Market Remarks

Morning Notes – Friday, August 25, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:00 AM; forming an up-sloping flag, a bearish pattern, since 4:30 PM – up more than 20 points to around 4398.00
  • Waiting for Fed Chair Powell’s speech at the Jackson Hole Symposium
  • The odds are for a sidewyas to a down day from the pre-open levels around 4400.00, with elevated volatility – watch for a break above 4415.00 or a break below 4379.50 for clarity
  • The major economic data report due during the day:
    • Revised UoM Consumer Sentiment ( 71.2 est.; prev. 71.2 ) at 10:00 AM
    • Revised UoM Inflation Expectations ( prev. 3.3%) at 10:00 AM
    • Fed Chair Powell at 10:05 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4375.55, 4360.30, and 4335.31
  • Critical resistance levels for S&P 500 are 4414.41, 4428.86, and 4458.30
  • The key levels for E-mini futures are 4415.00, the high at 2:00 PM on Thursday, and 4379.50, the low at 2:30 PM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2023) closed at 4385.00, and the index closed at 4376.31 – a spread of about +8.75 points; the futures closed at 4386.00; the fair value is -1.00
  • Pre-NYSE session open, futures were higher – at 7:45 AM, S&P 500 futures were up by +10:00, Dow by +100, and NASDAQ by +11.00

Markets Around The World

  • Markets in the East closed mostly lower – Singapore closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are mixed
    • Industrial metals are mostly higher
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.235, up +15.5 basis points from two weeks ago;
    • The 30-year is at 4.301%, up +6.0 basis points
    • The 2-year yield is at 5.014%, up +17.6 basis points;
    • The 10-Year-&-2-Year spread is at -0.779, down from -0.758
    • The 30-Year-&-10-Year spread is at 0.066, down from +0.161
  • VIX
    • At 17.01 @ 7:30 AM; down from the last close; above the 5-day SMA;
    • Recent high = 18.88 on August 18; low = 14.60 on August 10
    • Sentiment: Risk-Neutral-Off

The trend and patterns in various time frames for the 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 large Bearish Engulfing candle with almost no small upper and lower shadows. A Head-and-Shoulder pattern is appearing and a break below 4335.00 will complete the pattern with the 61.8% extension target near 4170.00 and the 100% extension target near 4060.00
    • Stochastic (9, 1, 3): %K crossed below the %D;
    • RSI-9 turned down to below 40; above 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)
  • The break above the downtrend line from the July high failed and the price fell below it again, thigh still above the lows of August 18 near 4340.00
    • RSI-21 has declined to around 30 from above 75
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Drifting sideways to up after Thursday’s close and after declining more than 100 points from the day’s high of 4482.50 at 3:00 AM;
    • RSI-21 drifted up to around 45 from below 25 at 4:40 PM
    • At/above 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 up since 10:30 PM.
  • The Bollinger Band has been contracting since 7:15 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Thursday, August 24, in mostly higher volume. Dow Jones Industrial Average traded in lower volume.

The major indices gapped up at the open but then reversed course and traded down for the rest of the day. Most made Bearish Engulfing candles. All S&P sectors closed lower.

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