Morning Notes – Wednesday, December 6, 2023

/ December 6, 2023

Directional Bias for the Day:

  • S&P Futures are higher at 8:30 AM – broke above a down-sloping flag on the 15-minute chart following the ADP jobs report at 8:15 AM. Up more than ten points from the 7:15 AM low of 4580.00.
  • The odds are an up day – watch for a break below 4580.00 for a change of sentiments.
  • The major economic data reports due during the day:
    • ADP Non-Farm Employment Change (103K vs. 131K est.; prev.106K) at 8:15 AM.
    • Revised Nonfarm Productivity (5.2% vs. 4.8% est.; prev. 4.7%) at 8:30 AM.
    • Revised Unit Labor Costs (-1.2% vs. -0.9% est.; prev. -0.8%) at 8:30 AM.
    • Trade Balance (-64.3B vs. -64.2B est.; prev. 61.2B) at 8:30 AM.
  • Weekly: Up
  • Daily: Up
  • 120-Min: Up-Side
  • 30-Min: Side-Up
  • 15-Min: Side-Up
  • 6-Min: Side-Up

Key Levels:

  • Critical support levels for the S&P 500 are 4578.56, 4556.61, and 4546.72.
  • Critical resistance levels for the S&P 500 are 4585.18, 4596.21, and 4599.39.
  • The key levels for E-mini futures are 4600.00, the high at 12:30 PM on December 1, and 4580.00, the low at 7:15 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2023) closed at 4575.75, and the index closed at 4567.18 – a spread of about +8.50 points; the futures closed at 4575.00; the fair value is +0.75
  • Pre-NYSE session open, futures were higher – at 8:30 AM, S&P 500 futures were up by +18.75, Dow by +70, and NASDAQ by +68.75

Markets Around the World

  • Markets in the East mostly closed up – Shanghai was down.
  • European markets are higher.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • NZD/USD
  • INR/USD
  • EUR/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower.
    • Precious metals are higher.
    • Industrial metals are lower.
    • Soft commodities are mixed.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.171, down -24.7 basis points from two weeks ago.
    • The 30-year is at 4.305%, down -27.5 basis points.
    • The 2-year yield is at 4.558%, down -32.1 basis points.
    • The 10-Year-&-2-Year spread is at -0.387, up from -0.461
    • The 30-Year-&-10-Year spread is at 0.134, down from +0.162
  • VIX
    • At 12.84 @ 8:00 AM; up from the last close; at/below the 5-day SMA
    • Recent high = 15.57 on November 9; low = 12.64 on November 27; Sentiment: Risk-Neutral-On

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 green candle near the low of December 1st’s relatively large green candle, with an upper shadow larger than the 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 is 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; bounced off the lower bound of the channel to its middle.
    • RSI-21 is above 60.
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting up since 7:30 AM on December 5 – up more than 30 points to around 4585.00.
    • RSI-21 has been moving above 55 since 6:00 PM on Tuesday.
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting down since 1:30 AM, making a bullish down-sloping flag.
  • The Bollinger Band has been expanding since 8:15 AM, with the price bouncing off the lower bound at 7:15 AM to above the upper bound by 8:15 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly lower on Tuesday, December 5, in lower volume. NASDAQ Composite closed higher. The indices opened lower and then moved higher in the early hours of trading. Most reached positive territory by mid-day. Most have traded sideways within a narrow for the past two days. NASDAQ Composite has been the leader this week.

All but two S&P sectors – Consumer Discretionary and Technology – closed lower. Crude oil, precious metals, and industrial metals closed down. The soft commodities were mixed. The US Treasury Yields closed down. 

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