Morning Notes – Tuesday, January 9, 2024

/ January 9, 2024

Directional Bias for the Day:

  • S&P Futures are lower at 8:30 AM – drifting down since 4:00 PM making a down-sloping flag, which is usually bullish if broken to the upside.
  • The odds are for a down day with a good chance of reversal from the pre-open levels – watch for a break above 4790.00 for a change of sentiments.
  • The major economic data reports that are due during the day.
    • NFIB Small Business Index (91.9 vs. 90.7 est.; prev. 90.6) at 6:00 AM
    • Trade Balance (-63.2B vs. -64.9B est.; prev. -64.5B) at 8:30 AM
  • Weekly: Up
  • Daily: Uptrend Resumed
  • 120-Min: Side
  • 30-Min: Up-Side
  • 15-Min: Side-Down
  • 6-Min: Side-Down

Key Levels:

  • Critical support levels for the S&P 500 are 4731.10, 4717.85, and 4711.72.
  • Critical resistance levels for the S&P 500 are 4764.54, 4776.90, and 4793.18.
  • The key levels for E-mini futures are 4790.00, the high at 4:45 AM, and 4771.75, the high at 2:15 PM on January 3.

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2024) closed at 4801.50, and the index closed at 4763.54 – a spread of about +38.00 points; the futures closed at 4801.25; the fair value is +0.25
  • Pre-NYSE session open, futures were lower – at 8:00 AM, S&P 500 futures were down by -20.25, Dow by -159, and NASDAQ by -98.00

Markets Around the World

  • Markets in the East mostly closed higher – Hong Kong closed down.
  • European markets are lower.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • USD/JPY
  • USD/CAD
  • EUR/USD
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed.
    • Precious metals are lower.
    • Industrial metals are lower.
    • Soft commodities are mostly lower.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.002, up +11.6 basis points from two weeks ago.
    • The 30-year is at 4.173%, up +13.0 basis points.
    • The 2-year yield is at 4.383%, up +4.7 basis points.
    • The 10-Year-&-2-Year spread is at -0.381, up from -0.450
    • The 30-Year-&-10-Year spread is at 0.171, up from +0.157
  • VIX
    • At 13.25 @ 8:00 AM; up from the last close; below 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 January 5 was a red candle with almost no upper shadow and a small lower shadow. A Bearish three-week Evening Star pattern has formed.
    • Stochastic (9,1, 3): %K is below the %D.
    • RSI-9 has declined to 65 from above 75.
  • The week was down -72.59 or -1.5%; the 5-week ATR is 83.43
  • First down week in the last five weeks and first in the previous ten weeks
  • The weekly pivot point=4711.23, R1=4740.34, R2=4783.45; S1=4668.12, S2=4639.01; S1/S2/S3 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A large green candle that closed at the year’s high point but still below last year’s close.
  • 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 above below %.
    • RSI-9 turned up just above 60; above 8-day EMA.
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA – in sequence.
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Bounced up back to the middle of a Horizontal Trading Channel after breaking below it on January 4.
    • RSI-21 has declined to below 60 after bouncing up to above 80 on Monday.
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Drifting lower since 4:00 PM on Monday making a down-sloping flag.
    • RSI-21 has declined to 50 from above 75.
    • Below EMA20, but above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting down since 2:45 AM.
  • The Bollinger Band has been contracting since 7:30 AM.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Monday, January 8 in mixed volume. Dow Jones Industrial Average and Dow Jones Transportation Average traded in higher volume. The major indices opened higher and then steadily advanced for the rest of the day.

All but one S&P sector – Energy – closed higher. The dollar index was down, so were the crude oil futures, precious metals, most of the industrial metals, and the soft commodities. Copper bucked the trend and rose. The US Treasury Yields inched down.

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