Morning Notes – Friday, July 28, 2023

/ July 28, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 9:15 AM. Futures have been moving up since 12:30 AM  – up more than 35 points from 4558.00
  • The odds are for an up day – watch for a break below 4579.00 for a change of sentiments
  • The major economic data reports due during the day:
    • Core PCE Price Index (0.2% vs. 0.2% est.; prev. 0.3%) at 8:30 AM
    • Employment Cost Index (1.0% vs. 1.1% est.; prev. 1.2%) at 8:30 AM
    • Personal Income ( 0.3% vs. 0.5% est.; prev. 0.5%) at 8:30 AM
    • Personal Spending (0.5% vs. 0.4% est.; prev. 0.2%) at 8:30 AM
    • Revised UoM Consumer Sentiment ( 72.6 est.; prev. 72.6) at 10:00 AM
    • Revised UoM Inflation Expectations ( prev. 3.4%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4555.62, 4528.56, and 4514.59
  • Critical resistance levels for S&P 500 are 4577.04, 4599.20, and 4607.07
  • The key levels for E-mini futures are 4603.25, the high at 13:30 PM on Thursday, and 4579.00, the low at 6:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2023) closed at 4563.50, and the index closed at 4537.41 – a spread of about +26.00 points; the futures closed at 4564.25; the fair value is -0.75
  • Pre-NYSE session open, futures were up – at 9:00 AM, S&P 500 futures were up by +32.25, Dow by +175, and NASDAQ by +186.00

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Seoul, and Singapore closed higher; Tokyo, Sydney, and Mumbai closed lower
  • European markets are mixed – Germany, the UK, France, and Spain are up; Itlay, Switzerland, and STOXX 600 are down
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.012, up +25.1 basis points from two weeks ago;
    • The 30-year is at 4.058%, up +16.3 basis points
    • The 2-year yield is at 4.932%, up +18.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.920, up from -0.989
    • The 30-Year-&-10-Year spread is at 0.046, down from +0.134
  • VIX
    • At 13.52 @ 9:00 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 21 was a green candle with almost no lower shadow and an upper shadow bigger than the real body just below a resistance level created by the high of the week of March 28, 2022.
    • Stochastic (9,1, 3): %K is crisscrossing the %D above 80;
    • RSI-9 is near75
  • The week was up +30.92 or +0.7%; the 5-week ATR  is 96.29
  • An up week, third in the last five weeks, and eight in the previous ten weeks;
  • The weekly pivot point=4539.89, R1=45741.88, R2=4613.42; S1=4501.35, S2=4466.36; R1 pivot level was breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A large Bearish Engulfing candle with small upper and lower shadows within a resistance zone.

    • Stochastic (9, 1, 3): %K is below %D; Bearish Divergence
    • RSI-9 is at 60; below 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Back in a Horizontal Channel bounded between 4609.25 and 4557.75 after breaking above it, near the lower bound of the pattern.
    • RSI-21 has bounced up to above 50 from near 25
    • At/below EMA20, which is at/below EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Moving up since 3:30 PM on Thursday after testing a support level around 4557.75 – up more than 40 points
    • RSI-21 has moved above 55 from below 30
    • Above EMA10 of EMA50, which is above EMA 20
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 1:00 AM.
  • The Bollinger Band has been expanding since 5:00 AM with the price walking up the upper band.
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Thursday, July 27, in higher volume.  The major indices gapped up at the open and made the day’s high in the first half hour of trading. The market then started to fall, picking up the pace in the afternoon. Most made Bearish Engulfing candles. All but one S&P sector – Communication Services – closed lower.

 

 

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