Morning Notes – Tuesday, January 2, 2024

/ January 2, 2024

Directional Bias for the Day:

  • S&P Futures are lower at 8:45 AM – moving down since 3:30 AM – down more than 45 points to around 4782.00.
  • The odds are a down day – watch for a break above 4796.75 for a change of sentiments.
  • The major economic data reports due during the day:
    • Final Manufacturing PMI (48.4 est.; prev.48.2) at 9:45 AM.
    • Construction Spending (0.6% est.; prev. 0.6%) at 10:00 AM.
  • Weekly: Up
  • Daily: Up
  • 120-Min: Side-Down
  • 30-Min: Side-Down
  • 15-Min: Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for the S&P 500 are 4736.77, 4708.35, and 4697.82.
  • Critical resistance levels for the S&P 500 are 4763.34, 4776.90, and 4792.42.
  • The key levels for E-mini futures are 4796.75, the low at 12:15 PM on December 29, and 4755.50, the low at 12:00 PM on December 21.

Pre-Open

  • On Friday at 4:00 PM, S&P futures (March 2024) closed at 4818.75, and the index closed at 4769.83 – a spread of about +49.00 points; the futures closed at 4820.00; the fair value is -1.25
  • Pre-NYSE session open, futures were lower – at 8:30 AM, S&P 500 futures were down by -40.75, Dow by -232, and NASDAQ by -198.50

Markets Around the World

  • Markets in the East mostly closed mostly lower – Sydney and Seoul closed up; Tokyo was closed.
  • European markets are mostly lower – Spain is higher; Switzerland is closed.
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher.
    • 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 3.969, up +6.8 basis points from two weeks ago.
    • The 30-year is at 4.111%, up +5.7 basis points.
    • The 2-year yield is at 4.558%, down -32.1 basis points.
    • The 10-Year-&-2-Year spread is at -0.285, up from -0.539
    • The 30-Year-&-10-Year spread is at 0.142, up from +0.099
  • VIX
    • At 14.23 @ 8:00 AM; up from the last close; above the 5-day SMA
    • Recent high = 14.49 on December 21; low = 12.38 on December 28; Sentiment: Risk-Off

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

Weekly:
  • The week ending on December 29 was a relatively small green with a larger upper shadow than the lower shadow.
    • Stochastic (9,1, 3): %K crossed below above the %D near 100.
    • RSI-9 is near 75.
  • The week was up +15.20 or +0.3%; the 5-week ATR is 78.31
  • Fifth up week in the last five weeks and nineth in the previous ten weeks
  • The weekly pivot point=4771.71, R1=4791.42, R2=4813.02; S1=4750.11, S2=4730.40; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A red candle with a larger lower shadow than the upper shadow near the year’s high made a few days ago.
  • 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, which made a bearish divergence on December 28.
    • RSI-9 is dipped 70; below 8-day EMA; made a bearish divergence on December 28.
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA – in sequence.
  • Uptrend
2-Hour (E-mini futures)
  • Drifting down since 4:00 AM; broke below a support level and the next support is around 4755.00.
    • RSI-21 has dropped to just above 20. Made bearish divergence at 2:00 AM on December 29
    • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Moving lower since 3:30 AM – down almost 50 points from the high of 4838.00.
    • RSI-21 has declined to just above 20 from above 50.
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 4:00 AM.
  • The Bollinger Band has been expanding since 4:00 AM, with the price walking down the lower bound.
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Friday, December 31, the last day of the year, in higher volume. Most indices are near their all-time highs. The indices started to decline at the open but then bounced off the day’s lows at noon.

For the week, the major indices mostly closed higher in lower volume. The Russell 2000 and the Dow Jones Transportation Average closed lower. The markets in Asia closed up but the European markets were mixed. The dollar index closed down for the week, the energy futures closed lower, the precious metals were mixed, and the industrial metals and the soft commodities mostly closed lower. The US Treasury yields closed down. All but three S&P sectors – Consumer Discretionary, Energy, and Materials – closed higher.

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