Market Remarks

Morning Notes – Friday, August 18, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:45 AM; moving down since 2:45 AM – down more than 30 points to around 4355.00;
  • The odds are for a down day with elevated volatility – watch for a break above 4372.75 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: Down
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for S&P 500 are 4328.08, 4314.40, and 4297.54
  • Critical resistance levels for S&P 500 are 4364.83, 4396.96, and 4412.70
  • The key levels for E-mini futures are 4372.75, the low at 5:30 AM, and 4338.25 and 4327.50, the support levels created on June 9, 2023

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2023) closed at 4383.50, and the index closed at 4370.36 – a spread of about +13.25 points; the futures closed at 4384.50; the fair value is -1.00
  • Pre-NYSE session open, futures were lower- at 8:15 AM, S&P 500 futures were down by -24:50, Dow by -154, and NASDAQ by -142.75

Markets Around The World

  • Markets in the East closed mostly lower – Sydney closed higher
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • EUR/USD
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.308, up +11.9 basis points from two weeks ago;
    • The 30-year is at 4.412%, up +10.8 basis points
    • The 2-year yield is at 4.931%, up +4.4 basis points;
    • The 10-Year-&-2-Year spread is at -0.623, up from -0.698
    • The 30-Year-&-10-Year spread is at 0.104, down from +0.115
  • VIX
    • At 18.64 @ 8:00 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
  • Another red candle with no very small upper and lower shadows. The index closed down ten out of the past 13 trading days. Broke below the lower bound of an up channel that has been forming since March 10, 2023. The next support is the June 26 low of 4328.08, which is also the high of August 16, 2022.
    • Stochastic (9, 1, 3): %K crossed above the %D; from below five
    • RSI-9 is around 25; below 8-DMA
  • Below 20-day EMA and 50-day EMA; above 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Trending down since July 27 making a sequence of lower highs and lower lows; broke below a support level around 4410.00; the next support is 4327.50, which is the upper bound of an up gap on June 9, 2023.
    • RSI-21 has bounced up to 40 from below 20
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving down following a break below a horizontal range at 7:00 AM – achieved the 100% extension target and the 161.8% extension target is near 4350.00
    • RSI-21 is moving along 30
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 3:00 AM
  • The Bollinger Band has been expanding since 3:00 AA with the price walking down the lower band.
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Thursday, August 17, in mostly higher volume. Russell 2000 traded in lower volume.

The market opened lower and then mostly traded lower for the rest of the day with a couple of small upswings. All S&P sectors but one – Energy – closed lower.

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