Morning Notes – Wednesday, October 18, 2023

/ October 18, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM; broke below a symmetrical triangle at 6:15 AM – the 100% extension target is near 4369.00, and the 161.8% extension target is near 4359.00
  • The odds are for a down day with elevated volatility – watch for breaks above 4397.25 for a change of sentiments
  • The major economic data reports due during the day:
    • Building Permits ( 1.47M vs. 1.45M est.; prev. 1.54M) at 8:30 AM
    • Housing Starts (1.36M vs. 1.39M est.; prev. 1.27M) at 8:30 AM
    • Beige Book at 2:00 AM
  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend Under Pressure
  • 120-Min: Up-Side
  • 30-Min: Side
  • 15-Min: Side-Down
  • 6-Min: Down-Side

Key Levels:

  • Critical support levels for the S&P 500 are 4355.61, 4337.54, and 4311.97
  • Critical resistance levels for the S&P 500 are 4373.30, 4393.57, and 4401.38
  • The key levels for E-mini futures are 4397.25, the high at 5:15 AM, and 4378.50, the low at 6:45 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2023) closed at 4402.50, and the index closed at 4373.20 – a spread of about +29.25 points; the futures closed at 4401.75; the fair value is +0.75
  • Pre-NYSE session open, futures were lower – at 8:15 AM, S&P 500 futures were down by -14.25, Dow by -49, and NASDAQ by -75.00

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai, and Singapore closed down; Tokyo, Sydney, and Seoul closed up
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • AUD/USD
  • INR/USD
  • Dollar index
  • USD/CHF
  • NZD/USD
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • 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 4.847, up +4.5 basis points from two weeks ago;
    • The 30-year is at 4.950%, up +1.3 basis points
    • The 2-year yield is at 5.208%, up +2.4 basis points;
    • The 10-Year-&-2-Year spread is at -0.361, up from -0.382
    • The 30-Year-&-10-Year spread is at 0.103, up from +0.135
  • VIX
    • At 18.27 @ 8:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 20.78 on October 13; low = 15.44 on October 12; Sentiment: Risk-Off

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

Weekly:
  • The week ending on October 13 was a relatively small green candle with small lower and upper shadows. The index is just above a support level, which briefly acted as a resistance level
    • Stochastic (9,1, 3): %K is above the %D;
    • RSI-9 is near 50
  • The week was up +19.28 or +0.4%; the 5-week ATR  is 101.50
  • Second up week in the last five weeks and fourth in the previous ten weeks;
  • The weekly pivot point=4332.47, R1=4381.16, R2=4434.53; S1=4279.10, S2=4230.41; R1 pivot level was breached
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • Another green candle with almost the same open and close as the previous day’s candle. A horizontal trading range has been forming since October 9 between 4385.00 and 4329.00, though it was broken to the upside on Tuesday.
  • At a resistance level created by the 50-day EMA, the high of October 12, and the gap created on September 21
  • 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 is above the %D
    • RSI-9 is above 50, above 8-DMA;
  • Above 20-day EMA; at/below 50-day EMA; below 100-day SMA; above 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moved above a resistance level around 4370.00 on October 10, breaking the sequence of lower highs and lower lows since September 15, staying just above that level, with a slight up bias since October 13
    • RSI-21 has turned down to below 50
    • At/below EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sidewyas between 4422.75 and 4378.50 since 9:30 AM on October 16
    • RSI-21 has been moving around 45
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 2:45 AM.
  • The Bollinger Band has been expanding since 5:15 AM – the price first walked down the lower band and then bounced up to the middle band.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly higher on Tuesday, October 17, in mostly higher volume.  The S&P 500 and NASDAQ Composite closed lower. The S&P 500 traded in lower volume.

The major indices gapped down at the open but turned around and moved above the past few days’ highs by Noon before giving up some of the gains and then moving sidewyas for the rest of the day.

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