Morning Notes – Tuesday, August 29, 2023

/ August 29, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 8:45 AM; moving down since 3:30 AM – down more than 15 points
  • The odds are for a down day with elevated volatility – watch for a break above 4449.25 for a change in sentiments
  • The major economic data report due during the day:
    • S&P/CS Composite-20 HPI ( -1.2% vs. -1.5% est.; prev. -1.7%) at 9:00 AM
    • HPI ( 0.2% vs. 0.2% est. prev. 0.7%) at 9:00 AM
    • CB Consumer Confidence ( 116.0 est.; prev. 117.0) at 10:00 AM
    • JOLTS Job Openings ( 9.49M est.; prev. 9.58M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4422.76, 4415.17, and 4401.67
  • Critical resistance levels for S&P 500 are 4439.56, 4458.30, and 4461.89
  • The key levels for E-mini futures are 4449.25, the high at 3:30 AM and 4423.50, the low at 2:15 PM on Monday

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2023) closed at 4441.75, and the index closed at 4433.31 – a spread of about +8.50 points; the futures closed at 4442.25; the fair value is -0.50
  • Pre-NYSE session open, futures were lower – at 8:30 AM, S&P 500 futures were down by -7:75, Dow by -60, and NASDAQ by -37.00

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
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.222, up +3.8 basis points from two weeks ago;
    • The 30-year is at 4.292%, up +1.1 basis points
    • The 2-year yield is at 5.010%, up +4.1 basis points;
    • The 10-Year-&-2-Year spread is at -0.788, down from -0.785
    • The 30-Year-&-10-Year spread is at 0.070, down from +0.097
  • VIX
    • At 15.21 @ 8:45 AM; up from the last close; below the 5-day SMA;
    • Recent high = 18.88 on August 18; low = 14.60 on August 10
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on August 25 was a small green Haram with an upper shadow longer than the lower shadow and the real body.
    • Stochastic (9,1, 3): %K turned up below the %D;
    • RSI-9 turned up above 50
  • The week was up +36.00 or +0.8%; the 5-week ATR  is 107.72
  • Second up week in the last five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4406.77, R1=4457.24, R2=4508.78; S1=4355.23, S2=4304.76; No pivot levels were breached
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A small green Spinning Top candle just above the previous day’s high. A Head-and-Shoulder pattern continues to take shape and a break below 4335.00 will complete the pattern with the 61.8% extension target near 4170.00 and the 100% extension target near 4060.00

    • Stochastic (9, 1, 3): %K is above the %D, near 80;
    • RSI-9 is just below 50; above 8-DMA
  • Below 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Above the downtrend line from the July high
    • RSI-21 has declined to around 55 from above 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving sideways to down since 4:00 PM on Monday
    • RSI-21 has declined to below 50 from above 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 9:45 PM
  • The Bollinger Band has been expanding a little since 3:45 AM with the price walking down the lower band.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Monday, August 28, in mostly lower volume. Dow Jones Transportation Average traded in lower volume. The major indices gapped up at the open and then moved up and down, closed the gap, and then closed higher for the day. All but one S&P Sector – Utilities – closed higher.

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