is near 4463.95; bouncing off from another low around 4478.00 to near the downtrend line from July 31 high.
    • RSI-21 is above 50 from around 25; Bullish Divergence
    • At/above EMA20, but below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving since 3:30 PM on Wednesday; up more than 40 points.
  • RSI-21 is around 55
    • Above EMA20, which is at/above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 9:45 PM.
  • The Bollinger Band is expanding with the price near the upper band
  • Bias: Up

Previous Session

Major U.S. indices closed lower on Wednesday, August 9, in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in lower volume.

The major indices opened higher but then started to decline. They made the day’s lows by mid-day. The subsequent rise did not go beyond the high made in the first half hour of trading. The indices declined near the lows in the last hour of trading. Only four S&P sectors – Consumer Staples, Energy, Utilities, and Real Estate – closed higher.

 

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