Morning Notes – Thursday, August 24, 2023

/ August 24, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM but are declining from a high of 4485.50 at 3:00 AM and forming an ABCD pattern – the two down targets are around 4454.00 and 4440.00
  • The odds are for a sidewyas to a down day from the pre-open levels around 4465.00, with elevated volatility – watch for a break below 4476.75 and a break below 4446.75 for more clarity
  • The major economic data report due during the day:
    • Unemployment Claims ( 230K vs. 239K; prev. 239K ) at 8:30 AM
    • Durable Goods Orders ( -5.2% vs. -4.1% est.; prev. 4.6%) at 8:30 AM
    • Core Durable Goods Orders ( 0.5% vs. 0.2% est.; prev. 0.5%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4443.18, 4423.53, and 4412.04
  • Critical resistance levels for S&P 500 are 4461.89, 4489.99, and 4506.52
  • The key levels for E-mini futures are 4476.75, the high at 7:15 AM and 4463.00, the low at 5:30 PM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2023) closed at 4448.00, and the index closed at 4436.01 – a spread of about +12.00 points; the futures closed at 4447.00; the fair value is +1.00
  • Pre-NYSE session open, futures were mixed – at 8:30 AM, S&P 500 futures were up by +18:25, Dow down by -47, and NASDAQ up by +145.50

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai closed lower
  • European markets are mixed – Germany, France, and SOXX 600 are down; the UK, Spain, Italy, and Switzerland are up
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • EUR/USD
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are mixed
    • Industrial metals are higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.223, up +21.1 basis points from two weeks ago;
    • The 30-year is at 4.303%, up +12.4 basis points
    • The 2-year yield is at 4.950%, up +14.6 basis points;
    • The 10-Year-&-2-Year spread is at -0.727, up from -0.792
    • The 30-Year-&-10-Year spread is at 0.080, down from +0.167
  • VIX
    • At 15.65 @ 8:15 AM; down from the last close; below the 5-day SMA;
    • Recent high = 18.88 on August 18; low = 14.60 on August 10
    • Sentiment: Risk-Neutral-On

The trend and patterns in various time frames for the 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 almost no lower shadow.

    • Stochastic (9, 1, 3): %K is above the %D;
    • RSI-9 is just below 50; 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)
  • Moving up since 8:00 AM on August 18 from below a previous support level of around 4410.00 breaking the sequence of lower highs and lower lows that was in effect since July 27; broke above the downtrend line from the July high.
    • RSI-21 has declined to just below 60 from above 75
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Broke above  an Ascending Triangle – the 61.8% extension target around 4490.00 is almost achieved; the 100% extension target is near 4525.00 and the 161.8% extension target is near 4575.00
    • RSI-21 is around 50
    • Below EMA20, but above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 11:30 PM.
  • The Bollinger Band has been expanding a little since 5:45 AM with the price walking down the lower band.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Wednesday, August 23, in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in lower volume.

The major indices opened up and traded higher for the rest of the day.  All S&P sectors except Energy closed higher.

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