Market Remarks

Morning Notes – Thursday, January 4, 2024

Sunil Sharma

Directional Bias for the Day:

  • S&P Futures are a tad lower at 8:00 AM – moving within a trading range between 4757.00 and 4741.00 since 3:45 PM.
  • The odds are a sideways to a down day – watch for a break above 4757.00 or a break below 4741.00 for clarity.
  • The major economic data reports due during the day:
    • ADP Non-Farm Employment Change (164K vs. 120K est.; prev.101K) at 8:15 AM.
    • Unemployment Claims (202K vs. 217K est.; prev. 220K) at 8:30 AM
    • Final Services PMI (51.3 est.; prev. 51.3) at 9:45 AM
  • Weekly: Up
  • Daily: Uptrend Under Pressure
  • 120-Min: Side-Down
  • 30-Min: Down-Side
  • 15-Min: Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for the S&P 500 are 4694.34, 4643.26, and 4593.39.
  • Critical resistance levels for the S&P 500 are 4729.29, 4744.14, and 4763.58.
  • The key levels for E-mini futures are 4757.00, the high at 3:30 AM, and 4741.00, the low at 3:45 PM on Wednesday.

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2024) closed at 4747.00, and the index closed at 4704.81 – a spread of about +42.25 points; the futures closed at 4746.50; the fair value is +0.50
  • Pre-NYSE session open, futures were mixed- at 8:30 AM, S&P 500 futures were down by -2.00, Dow by +72, and NASDAQ down by -64.00

Markets Around the World

  • Markets in the East mostly closed mostly lower – Mumbai closed up.
  • European markets are mostly higher – Switzerland is lower.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • INR/USD
  • EUR/USD
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed.
    • Precious metals are lower.
    • Industrial metals are mostly lower.
    • Soft commodities are mostly lower.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.907, up +3.0 basis points from two weeks ago.
    • The 30-year is at 4.056%, up +5.1 basis points.
    • The 2-year yield is at 4.342%, up +0.7 basis points.
    • The 10-Year-&-2-Year spread is at -0.435, up from -0.458
    • The 30-Year-&-10-Year spread is at 0.149, up from +0.128
  • VIX
    • At 13.99 @ 7:30 AM; down from the last close; above the 5-day SMA
    • Recent high = 14.49 on December 21; low = 12.38 on December 28; Sentiment: Risk-Neutral-Off

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

Weekly:
  • The week ending on December 29 was a relatively small green with a larger upper shadow than the lower shadow.
    • Stochastic (9,1, 3): %K crossed below above the %D near 100.
    • RSI-9 is near 75.
  • The week was up +15.20 or +0.3%; the 5-week ATR is 78.31
  • Fifth up week in the last five weeks and ninth in the previous ten weeks
  • The weekly pivot point=4771.71, R1=4791.42, R2=4813.02; S1=4750.11, S2=4730.40; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A red candle with almost no upper and lower shadows. Declined to a swing-low support – the low of December 20.
  • Broke above a down-sloping Flag on November 14 – the 61.8% extension target 4597.07 is achieved, the 100% extension target is around 4901.99, and the 161.8% extension target is near 5395.00.
    • Stochastic (9, 1, 3): %K is below %D to near five after making a bearish divergence on December 28.
    • RSI-9 is dipped below 50; below 8-day EMA; made a bearish divergence on December 28.
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA – in sequence.
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving down since 4:00 AM on Tuesday – at a support level around 4743.00, which was the low on December 20; the next support is around 4700.00. At the lower bound of a horizontal channel – a break below 4743.25 will have the 61.8% extension target around 4683.00 and the 100% extension target around 4645.00.
    • RSI-21 has bounced up above 30 from below 20 at 10:00 AM on Wednesday.
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Drifting sideways around 4750.00 since 6:00 PM after declining almost 100 points from December 29 high.
    • RSI-21 has drifted yup to above 40 after making a Bullish Divergence at 3:30 PM on Wednesday.
    • At/below 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 since 8:45 PM.
  • The Bollinger Band has narrowed with the price moving along the middle band.
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Wednesday, January 3 in mostly lower volume. Dow Jones Industrial Average has been leading the market this week so far.

The major indices opened lower and declined in the morning before bouncing up mid-day only to give up those gains and some more before by the end of the day.

All but two S&P sectors – Energy and Utilities – closed lower. The dollar index was up, energy futures were up, precious metals and industrial metals were down, and the soft commodities closed mixed. The US Treasury yields inched down.

Exit mobile version