Morning Notes – Friday, October 20, 2023

/ October 20, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM – moving within a widening pattern after declining sharply on Thursday
  • The odds are for a sideways to a down day with elevated volatility – watch for breaks below 4299.50 and 4304.25 for a change of sentiments
  • No major economic data reports are due during the day:
  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend Under Pressure
  • 120-Min: Side-Down
  • 30-Min: Down-Side
  • 15-Min: Down-Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for the S&P 500 are 4256.23, 4245.58, and 4234.33
  • Critical resistance levels for the S&P 500 are 4285.61, 4302.23, and 4311.66
  • The key levels for E-mini futures are 4299.50, the high at 7:45 AM and 4282.00, the low at 8:15 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2023) closed at 4301.50, and the index closed at 4278.00 – a spread of about +23.50 points; the futures closed at 4303.00; the fair value is -1.50
  • Pre-NYSE session open, futures were lower – at 8:45 AM, S&P 500 futures were down by -16.00, Dow by -108, and NASDAQ by -67.00

Markets Around The World

  • Markets in the East closed lower
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • USD/JPY
  • USD/CAD
  • Dollar index
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • INR/USD
  • 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 4.984, up +26.7 basis points from two weeks ago;
    • The 30-year is at 5.139%, up +25.3 basis points
    • The 2-year yield is at 5.166%, up +14.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.182, up from -0.300
    • The 30-Year-&-10-Year spread is at 0.156, down from +0.169
  • VIX
    • At 21.00 @ 7:45 AM; down from the last close; above the 5-day SMA;
    • Recent high = 25.21 on March 24; 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 relatively large red candle; broke below a horizontal trading range since October 9 between 4385.00 and 4311.00 – the 61.8% extension target is near 4266.00, and the 100% extension target is near 4238.00
    • Stochastic (9, 1, 3): %K is below the %D
    • RSI-9 is below 40, below 8-DMA;
  • Below 20-day EMA, 50-day EMA, and 100-day SMA; above 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Broke below a support level around 4370.00, which was a resistance level until October 9
    • RSI-21 is around 20
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Trending down since 12:00 Pm on October 17
    • RSI-21 has bounced up to near 40 from 30
    • Below EMA20, and 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 9:15 PM.
  • The Bollinger Band is a little expanded, with the price near the lower band.
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Thursday, October 19, in mostly higher volume. The Dow Jones Transportation Average traded in lower volume.

The major indices opened flat and moved higher until the afternoon when they turned down and traded lower until the close. Most market indices broke below a 5-6 days’ congestion area after turning down from a resistance level at the down gap made on September 21.

All S&P sectors closed lower. The dollar index was down; crude oil, gold, copper, and most of the soft commodities were also up.

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