Morning Notes – Tuesday, August 22, 2023

/ August 22, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; declined ten points from a high of 4440.00 at 8:00 AM
  • The odds are for an up day with elevated volatility – watch for a break below 4405.50 for a change of sentiments
  • The major economic data report due during the day:
    • Existing Home Sales ( 4.15M est.; prev. 4.16M) at 10:00 Am
    • Richmond Manufacturing Index ( -10 est.; prev. -9) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4407.55, 4385.18, and 4373.14
  • Critical resistance levels for S&P 500 are 4421.17, 4449.95, and 4478.87
  • The key levels for E-mini futures are 4440.00, the high at 8:30 AM and 4424.25, the low at 5:15 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2023) closed at 4412.75, and the index closed at 4399.77 – a spread of about +13.00 points; the futures closed at 4412.50; the fair value is +0.25
  • Pre-NYSE session open, futures were higher – at 8:45 AM, S&P 500 futures were up by +22:00, Dow by +74, and NASDAQ by +108.25

Markets Around The World

  • Markets in the East closed higher
  • 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 lower
    • 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 4.322, up +24.4 basis points from two weeks ago;
    • The 30-year is at 4.433%, up +18.4 basis points
    • The 2-year yield is at 5.018%, up +24.8 basis points;
    • The 10-Year-&-2-Year spread is at -0.684, up from -0.692
    • The 30-Year-&-10-Year spread is at 0.108, down from +0.180
  • VIX
    • At 16.67 @ 8:15 AM; down from the last close; below the 5-day SMA;
    • Recent high = 18.88 on August 18; low = 12.73 on June 22
    • Sentiment: Risk-On

The trend and patterns in various time frames for S&P 500:

Weekly:
  • The week ending on August 18 was a relatively large red Spinning Top candle.
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 declined to just above 50 from above 75
  • The week was down -94.34 or -2.1%; the 5-week ATR  is 102.02
  • A third consecutive down week, third in the last five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4398.45, R1=4461.59, R2=4553.47; S1=4306.57, S2=4243.43; S1/S2 pivot levels were breached
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A green candle with a small upper shadow and a lower shadow as long as the real body. A three-day reversal pattern is formed. Fourth up-day over the past 15 days’ trading. Turned up just above support – the June 26 low of 4328.08, which is also the high of August 16, 2022.

    • Stochastic (9, 1, 3): %K is above the %D;
    • RSI-9 has risen to around 35; above 8-DMA
  • Below 20-day EMA and 50-day EMA; above 100-day SMA, and 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Bouncing up from below a previous support level around 4410.00; breaking the sequence of lower highs and lower lows that was in effect since July 27 by moving above 4437.00; still below the downtrend line from July high.
    • RSI-21 has risen to above 70 after making a Bullish Divergence at 8:00 AM on August 18
    • Above EMA20, which is at/below EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 9:30 AM on August 18; at a resistance around 4436.00
    • RSI-21 is just below 70 after making a Bullish Divergence at 9:30 AM on Friday
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 3:00 AM
  • The Bollinger Band has been contracting since 8:00 AM
  • Bias: Up

Previous Session

Major U.S. indices closed mixed on Monday, August 21, in mostly lower volume. S&P 500, NASDAQ Composite, and Dow Jones Transportation Average closed higher. Dow Jones Industrial Average, NYSE Composite, and Russell 2000 closed lower. Dow Jones Transportation Average traded in higher volume.

The major indices opened up, moved higher then declined to the day’s lows by mid-day before climbing higher for the rest of the day.

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