Morning Notes – Monday, August 7, 2023

/ August 7, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 8:45 AM. Futures are up more than 12 points since 6:30 AM but are within a trading range between 4522.00 and 4504.00
  • The odds are for an up day, within a down daily bias, with elevated volatility – watch for a break below 4504.75 for a change of sentiments
  • No major economic data report is due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4474.55, 4463.23, and 4443.64
  • Critical resistance levels for S&P 500 are 4510.28, 4529.15, and 4530.34
  • The key levels for E-mini futures are 4522.00, the high at 3:30 AM, and 4504.75, the low at 6:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2023) closed at 4499.25, and the index closed at 4478.03 – a spread of about +21.25 points; the futures closed at 4498.00; the fair value is +1.25
  • Pre-NYSE session open, futures were higher- at 8:45 AM, S&P 500 futures were up by +12.25, Dow by +86, and NASDAQ by +74.50

Markets Around The World

  • Markets in the East closed mixed
  • European markets are mixed
  • 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 mostly lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.189, up +33.5 basis points from two weeks ago;
    • The 30-year is at 4.304%, up +39.4 basis points
    • The 2-year yield is at 4.880%, up +2.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.699, up from -1.012
    • The 30-Year-&-10-Year spread is at 0.115, down from +0.056
  • VIX
    • At 17.24 @ 8:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 17.42 on August 3; 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 August 4 was a relatively large red candle just below a resistance level created by the high of the week of March 28, 2022.
    • Stochastic (9,1, 3): %K crossed below the %D;
    • RSI-9 declined to just above 60 from above 75
  • The week was down -104.20 or -2.3%; the 5-week ATR  is 96.19
  • A down week, second in the last five weeks, and third in the previous ten weeks;
  • The weekly pivot point=4515.60, R1=4556.65, R2=4635.27; S1=4436.98, S2=4395.93; S1/S2 pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A Bearish Engulfing candle – following a small green tear-drop spinning top candle.

    • Stochastic (9, 1, 3): %K is below %D; below 10
    • RSI-9 is below 40; below 8-DMA
  • Below 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Broke below a Horizontal Channel bounded between 4609.25 and 4553.75 – the bounce from the 100% extension target around 4498.00 appears to have failed at the broken lower bound; the 161.8% extension target is near 4463.95, which is -3.7% below the high of 4634.50 reached on July 27.
    • RSI-21 is just above 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Downtrend since 9:30 PM on July 31; fresh down leg started at 12:30 PM on Friday
  • RSI-21 is moving around 45
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways since 8:15 PM on Sunday.
  • The Bollinger Band has been expanding a little since 3:30 AM with the price moving down from the upper band to the lower band and then bouncing up to the upper band.
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Friday, August 4, in mostly higher volume. Dow Jones Transportation Average traded in lower volume. The major indices opened higher and then moved higher until early afternoon when they turned down and closed near the lows for the day.

For the week, the major US indices closed lower in mostly higher volume. The markets in Asia and Europe mostly closed lower. Shanghai was up. The dollar index closed up, the energy futures closed up, the metals closed mixed, and most soft commodities closed lower. The US Treasury yields closed up for the week. All but one S&P sector – Energy – closed lower.

 

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