Morning Notes – Tuesday, December 5, 2023

/ December 5, 2023

Directional Bias for the Day:

  • S&P Futures are lower at 8:30 AM – near moving within a trading range between 4569.00 and 45500. since 1:00 AM – near the upper bound of the range
  • The odds are for a down day with a good chance of a sideways to an up move from the pre-open levels – watch for a break above 4569.25 or a break below 4555.75 for clarity.
  • The major economic data reports due during the day:
    • Final Service PMI (50.8 est.; prev.50.8) at 9:45 AM.
    • ISM Services PMI (52.1 est.; prev. 51.8) at 10:00 AM.
    • JOLTS Job Openings (9.31M est.; prev. 9.55M) at 10:00 AM.
  • Weekly: Up
  • Daily: Up
  • 120-Min: Up-Side
  • 30-Min: Down
  • 15-Min: Down-Side
  • 6-Min: Down-Side

Key Levels:

  • Critical support levels for the S&P 500 are 4557.90, 4546.72, and 4537.24.
  • Critical resistance levels for the S&P 500 are 4572.37, 4585.18, and 4596.21.
  • The key levels for E-mini futures are 4569.25, the high at 4:15 AM and 4555.75, the low at 7:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2023) closed at 4576.75, and the index closed at 4569.78 – a spread of about +7.00 points; the futures closed at 4576.50; the fair value is +0.25
  • Pre-NYSE session open, futures were lower – at 8:15 AM, S&P 500 futures were down by -14.00, Dow by -100, and NASDAQ by -73.75

Markets Around the World

  • Markets in the East mostly closed down – Mumbai was up.
  • European markets are mostly higher – the UK is lower.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • INR/USD
  • EUR/USD
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower.
    • Precious metals are higher.
    • Industrial metals are mostly lower.
    • Soft commodities are mixed.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.288, down -13.4 basis points from two weeks ago.
    • The 30-year is at 4.438%, down -13.7 basis points.
    • The 2-year yield is at 4.650%, down -25.0 basis points.
    • The 10-Year-&-2-Year spread is at -0.362, up from -0.478
    • The 30-Year-&-10-Year spread is at 0.150, down from +0.153
  • VIX
    • At 13.37 @ 7:47 AM; up from the last close; above the 5-day SMA
    • Recent high = 15.57 on November 9; low = 12.64 on November 27; Sentiment: Risk-Off

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

Weekly:
  • The week ending on December 1 was a green candle, closing at the highest level in the 2023, with small upper and lower shadows.
    • Stochastic (9,1, 3): %K is above the %D and near 100
    • RSI-9 is above 60.
  • The week was up +35.29 or +0.8%; the 5-week ATR is 115.58
  • Fifth up week in the last five weeks and seventh in the previous ten weeks
  • The weekly pivot point=4577.09, R1=4616.93, R2=4639.24; S1=4554.78, S2=4514.94; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A small red candle near the low of previous day’s green candle. with almost no upper shadow and a small lower shadow. Just above a support level, 4541.25 – the high of September 2023, which was a resistance before it was broken to the upside.
  • Broke above a down-sloping Flag on November 14 – the 61.8% extension target 4597.07 is achieved, the 100% extension target is around 4901.99, and the 161.8% extension target is near 5395.00.
    • Stochastic (9, 1, 3): %K is below %D.
    • RSI-9 has declined to below 70; below 8-day EMA.
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA – in sequence.
  • Uptrend
2-Hour (E-mini futures)
  • Drifting up since 10:00 AM on November 14, within a narrow upsloping channel; near the lower bound of the channel.
    • RSI-21 has been moving just above 30 since 6:00 AM on Monday.
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting down since 12:30 PM on December 1. Declined almost 50 points to the low of November 30.
    • RSI-21 is just above 40 after making a Bullish Divergence at 7:00 AM
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting down since 4:15 PM on Monday.
  • The Bollinger Band has expanded since 2:45 AM. Price has bounced up to the middle band from the lower band.
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mostly lower on Monday, December 4, in mixed volume. Russell 2000 and Dow Jones Transportation Average closed higher. S&P 500 and Russell 2000 traded in lower volume.

Major US indices gapped down at the open and traded lower for the first hour of trading. Then they turned around and mostly drifted higher. Only four S&P sectors – Consumer Staples, Industrials, Healthcare and Real Estate – closed higher. Crude oil, precious metals, and industrial metals closed down. Most soft commodities also closed down. The US Treasury Yields closed up. The overall market sentiment was risk-off.

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