Morning Notes – Wednesday, August 30, 2023

/ August 30, 2023

Directional Bias For The Day:

  • S&P Futures are little changed at 9:00 AM; moving within a range between 4516.25 and 4496.25 since 3:00 PM on Tuesday
  • The odds are for a sideways day – watch for a break above 4516.25 or a break below 4496.25 for clarity
  • The major economic data report due during the day:
    • ADP Non-Farm Employment Change ( 177K vs. 194K est.; prev. 371K) at 8:15 AM
    • Prelim GDP  (2.1% vs. 2.4% est.; prev. 2.4% ) at 8:30 AM
    • Prelim GDP Price Index ( 2.0% vs. 2.2% est.; prev. 2.2%) at 8:30 AM
    • Goods Trade Balance ( -91.2B vs. -90.0B; prev. -87.8B) at 8:30 AM
    • Prelim Wholesales Inventories ( -0.1% vs. 0.2% est.; prev. -0.5%) at 8:30 AM
    • Pending Home Sales ( -0.8% est.; prev. 0.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4483.54, 4461.527, and 4438.15
  • Critical resistance levels for S&P 500 are 4506.52, 4527.37, and 4540.34
  • The key levels for E-mini futures are 4516.25, the high at 10:15 PM and 4496.25, the low at 5:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2023) closed at 4506.00, and the index closed at 4497.63 – a spread of about +8.25 points; the futures closed at 4506.75; the fair value is -0.75
  • Pre-NYSE session open, futures were a little higher – at 9:00 AM, S&P 500 futures were up by +2:00, Dow by +55, and NASDAQ by +1.00

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Singapore closed lower
  • European markets are mostly higher – Germany is lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • EUR/USD
  • GBP/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.102, down -11.9 basis points from two weeks ago;
    • The 30-year is at 4.230%, down -8.1 basis points
    • The 2-year yield is at 4.926%, down -3.5 basis points;
    • The 10-Year-&-2-Year spread is at -0.832, down from -0.740
    • The 30-Year-&-10-Year spread is at 0.129, up from +0.098
  • VIX
    • At 14.48 @ 8:15 AM; up from the last close; below the 5-day SMA;
    • Recent high = 18.88 on August 18; low = 12.74 on July 27
    • Sentiment: Risk-Neutral-On

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 large green with almost no upper and lower shadows. The potential Head-and-Shoulder pattern emerging since June 12 is likely to fizzle out.

    • Stochastic (9, 1, 3): %K is above the %D, near 100;
    • RSI-9 is above 60; above 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Moving up since 10:00 AM on August 25; near a resistance level around 4515.00
    • RSI-21 is above 70 after declining from above 80
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving sideways since 3:00 PM on Tuesday after rising more than 70 points to above 4500.00
    • RSI-21 has declined to just above 60 from above 75
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sidewyas to down since 10:15 PM.
  • The Bollinger Band has been flattening since 7:30 AM after expanding from 2:00 AM.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Tuesday, August 29, in mostly higher volume. Russell 2000 traded in lower volume. The major indices opened flat and traded higher for the rest of the day closing near the high. All S&P Sector closed higher.

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