Morning Notes – Monday, August 14, 2023

/ August 14, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; reversed direction from the European open – down more than 30 points since 4:00 AM
  • The odds are for a down day with elevated volatility – watch for a break above 4495.25 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: Down
  • 30-Min: Down-Side
  • 15-Min: Side-Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for S&P 500 are 4452.89, 4443.98, and 4416.79
  • Critical resistance levels for S&P 500 are 4471.64, 4484.88, and 4506.52
  • The key levels for E-mini futures are 4495.25, the high at 6:45 AM, and 4465.00, the low at 11:45 PM on Sunday

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2023) closed at 4482.00, and the index closed at 4464.05 – a spread of about +18.00 points; the futures closed at 4480.75; the fair value is +1.25
  • Pre-NYSE session open, futures were lower- at 9:00 AM, S&P 500 futures were down by -6.75, Dow by -35, and NASDAQ by -14.75

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai closed higher
  • 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 higher
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.182, up +21.3 basis points from two weeks ago;
    • The 30-year is at 4.277%, up +24.7 basis points
    • The 2-year yield is at 4.829%, down -0.5 basis points;
    • The 10-Year-&-2-Year spread is at -0.710, up from -0.928
    • The 30-Year-&-10-Year spread is at 0.095, up from +0.041
  • VIX
    • At 15.97 @ 8:30 AM; up 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 11 was a relatively small Spinning Top candle near the close of the prior week’s large red candle.
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 declined to just above 60 from above 75
  • The week was down -13.98 or -0.3%; the 5-week ATR  is 98.39
  • A down week, second in the last five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=4478.47, R1=4512.95, R2=4561.86; S1=4429.56, S2=4395.08; no pivot levels were breached
  • At/above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A relatively small green Spinning Top candle with the real body below the previous day’s candle’s lower shadow; nearing the lower bound of an up channel that has been forming since March 10, 2023

    • Stochastic (9, 1, 3): %K crossed above the %D; from 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 achieved;
    • RSI-21 is just above 40 but declining
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Declining since 3:30 Am after breaking above a recent high with a downtrend
    • RSI-21 is below 40 and declining
    • Below EMA20, which is at/above EMA10 of EMA50
  • Bias: Down-Size
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 8:15 AM.
  • The Bollinger Band is expanding since 8:15 AM with the price walking down the lower band.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mixed on Friday, August 11, in lower volume. S&P 500, NASDAQ Composite, and Dow Jones Transportation Average closed down. Dow Jones Industrial Average, Russell 2000, and NYSE Composite closed higher.

For the week, the major US indices mostly closed lower DJIA and NYSE Composite closed up. The markets in Asia and Europe also mostly closed down. The dollar index was up, the energy futures were up, the precious metals were down, and the industrial metals and the soft commodities were mostly down. The US Treasury yields closed up for the week.

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