Morning Notes – Monday, October 23, 2023

/ October 23, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM – bounced up 15 points since 6:00 AM in a downtrend
  • The odds are for a down day with elevated volatility and with a good chance of a bounce from the pre-open levels around 4230.00  – watch for breaks above 4247.25 for a change of sentiments
  • No major economic data reports are due during the day:
  • Weekly: In Correction
  • Daily: In Correction
  • 120-Min: Down
  • 30-Min: Down
  • 15-Min: Down-Side
  • 6-Min: Down-Side

Key Levels:

  • Critical support levels for the S&P 500 are 4212.05, 4192.18, and 4171.64
  • Critical resistance levels for the S&P 500 are 4223.03, 4244.32, and 4258.67
  • The key levels for E-mini futures are 4247.25, the high at 4:15 AM and 4215.25, the low at 5:45 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (December 2023) closed at 4248.50, and the index closed at 4224.16 – a spread of about +24.25 points; the futures closed at 4248.50; the fair value is 0.0
  • Pre-NYSE session open, futures were lower – at 8:45 AM, S&P 500 futures were down by -13.00, Dow by -130, and NASDAQ by -48.00

Markets Around The World

  • Markets in the East closed lower – Hong Kong was closed
  • European markets are mostly lower – France and Italy are up
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • EUR/USD
  • USD/JPY
  • USD/CAD
  • INR/USD
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.969, up +18.5 basis points from two weeks ago;
    • The 30-year is at 5.123%, up +18.2 basis points
    • The 2-year yield is at 5.110%, up +3.0 basis points;
    • The 10-Year-&-2-Year spread is at -0.141, up from -0.296
    • The 30-Year-&-10-Year spread is at 0.154, down from +0.157
  • VIX
    • At 22.38 @ 8:00 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 20 was a relatively large Bearish Engulfing candle with almost no lower shadow and an upper shadow one-third the size of the real body. The index is breaking below an uptrend line from the October 2022 low.
    • Stochastic (9,1, 3): %K crossed below the %D;
    • RSI-9 has declined below 40
  • The week was down -103.62 or 2.4%; the 5-week ATR  is 126.00
  • Third down week in the last five weeks and sixth in the previous ten weeks;
  • The weekly pivot point=4280.25, R1=4337.48, R2=4450.79; S1=4166.94, S2=4109.71; R1/S1/S2 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • Another relatively large red candle separating from the previous red candle; at a support level – the low October 3; broke below a horizontal trading range since October 9 between 4385.00 and 4311.00 – the 100% extension target near 4238.00 is achieved, and the 161.8% extension target is near 4192.43
    • Stochastic (9, 1, 3): %K is below the %D, near zero
    • RSI-9 is near 30 and below 8-DMA;
  • Below 20-day EMA, 50-day EMA, and 100-day SMA; at/below 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Broke below a support level around 4235.00, which was the low reached on October 4;
    • RSI-21 has bounced up above 30 from below 20, and after making Bullish Divergence
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Trending down since 12:00 PM on October 17
    • RSI-21 has bounced up to near 40 from below 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 down since 3:15 AM.
  • The Bollinger Band is contracting, with the price rebounding from the lower band to the middle band.
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mostly lower on Friday, October 20, in mostly higher volume. The Dow Jones Transportation Average closed higher in lower volume.

The major indices opened lower and traded down for the day with a brief bounce in the afternoon, which did not last, and the indices closed near the lows for the day. All S&P sectors closed down.

For the week, the major US indices closed down in higher volumes. The markets in Asia and Europe also closed lower. The dollar index was up, the crude oil was down, precious metals were up, copper was down, and most of the soft commodities were mixed. The US Treasury Yields closed up. All but two S&P sectors – Consumer Staples and Energy – closed lower for the week.

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