Morning Notes – Monday, August 21, 2023

/ August 21, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; declined more than ten points from a high of 4407.50 at 8:00 AM
  • The odds are for an up day with elevated volatility – watch for a break below 4378.50 for a change of sentiments
  • No major economic data report is due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4354.54, 4335.31, and 4328.08
  • Critical resistance levels for S&P 500 are 4392.98, 4412.70, and 4421.17
  • The key levels for E-mini futures are 4407.50, the high at 8:00 AM and 4378.50, the low at 2:45 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2023) closed at 4384.75, and the index closed at 4369.71 – a spread of about +15.00 points; the futures closed at 4382.75; the fair value is +2.00
  • Pre-NYSE session open, futures were higher – at 9:00 AM, S&P 500 futures were up by +11:25, Dow by -+35, and NASDAQ by +65.00

Markets Around The World

  • Markets in the East closed mixed – Tokyo, Mumbai, and Seould closed higher
  • 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 lower
    • 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 4.308, up +24.8 basis points from two weeks ago;
    • The 30-year is at 4.436%, up +22.2 basis points
    • The 2-year yield is at 4.949%, up +16.6 basis points;
    • The 10-Year-&-2-Year spread is at -0.641, up from -0.723
    • The 30-Year-&-10-Year spread is at 0.128, down from +0.154
  • VIX
    • At 17.62 @ 8:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 18.88 on August 18; 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 18 was a relatively large red Spinning Top candle.
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 declined to just above 50 from above 75
  • The week was down -94.34 or -2.1%; the 5-week ATR  is 102.02
  • A third consecutive down week, third in the last five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4398.45, R1=4461.59, R2=4553.47; S1=4306.57, S2=4243.43; S1/S2 pivot levels were breached
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A green Spinning Top candle at a support level near 4328.00; however, the index still closed below the previous day’s close. The index closed down 11 out of the past 14 trading days. Turned up just above support – the June 26 low of 4328.08, which is also the high of August 16, 2022.

    • Stochastic (9, 1, 3): %K is above the %D;
    • RSI-9 is around 25; below 8-DMA
  • Below 20-day EMA and 50-day EMA; above 100-day SMA, and 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Trending down since July 27 making a sequence of lower highs and lower lows; bouncing up from below a previous support level around 4410.00 but above the next support around 4327.50, which is the upper bound of an up gap on June 9, 2023.
    • RSI-21 has risen to above 50 after making a Bullish Divergence at 8:00 AM on August 18
    • Above EMA20, but below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving up since 9:30 Am on Friday; within a range – between 4407.50 and 4350.00 – since 2:30 Pm on Friday;
    • RSI-21 has moved above 5o after making a Bullish Divergence at 9:30 Am on Friday
    • A/above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been flattening since 8:L30 AM after rising from 3:15 AM.
  • The Bollinger Band has been contracting since 8:20 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Friday, August 18, in mixed volume. S&P 500 and NASDAQ Composite closed lower. Dow Jones Transportation Average and NASDAQ Composite traded in lower volume.

The major indices gapped down at the open and made the day’s lows in the first half-hour of trading. The indices then mostly traded higher for the rest of the day.

For the week, the major indices closed lower in higher volume. The markets in Asia and Europe closed lower. The dollar index closed down, and most soft and hard commodities closed lower. The US Treasury Yields closed up. All S&P sectors closed down for the week.

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