Morning Notes – Tuesday, February 6, 2024

/ February 6, 2024

Directional Bias for the Day:

  • S&P Futures are little changed at 8:15 AM – moving between 4971.50 and 4954.50 since 4:00 PM on Monday.
  • The odds are for a sideways day – watch for a break above 4971.50 or a break below 4954.50 for clarity.
  • No major economic data report is due during the day:
  • Weekly: Up
  • Daily: Uptrend
  • 120-Min: Up-Side
  • 30-Min: Side
  • 15-Min: Side-Down
  • 6-Min: Side-Down

Key Levels:

  • Critical support levels for the S&P 500 are 4941.21, 4918.09, and 4907.99.
  • Critical resistance levels for the S&P 500 are 4956.35, 4975.29, and 4999.74.
  • The key levels for E-mini futures are 4971.50, the high at 2:30 AM, and 4954.50, the low at 7:15 AM.

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2024) closed at 4961.00, and the index closed at 4942.81 – a spread of about +18.25 points; the futures closed at 4962.00; the fair value is -1.00.
  • Pre-NYSE session open, futures were mixed – at 8:00 AM, the S&P 500 futures were down by -1.50, Dow down by -32, and NASDAQ up by +4.25.

Markets Around the World

  • Markets in the East closed mixed – Shanghai, Hong Kong and Mumbai closed up. Tokyo, Syndey, Seoul, and Singapore closed down.
  • European markets are mostly higher – Switzerland is down.
  • 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 higher.
    • Industrial metals are higher.
    • Soft commodities are mixed.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.164, up +7.0 basis points from two weeks ago.
    • The 30-year is at 4.345%, up +2.9 basis points.
    • The 2-year yield is at 4.474%, up +9.3 basis points.
    • The 10-Year-&-2-Year spread is at -0.310, down from -0.287
    • The 30-Year-&-10-Year spread is at 0.181, down from +0.222
  • VIX
    • At 13.65 @ 8:00 AM; down from the last close; below the 5-day SMA
    • Recent high = 15.40 on December 17; low = 12.41 on January 24; Sentiment: Risk-Off

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

Weekly:
  • The week ending on February 2 was a green candle with small upper and lower shadows closing at the all-time high.
  • Broke above a down-sloping Flag on November 14 – the 100% extension target around 4901.00 is achieved, and the 161.8% extension target is near 5395.00.
    • Stochastic (9,1, 3): %K is below the %D above 90.
    • RSI-9 is around 75.
  • The week was up +67.64 or +1.4%; the 5-week ATR is 103.43.
  • Fourth up week in the last five weeks and ninth in the previous ten weeks
  • The weekly pivot point=4929.35, R1=5007.55, R2=5056.49; S1=4877.41, S2=4796.21; R1/R2/S1 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A relatively small red Harami candle with almost no upper shadow and a lower shadow longer than the real body.
  • Broke above a Horizontal Channel between 4802.40 and 4682.11 on January 19 – the 100% extension target around 4922.00 is achieved and the 161.8% extension target is near 4997.00.
    • Stochastic (9, 1, 3): %K crossed below %D after making Bearish Divergence.
    • RSI-9 turned down around 65 after making a Bearish Divergence; below 8-day EMA.
  • Above 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA – in sequence.
  • Uptrend
2-Hour (E-mini futures)
  • Moving sideways to down since 4:00 Pm on Friday.
  • Broke above a Horizontal Trading Channel between 4841.25 and 4702.00 on January 19 – the 100% extension target near 4981.00 is achieved and the 161.8% extension target is near 5067.00.
    • RSI-21 is zig-zagging lower since 12:00 PM on February 1 and making Bearish Divergences. Below 50.
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways to below since 3:00 PM on Monday around 4960.00.
    • RSI-21 has been moving around 50.
    • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 9:00 PM.
  • The Bollinger Band has been expanding a bit since 4:30 AM with the price in the lower half of the band.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed lower on Monday, February 5 in lower volume. The major indices opened lower and traded down in the early trading before turning around in late morning and moving higher for the rest of the day. Most indices made red Harami candles with almost no upper shadows and longer lower shadows.

All but two S&P sectors – Technolgy and Healthcare – closed lower. The dollar index and the energy futures closed up, precious metals closed down, the industrial metals closed mostly higher, and the soft commodities closed mixed. Bonds rose and the US Treasury Yields closed up.

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