Market Remarks

Morning Notes – Friday, August 11, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; broke below a Pennant at 8:30 AM – the next three down targets are near 4458.00, 4448.00, and 4430.00 respectively
  • The odds are for a down day with elevated volatility – watch for a break below 4487.00 for a change of sentiments
  • The major economic data report due during the day:
    • PPI m/m ( 0.3% vs. 0.2% est.; prev. 0.1%) at 8:30 AM
    • Core PPI ( 0.3% vs. 0.2% est.; prev. 0.1%) at 8:30 AM
    • Prelim UoM Consumer Sentiment ( 71.4 est.; prev. 71.6) at 10:00 AM
    • Prelim UoM Inflation Expectations ( prev. 3.4) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4443.64, 4416.79, and 4408.46
  • Critical resistance levels for S&P 500 are 4457.92, 4484.88, and 4506.52
  • The key levels for E-mini futures are 4487.00, the high at 7:00 AM, and 4439.00, the low at 4:00 AM on July 11

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2023) closed at 4486.25, and the index closed at 4468.83 – a spread of about +17.50 points; the futures closed at 4485.75; the fair value is +0.50
  • Pre-NYSE session open, futures were lower- at 9:00 AM, S&P 500 futures were down by -15.50, Dow by -55, and NASDAQ by -87.25

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai and Seoul closed lower
  • European markets are higher
  • 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 higher
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.080, up +6.8 basis points from two weeks ago;
    • The 30-year is at 4.241%, up +18.3 basis points
    • The 2-year yield is at 4.838%, down -10.3 basis points;
    • The 10-Year-&-2-Year spread is at -0.758, up from -0.929
    • The 30-Year-&-10-Year spread is at 0.161, up from +0.046
  • VIX
    • At 16.05 @ 9:00 AM; down from the last close; above the 5-day SMA;
    • Recent high = 18.14 on August 8; 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 red Harami candle with a small lower shadow and an upper shadow that was more than twice the real body; nearing the lower bound of an up channel that has been forming since March 10, 2023
    • Stochastic (9, 1, 3): %K is below the %D; below five
    • 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)
  • Lower highs and lower lows since 8:00 AM on July 27; broke below a Horizontal Channel bounded between 4609.25 and 4553.75 on August 2 – the 161.8% extension target is near 4463.95.
    • RSI-21 is below 35
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Breaking below a support level around 4473.50
  • RSI-21 is around 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 7:45 PM.
  • The Bollinger Band is expanding since 8:30 AM with the price near the lower band.
  • Bias: Down

Previous Session

Major U.S. indices closed mostly higher on Thursday, August 10, in mostly higher volume. Russell 2000 and NYSE Composite closed down. Dow Jones Transportation Average traded in lower volume.

The major indices gapped up at the open but turned down in the first hour of trading. They then for most of the day before recovering a bit in the final hour of trading. The end of the day’s bias was down.

 

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