Morning Notes – Wednesday, July 19, 2023

/ July 19, 2023

Directional Bias For The Day:

  • S&P Futures are little changed at 8:45 AM. Futures have been moving within a range bounded by 4592.75 and 4582.25 since 4:00 PM on Tuesday
  • The odds are for a sideways to a down day – watch for a break above 4592.75 or a break below 4582.25 for clarity
  • The major economic data reports due during the day:
    • Housing Starts ( 1.43M vs. 1.48M est.; prev. 1.56M) at 8:30 AM
    • Building Permits ( 1.44M vs. 1.49M est.; prev. 1.50M) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4551.96, 4538.31, and 4514.59
  • Critical resistance levels for S&P 500 are 4561.51, 4593.45, and 4603.07
  • The key levels for E-mini futures are 4592.75, the high at 3:00 AM, and 4582.25, the low at 6:00 PM on Tuesday

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2023) closed at 4587.75, and the index closed at 4554.98 – a spread of about +32.75 points; the futures closed at 4587.75; the fair value is +0.0
  • Pre-NYSE session open, futures were a little higher – at 8:15 AM, S&P 500 futures were unchanged, Dow was up by +11, and NASDAQ up by +24.75

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong closed lower
  • European markets are mixed – Germany, Spain, and Itlay are lower; the UK, France, Switzerland, and STOXX 600 are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.789, down -15.6 basis points two weeks ago;
    • The 30-year is at 3.901%, down -4.3 basis points
    • The 2-year yield is at 4.764%, down -19.1 basis points;
    • The 10-Year-&-2-Year spread is at -0.975, up from -1.010
    • The 30-Year-&-10-Year spread is at 0.112, up from -0.001
  • VIX
    • At 13.33 @ 8:00 AM; up from the last close; below the 5-day SMA;
    • Recent high = 21.33 on May 4; low = 12.73 on June 22
    • Sentiment: Risk-Neutral-Off

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

Weekly:
  • The week ending on July 14 was a Bullish Engulfing candle closing at the highest level since the week of April 18, 2022
    • Stochastic (9,1, 3): %K is crisscrossing the %D above 90;
    • RSI-9 has turned up above 70 but is still below the reading of the week ending on June 12, 2023.
  • The week was up +106.47 or +2.4%; the 5-week ATR  is 111.50
  • An up week, third in the last five weeks, and seventh in the previous ten weeks;
  • The weekly pivot point=4474.37, R1=4558.81, R2=4612.21; S1=4420.97, S2=4336.53; R1/R2/R3 pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A green candle with almost no upper and lower shadows breaking above a resistance level of around 4520.00, created by the high of April 21, 2022

    • Stochastic (9, 1, 3): %K is above the %D; above 90
    • RSI-9 is near 80; above 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Trending up since 2:00 AM on July 10 from a support level around 4410.00. Broke above a Symmetrical Triangle – the 100% extension target near 4545.00 is achieved, and the 161.8% extension target is near 4590.00.
    • RSI-21 has declined to just above 70 from above 85
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving sideways since 2:30 PM on Tuesday around 4585.00
    • RSI-21 has declined to 60 from above 75
    • 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 sidewyas to up since 9:30 PM
  • The Bollinger Band has been relatively stable
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Tuesday, July 18, in higher volume. The major indices opened a bit lower but then started to move higher and continued their upward drift for the rest of the day. All but three S&P sectors – Consumer Staples, Utilities, and Real Estate – closed higher.

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