Morning Notes – Tuesday, August 1, 2023

/ August 1, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 8:45 AM. Futures have been moving down since 9:45 AM – down more than 25 points; broke below a support level around 4600.00
  • The odds are for a down day – watch for a break above 4608.50 for a change of sentiments
  • The major economic data reports due during the day:
    • Final Manufacturing PMI ( 49.0 est.; prev. 49.0) at 9:45 AM
    • ISM Manufacturing PMI ( 46.9 est.; prev. 46.0) at 10:00 AM
    • JOLTS Job Openings ( 9.61M est.; prev. 9.82M) at 10:00 AM
    • ISM Manufacturing (43.8 est.; prev. 41.8) at 10:00 AM
    • Construction Spending ( 0.6% est.; prev. 0.9%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4573.14, 4564.01, and 4543.87
  • Critical resistance levels for S&P 500 are 4589.60, 4594.22, and 4607.07
  • The key levels for E-mini futures are 4608.50, the high at 7:00 AM, and 4588.75, the low at 1:30 PM on July 28

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2023) closed at 4616.00, and the index closed at 4588.96 – a spread of about +27.00 points; the futures closed at 4614.50; the fair value is +1.50
  • Pre-NYSE session open, futures were down – at 8:15 AM, S&P 500 futures were down by -15.25, Dow by -65, and NASDAQ by -83.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai, and Singapore closed lower; Tokyo, Sydney, and Seoul closed higher
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • INR/USD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.959, up +16.2 basis points from two weeks ago;
    • The 30-year is at 4.019%, up +9.6 basis points
    • The 2-year yield is at 4.858%, up +11.6 basis points;
    • The 10-Year-&-2-Year spread is at -0.899, up from -0.945
    • The 30-Year-&-10-Year spread is at 0.060, down from +0.126
  • VIX
    • At 13.97 @ 6:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 21.33 on May 4; low = 12.73 on June 22
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on July 28 was a green candle with almost no lower and upper shadows 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 above 75
  • The week was up +45.89 or +1.0%; the 5-week ATR  is 98.34
  • An up week, fourth in the last five weeks, and eight in the previous ten weeks;
  • The weekly pivot point=4579.49, R1=4616.68, R2=461.13; S1=4538.17, S2=4494.1; R1 pivot level was breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A small Doji candle closing above Friday’s close and near the open of 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)
  • At the upper bound of a Horizontal Channel bounded between 4609.25 and 4557.75, that was once broken to the upside.
    • RSI-21 has declined to 40
    • Below EMA20, but at at/above EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Drifted down from 4621.75 at 9:30 PM to around 4600.00, a swing low
    • RSI-21 is moving around 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 3:30 AM
  • The Bollinger Band has been contracting since 7:30 AM
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly higher on Monday, July 31, in mixed volume.  Dow Jones Transportation Average closed lower. Russell 2000 and Transports traded in higher volume.

The major indices opened flat and then mostly traded sideways to down for most of the day before advancing a little in the last hour of trading.

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