Morning Notes – Wednesday, July 12, 2023

/ July 12, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM. Futures shot up more than 30 points following the release of the CPI report at 8:30 AM
  • The odds are for an up day with elevated volatility – watch for a break below 4498.25
  • The major economic data reports due during the day:
    • CPI m/m ( 0.2% vs. 0.3% est.; prev. 0.1%) at 8:30 AM
    • Core CPI m/m ( 0.2% vs. 0.3% est.; prev. 04%) at 8:30 AM
    • CPI y/y ( 3.0% vs. 3.1% est.; prev. 4.0%) at 8:30 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Up
  • 30-Min: Up
  • 15-Min: Up
  • 6-Min:  Up

Key Levels:

  • Critical support levels for S&P 500 are 4458.48, 4443.64, and 4426.02
  • Critical resistance levels for S&P 500 are 4480.55, 4489.17, and 4512.94
  • The key levels for E-mini futures are 4410.75, the high at 8:36 AM, and 4498.25, the low at 8:54 AM

Pre-Open

  • On Tuesday at 1:00 PM, S&P futures (September 2023) closed at 4473.00, and the index closed at 4439.26 – a spread of about +33.75 points; the futures closed at 4473.50; the fair value is -0.50
  • Pre-NYSE session open, futures were higher – at 8:45 AM, S&P 500 futures were up by +27.50, Dow by +159, and NASDAQ by +136.25

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • NZD/USD
  • USD/CAD
  • INR/USD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.923, up +15.5 basis points from two weeks ago;
    • The 30-year is at 4.060%, up +16.6 basis points
    • The 2-year yield is at 4.877%, down -1.0 basis points;
    • The 10-Year-&-2-Year spread is at -0.954, up from -1.119
    • The 30-Year-&-10-Year spread is at 0.081, up from +0.072
  • VIX
    • At 14.07 @ 8:45 AM; down from the last close; below the 5-day SMA;
    • Recent high = 21.33 on May 4; 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 July 7 was a red candle that declined to near the middle of the previous week’s candle
    • Stochastic (9,1, 3): %K is crisscrossing the %D above 80;
    • RSI-9 has declined to just below 70
  • The week was down -51.43 or -1.2%; the 5-week ATR  is 96.24
  • A down week, second in the last five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=4413.49, R1=4441.92, R2=4484.90; S1=4370.51, S2=4342.08; No pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A relatively large green candle with small upper and lower shadows. The index is mostly moving sideways over the past few days after falling below a three-day island.

    • Stochastic (9, 1, 3): %K is above the %D;
    • RSI-9 is above 60; below 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving up since 2:00 AM on Monday from a support level around 4410.00. Broke above a Symmetrical Triangle – the 61.8% extension target near 4512.00 is achieved; the 100% extension target is near 4545.00, and the 161.8% extension target is near 4590.00
    • RSI-21 has risen to above 85 after making a Hidden Divergence at 2:00 AM on Monday
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Trending up since 3:00 AM on Monday
    • RSI-21 is near 80
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 5:45 AM on July 10
  • The Bollinger Band has been expanding since 8:30 AM, with the price walking up the upper bound
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Tuesday, July 11, in mixed volume. Dow Jones Industrial Average, NASDAQ Composite, and Russell 2000 traded in lower volume.

The major indices opened up and moved higher but retreated in the early afternoon before advancing again near the end of the day. All S&P sectors closed higher.

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