Morning Notes – Thursday, August 31, 2023

/ August 31, 2023

Directional Bias For The Day:

  • S&P Futures are a little higher at 9:00 AM; moving down since 8:30 AM – down more than 13 points from a high of 4541.25
  • The odds are for an up to a sideways day – watch for a break above 4541.25 or a break below 4523.00 for clarity
  • The major economic data report due during the day:
    • Core PCE Price Index ( 0.2% vs. 0.2% est.; prev. 0.2%) at 8:30 AM
    • Unemployment Claims ( 228K vs. 236K est.; prev. 232K) at 8:30 AM
    • Personal Income  ( 0.2% vs. 0.3% est.; prev. 0.3% ) at 8:30 AM
    • Personal Spending ( 0.8% vs. 0.7% est.; prev. 0.6%) at 8:30 AM
    • Chicago PMI ( 44.3 est.; prev. 42.8 ) at 9:45 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4505.88, 4493.59, and 4483.54
  • Critical resistance levels for S&P 500 are 4521.65, 4527.37, and 4540.34
  • The key levels for E-mini futures are 4541.25, the high at 8:30 AM and 4523.00, the low at 5:45 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2023) closed at 4524.00, and the index closed at 4514.87 – a spread of about +9.25 points; the futures closed at 4524.25; the fair value is -0.25
  • Pre-NYSE session open, futures were higher – at 9:00 AM, S&P 500 futures were up by +9:25, Dow by +163, and NASDAQ by +4.25

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai, and Seoul closed lower; Tokyo, Syndey, and Singapore closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • Dollar index
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • 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 -15.6 basis points from two weeks ago;
    • The 30-year is at 4.211%, down -15.0 basis points
    • The 2-year yield is at 4.876%, down -8.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.774, down from -0.707
    • The 30-Year-&-10-Year spread is at 0.109, up from +0.103
  • VIX
    • At 13.75 @ 8:45 AM; down from the last close; below the 5-day SMA;
    • Recent high = 18.88 on August 18; low = 12.74 on July 27
    • Sentiment: Risk-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 relatively small green spinning top candle above the previous day’s large green candle. The potential Head-and-Shoulder pattern emerging since June 12 is likely to fizzle out.

    • Stochastic (9, 1, 3): %K turned down above the %D, above 90;
    • RSI-9 is above 60; above 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving up since 10:00 AM on August 25; near a resistance level around 4545.00
    • RSI-21 is moving above 65; it made a few Bearish Divergences
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving sideways to up since 2:00 PM on Wednesday.
    • RSI-21 has been moving between 50 and 65 since 2:00 AM Wednesday
    • 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 sideways to up since 3:45 PM on Wednesday.
  • The Bollinger Band has been expanding a little since 7:15 AM
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Wednesday, August 30, in lower volume. Russell 2000 traded in lower volume. The major indices opened higher, declined, and advanced again before moving sideways in the last afternoon trading. All but two S&P sectors – Healthcare and Utilities – closed higher.

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