Morning Notes – Wednesday, January 3, 2024

/ January 3, 2024

Directional Bias for the Day:

  • S&P Futures are lower at 8:00 AM – moving down since 6:00 PM – down more than 20 points to around 4767.00.
  • The odds are a down day – watch for a break above 4780.00 for a change of sentiments.
  • The major economic data reports due during the day:
    • ISM Manufacturing PMI (47.2 est.; prev.46.7) at 10:00 AM.
    • ISM Manufacturing Prices (49.5 est.; prev. 49.9) at 10:00 AM
    • JOLTS Job Openings (8.84M est.; prev. 8.73M) at 10:00 AM.
    • FOMC Meeting Minutes at 2:00 PM
  • Weekly: Up
  • Daily: Uptrend Under Pressure
  • 120-Min: Side-Down
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for the S&P 500 are 4722.67, 4708.35, and 4697.82.
  • Critical resistance levels for the S&P 500 are 4744.14, 4763.58, and 4776.90.
  • The key levels for E-mini futures are 4780.00, the high at 5:30 AM, and 4765.50, the low at 3:00 PM on Tuesday.

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2024) closed at 4788.00, and the index closed at 4742.83 – a spread of about +45.25 points; the futures closed at 4787.25; the fair value is +0.75
  • Pre-NYSE session open, futures were lower – at 7:45 AM, S&P 500 futures were down by -20.00, Dow by -127, and NASDAQ by -109.75

Markets Around the World

  • Markets in the East mostly closed mostly lower – Shanghai closed up; Tokyo was closed for trading.
  • European markets are mostly lower – Switzerland is higher.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • INR/USD
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed.
    • Precious metals are mixed.
    • Industrial metals are mostly lower.
    • Soft commodities are mostly lower.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.946, up +2.4 basis points from two weeks ago.
    • The 30-year is at 4.085%, up +5.0 basis points.
    • The 2-year yield is at 4.332%, down -10.9 basis points.
    • The 10-Year-&-2-Year spread is at -0.386, up from -0.519
    • The 30-Year-&-10-Year spread is at 0.139, up from +0.113
  • VIX
    • At 13.83 @ 7:30 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 long-legged small bodied red candle that gapped down and resembles a Doji.
  • 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 below 60; 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 Under Pressure
2-Hour (E-mini futures)
  • Drifting down since 4:00 AM on Tuesday – at a support level, the lows of Tuesday; the next support is around 4755.00.
    • RSI-21 has is below 25.
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Moving lower since 6:00 PM – down to the lows of Tuesday’s low of 4765.50
    • RSI-21 has drifted to below 30 from near 50.
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 3:15 AM.
  • The Bollinger Band has been expanding since 3:15 AM, with the price walking down the lower bound.
  • Bias: Down

Previous Session

Major U.S. indices closed mostly lower on Tuesday, January 2, the first day of the year, in higher volume. Dow Jones Industrial Average closed higher.

The major indices gapped down at the open a bounce in late morning failed just above the high of earlier trading; however, the indices staged a rally in the final hour of trading and recovered some lost ground.

The Healthcare sector was the leader with a 2.4% gain for the day. The dollar index was up, crude oil declined, gold advanced, copper slipped, and the soft commodities closed mixed. The US Treasury yields inched up to start the year.

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