Morning Notes – Thursday, September 28, 2023

/ September 28, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 8:45 AM, moving sideways since 3:00 PM on Wednesday between 4330.25 and 4302.25
  • The odds are for a sidewyas to a down day – watch for a break above 4330.25 or a break below 4302.25 for clarity
  • The major economic data reports due during the day:
    • Final GDP ( 2.1% vs. 2.2% est.; prev. 2.1%) at 8:30 AM
    • Final GDP Price Index (1.7% vs. 2.0% est.; prev. 2.0%) at 8:30 AM
    • Unemployment Claims ( 204K vs. 214K est.; prev. 201K) at 8:30 AM
  • Weekly: Uptrend Under Pressure
  • Daily: Correction
  • 120-Min: Down-Side
  • 30-Min: Down-Side
  • 15-Min: Side
  • 6-Min: Side-Up

Key Levels:

  • Critical support levels for the S&P 500 are 4264.69, 4238.63, and 4212.05
  • Critical resistance levels for the S&P 500 are 4295.28, 4316.38, and 4338.51
  • The key levels for E-mini futures are 4328.25, the high at 8:30 AM and 4302.25, the low at 5:15 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2023) closed at 4315.00, and the index closed at 4274.51 – a spread of about +40.50 points; the futures closed at 4313.50; the fair value is +1.50
  • Pre-NYSE session open, futures were mixed – at 8:15 AM, S&P 500 futures were up by +4.50, Dow up by +37, and NASDAQ down by -14.50

Markets Around The World

  • Markets in the East closed mostly  – Shanghai and Singapore closed up; Seoul was closed
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • NZD/USD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.626, up +37.7 basis points from two weeks ago;
    • The 30-year is at 4.750%, up +41.3 basis points
    • The 2-year yield is at 5.142%, up +15.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.516, down from -0.741
    • The 30-Year-&-10-Year spread is at 0.124, down from +0.088
  • VIX
    • At 18.57 @ 7:45 AM; up from the last close; above the 5-day SMA;
    • Recent high = 21.33 on May 4; low = 12.68 on September 15
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on September 22 was a relatively large red candle with almost no lower and upper shadows at a support level near 4335.00, the low of the week ending on August 18, 2023
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 has declined to below 45
  • The week was down -130.26 or -2.9%; the 5-week ATR  is 107.50
  • Third down week in the last five weeks and sixth in the previous ten weeks;
  • The weekly pivot point=4367.64, R1=4418.78, R2=4517.51; S1=4268.91, S2=4217.77; S1/S2/S3 pivot levels were breached
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A red candle with a small real body that looks like a Doji with a short upper shadow and a longer lower shadow. Gapped down on September 21 and broke below a symmetrical triangle – the 61.8% extension target near 4250.00 is achieved; the 100% extension target is around 4150.00.

    • Stochastic (9, 1, 3): %K has again crossed above the %D from near zero; Bullish Divergence.
    • RSI-9 is just below 25; below 8-DMA
  • Below 20-day EMA, 50-day EMA, and 100-day SMA; above 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • The downtrend since 2:00 AM on September 15. Broke below a horizontal channel on September 21 – the 100% extension target near 4305.00 is achieved, and the 161.8% extension target is around 4224.66;
  • The chart action since early June shows an uneven Head-and-Shoulder pattern. The neckline was broken on September 25. The 61.8% extension target is around 4210.00, the 100% extension target is near 4110.00, and the 161.8% extension target is around 3950.00. A convincing move above 4400.00 will nullify the pattern
  • RSI-21 has bounced up above 45 from 25 after making Bullish Divergence
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving sideways to down since 2:00 PM on September 26 – moving between 4336.50 and 4277.00
    • RSI-21 has been moving around 50 since 2:30 PM on Wednesday
    • At/above EMA20, which is at/below  EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 9:45 PM.
  • The Bollinger Band is relatively stable, with the price bouncing up to the upper band from the lower band.
  • Bias: Side

Previous Session

Major U.S. indices closed mostly higher on Wednesday, September 27, in higher volume. The Dow Jones Industrial Average closed down.

The major indices opened higher but then turned down in the first half of trading, declined sharply, and reached the lows since June by mid-afternoon. Most found support at previous lows or broken resistance. The indices then bounced up and tested the day’s high before closing off the highs. Most mad Doji or similar candles that show indecision. Five of the S&P sectors closed up, and six closed down.

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