Morning Notes – Tuesday, August 15, 2023

/ August 15, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 8:15 AM; moving down since 9:15 PM – down more than 40 points;
  • The odds are for a down day with elevated volatility – watch for a break above 4492.00 for a change of sentiments
  • The major economic data report due during the day:
    • Retail Sales ( 0.7% vs. 0.4% est.; prev. 0.3%) at 8:30 AM
    • Core Retail Sales ( 1.0% vs. 0.4% est.; prev. 0.2% ) at 8:30 AM
    • Empire State Manufacturing Index ( -19.0 vs. -0.9 est.; 1.1) at 8:30 AM
    • Import Prices ( 0.4% vs. 0.2.% est.; prev. -0.2%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4453.44, 4443.98, and 4416.79
  • Critical resistance levels for S&P 500 are 4473.30, 4489.99, and 4506.52
  • The key levels for E-mini futures are 4492.00, the high at 4:45 AM, and 4471.00, the low at 8:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2023) closed at 4506.75, and the index closed at 4489.72 – a spread of about +17.00 points; the futures closed at 4506.00; the fair value is +0.75
  • Pre-NYSE session open, futures were lower- at 8:00 AM, S&P 500 futures were down by -32.25, Dow by -273, and NASDAQ by -91.25

Markets Around The World

  • Markets in the East closed mostly mixed – Shanghai, Hong Kong, and Singapore closed lower; Tokyo and Sydney closed higher; Mumbai and Seoul were closed
  • European markets are lower
  • 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 lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.184, up +22.5 basis points from two weeks ago;
    • The 30-year is at 4.281%, up +26.2 basis points
    • The 2-year yield is at 4.965%, up +9.1 basis points;
    • The 10-Year-&-2-Year spread is at -0.781, up from -0.915
    • The 30-Year-&-10-Year spread is at 0.097, up from +0.060
  • VIX
    • At 15.90 @ 7:45 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 green candle with a small lower shadow and almost no upper shadow. A three-day Morning Star pattern is forming near the lower bound of an up channel that has been forming since March 10, 2023

    • Stochastic (9, 1, 3): %K is above the %D; from below five
    • RSI-9 is around 45; above 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)
  • Turned down from the downtrend line from July 31 high; sequence of 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 30 and declining
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving sideways since 11:30 AM on August 10 between 4517.00 and 4459.00 – in the lower half of the range
    • RSI-21 is moving around 35
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 2:45 AM.
  • The Bollinger Band has been contracting since 6:30
  • Bias: Down

Previous Session

Major U.S. indices closed mostly higher on Monday, August 14, in mixed volume. Russell 2000 and NYSE Composite closed down. Dow Jones Industrial Average and Dow Jones Transportation Average traded in higher volume.

The market opened lower and made the day’s low early before moving higher for the rest of the day with a brief consolidation around mid-day.

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