Morning Notes – Friday, August 9, 2024

Sunil Sharma

3 months ago

Directional Bias for the Day:

S&P Futures are lower at 8:30 AM – moving down since 4:45 AM from a resistance level around 4372.00 and broke below the support at 5228.50.
The odds are for a down day with elevated volatility; watch for a break above 5351.75, the high of 7:30 AM, for a change of sentiments.
No major economic data is due during the day:

Weekly: Uptrend Under Pressure
Daily: Market In Correction
120-Min: Down-Side

30-Min: Up-Side
15-Min: Side
6-Min: Down

Key Levels:

Critical support levels for the S&P 500 are 5307.76, 5297.57, and 5283.21.
Critical resistance levels for the S&P 500 are 5324.07, 5330.67, and 5347.26.
The key levels for E-mini futures are 5372.00, the high at 4:45 AM and 5306.00, the low at 11:15 AM on Thursday.

Pre-Open

On Thursday at 4:00 PM, S&P futures (September 2024) closed at 5348.25, and the index closed at 5319.31 – a spread of about +29.00 points; the futures closed at 5341.50; the fair value is +6.75.
Pre-NYSE session open, futures were lower – at 8:15 AM, the S&P 500 futures were down by -6.75, Dow by -30, and NASDAQ by -50.00.

Markets Around the World

Markets in the East closed mostly higher – Shanghai closed down.
European markets are higher.
Currencies (Compared to two weeks ago):

Up	Down
EUR/USD AUD/USD NZD/USD INR/USD	Dollar index GBP/USD USD/JPY USD/CHF USD/CAD

Commodities (Compared to two weeks ago):
- Energy futures are mixed.
- Precious metals are mixed.
- Industrial metals are mostly lower.
- Soft commodities are mixed.
Treasuries (Compared to two weeks ago)
- The 10-year yield closed at 3.997, down -25.0 basis points from two weeks ago.
- The 30-year is at 4.285%, down -20.0 basis points.
- The 2-year yield is at 4.050%, down -38.9 basis points.
- The 10-Year-&-2-Year spread is at -0.053, up from -0.192.
- The 30-Year-&-10-Year spread is at 0.288, down 0.238.
VIX
- At 24.01 @ 8:15 AM; up from the last close; below the 5-day SMA
- Recent high = 65.73 on August 5; low = 20.01 on August 2; Sentiment: Risk-Off

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

Weekly:	The week ending on August 2 was a relatively large red candle with upper shadow longer than the lower shadow, but smaller than the real body. The index has fallen for three week and closed -5.7% below the all-time high of 5669.67. Stochastic (9,1, 3): %K is below the %D. RSI-9 has declined to just above 50 from above 80 and after making a bearish divergence. The week was down -112.54 or -2.1%; the 5-week ATR is 169.60. Third down week in the last five weeks and fifth in the previous ten weeks The weekly pivot point=5404.92, R1=5507.80, R2=5669.05; S1=5243.67, S2=5140.79; R1/S1 pivot levels were breached Below 10-week EMA; above 39-week SMA, and 89-week SMA Uptrend Under Pressure
*Daily*	A green candle with small upper and lower shadows erasing previous day’s loss, at the resistance of the upper bound of a down-gap. In a second leg of down move following a small up-sloping flag after declining from the all-time time – the 161.8% extension target around 5115.19 has been almost achieved and the 261.8% extension target is around 4836.50. Stochastic (9, 1, 3): %K crossed above the %D after making a Dullish Divergence. RSI-9 is above 40; above 8-day EMA. Below 20-day EMA, 50-day EMA, and 100-day SMA; above 200-day SMA. Market In Correction
*2-Hour (E-mini futures)*	Back at the high of Wednesday after retracing to 61.8% Fibonacci level of the bounce up from August 5 low of 5120.00. Back in the upper half of a down-trending regression channel. RSI-21 has declined to around 55 from above 70. Above EMA20, which crossed above the EMA10 of EMA50. Bias: Down-Side
*30-Minute (E-mini futures)*	Moving sideways to up above 5310.00 level since 10:30 AM on Thursday. RSI-21 has declined to just below 50 from above 65. At/above EMA20, which is above EMA10 of EMA50. Bias: Up-Side
*15-Minute (E-mini futures)*	The Bollinger Band (20, 2.0) has been moving sideways since 11:45 PM. The Bollinger Band is expanding a bit since 7:45 Am with the price at the lower bound. Bias: Side

Previous Session

Major U.S. indices closed higher on Thursday, August 8 in lower volume. The volume for most is below their respective 10-day average. The market’s bounce from the low of Monday continues and the first of two down-gaps since the all-time highs has been filled, though the resistance levels at the upper bound of the gap have not been cleared connivingly.

The indices broke below the uptrend line from the October 2023 lows by making two down gaps. The first gap was on August 2 and the second was on August 5.

All S&P sectors closed higher. The dollar index closed higher at 103.02; energy and metals – precious and industrials – futures closed higher; the soft commodities closed mostly lower. The US Treasury yields closed down as the bonds rallied.

From Briefing.com

S&P 500: +11.5% YTD
Nasdaq Composite: +11.0% YTD
S&P Midcap 400: +5.6% YTD
Dow Jones Industrial Average: +4.7% YTD
Russell 2000: +2.8% YTD

Reviewing today’s economic data:

Weekly Continuing Claims 1.875 mln; Prior was revised to 1.869 mln from 1.877 mln; Weekly Initial Claims 233K (Briefing.com consensus 242K); Prior was revised to 250K from 249K
- The key takeaway from the report is that the downturn in initial jobless claims — a leading indicator — is helping to quell recession concerns.
June Wholesale Inventories 0.2% (Briefing.com consensus 0.2%); Prior was revised to 0.5% from 0.6%

Looking ahead to Thursday, market participants will receive the following data:

8:30 ET: Weekly Initial Claims (Briefing.com consensus 242,000; prior 249,000) and Continuing Claims (prior 1.877 mln)
10:00 ET: June Wholesale Inventories (Briefing.com consensus 0.2%; prior 0.6%)
10:30 ET: Weekly natural gas inventories (prior +18 bcf)

Overseas:

Europe: DAX +0.3%, TSE -0.3%, CAC -0.3%
Asia: Nikkei -0.8%, Hang Seng +0.1%, Shanghai +0.0%

Commodities:

Crude Oil +0.87 @ 76.14
Nat Gas -0.02 @ 2.09
Gold +32.30 @ 2463.30
Silver +0.81 @ 27.64
Copper +0.03 @ 3.97