Morning Notes – Monday, October 2, 2023

/ October 2, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM, at a swing low around 4311.00 on the 15-minute chart after declining from a high of 4355.50 at 3:15 AM
  • The odds are for a down day with a good chance of a bounce from the pre-open levels around 4315.00 – watch for a break above 4328.50 for a change of sentiments
  • The major economic data reports due during the day:
    • Final Manufacturing PMI ( 48.9 est.; prev. 48.9) at 9:45 AM
    • ISM Manufacturing PMI ( 47.8 est.; prev. 47.6) at 10:00 AM
    • ISM Manufacturing Prices (48.9 est.; prev. 48.4) at 10:00 AM
    • Construction Spending ( 0.6% est.; prev. 0.7% ) at 10:00 AM
  • Weekly: Uptrend Under Pressure
  • Daily: Correction
  • 120-Min: Down-Side
  • 30-Min: Side-Down
  • 15-Min: Side-Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for the S&P 500 are 4275.61, 4264.38, and 4238.63
  • Critical resistance levels for the S&P 500 are 4303.12, 4333.15, and 4338.51
  • The key levels for E-mini futures are 4328.50, the high at 7:15 AM and 4311.00, the low at 2:30 PM on Friday

Pre-Open

  • On Friday at 4:00 PM, S&P futures (December 2023) closed at 4326.25, and the index closed at 4288.05 – a spread of about +38.25 points; the futures closed at 4325.50; the fair value is +0.75
  • Pre-NYSE session open, futures were lower – at 9:00 AM, S&P 500 futures were down by -10.75, Dow by -78, and NASDAQ by -23.00

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai, Hong Kong, Mumbai, and Seoul were closed
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • INR/USD
  • USD/CAD
  • EUR/USD
  • GBP/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly higher
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 45730, up +25.1 basis points from two weeks ago;
    • The 30-year is at 4.711%, up +30.0 basis points
    • The 2-year yield is at 5.054%, up +1.7 basis points;
    • The 10-Year-&-2-Year spread is at -0.481, down from -0.715
    • The 30-Year-&-10-Year spread is at 0.138, down from +0.089
  • VIX
    • At 18.35 @ 8:45 AM; up from the last close; above the 5-day SMA;
    • Recent high = 19.71 on September 27; 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 29 was a relatively small candle that looked like Dragonfly Doji just below resistance, which was acting as a support until the last week.
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 has declined to near 40
  • The week was down -33.01 or -0.7%; the 5-week ATR  is 107.08
  • Fourth down week in the last five weeks and seventh in the previous ten weeks;
  • The weekly pivot point=4288.40, R1=4338.16, R2=4388.28; S1=4238.28, S2=4188.52; S1 pivot level was breached
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A red candle with almost no upper and lower shadows just below a resistance level. The next support is 4238.63, which is the low of a three-day Morning Star pattern.
  • 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. A convincing move above the gap will nullify the pattern targets.

    • Stochastic (9, 1, 3): %K turned down above the %D
    • RSI-9 is around 30; above 8-DMA; Bullish Divergence on September 27
  • 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;
  • Turned down on Friday from a resistance level after bouncing from 427700, the low reached at 6:00 AM on September 27
  • 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 declined to 35 from above 60
    • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Drifting down since 3:00 AM to a swing low of 4311.75
    • RSI-21 has declined to near 30
    • Below EMA20, which is below  EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 5:00 AM.
  • The Bollinger Band has been expanding since 5:00 AM, with the price walking down the lower band.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly lower on Friday, September 29, in mostly higher volume. The NASDAQ composite closed lower. The Dow Jones Transportation Average traded in lower volume. The major indices gapped up at the open and made the day’s high in the first half-hour of trading. After that, the indies mostly traded down, closing near the lows for the day.

For the week, the major us indices mostly closed lower in mostly higher volume. The markets in Asia and Europe also closed mostly lower. The dollar index was, and so were the energy futures. The metals and soft commodities were mostly down for the week. The  US Treasury Yields closed higher. All but three S&P sectors – Consumer Discretionary, Energy, and Materials – closed down for the week.

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