Morning Notes – Thursday, January 18, 2024

/ January 18, 2024

Directional Bias for the Day:

  • S&P Futures are higher at 8:00 AM – moving up since 11:45 Am – up more than 30 points.
  • The odds are an up day – watch for a break below 4763.50 for a change of sentiments.
  • The major economic data reports due during the day:
    • Unemployment Claims (187K vs. 206K est.; prev.203K) at 8:30 AM.
    • Building Permits (150M vs. 1.47 est.; prev. 1.47M) at 8:30 Am
    • Philly Fed Manufacturing Index (-10.6 vs. -6.6 est.; prev. -10.5) at 8:30 AM
    • Housing Starts (1.46M vs. 1.43M est.; prev. 1.56M) at 8:30 AM.
  • Weekly: Up
  • Daily: Uptrend Under Pressure
  • 120-Min: Side
  • 30-Min: Side
  • 15-Min: Side-Up
  • 6-Min: Side-Up

Key Levels:

  • Critical support levels for the S&P 500 are 4744.04, 4723.19, and 4714.82.
  • Critical resistance levels for the S&P 500 are 4766.50, 4783.08, and 4802.40.
  • The key levels for E-mini futures are 4800.75, the high at 6:45 PM, and 4763.50, the low at 11:45 PM on Wednesday.

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2024) closed at 4771.00, and the index closed at 4739.21 – a spread of about +31.75 points; the futures closed at 4771.25; the fair value is -0.25.
  • Pre-NYSE session open, futures were mixed- at 8:00 AM, S&P 500 futures were up by +20.75, Dow down by -41, and NASDAQ up by +140.00

Markets Around the World

  • Markets in the East mostly closed mixed – Shanghai, Hong Kong, and Seoul closed up; Tokyo, Sydney, Mumbai, and Singapore closed down.
  • European markets are higher.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • EUR/USD
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed.
    • Precious metals are lower.
    • Industrial metals are mostly lower.
    • Soft commodities are mostly lower.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.106, up +19.9 basis points from two weeks ago.
    • The 30-year is at 4.312%, up +25.6 basis points.
    • The 2-year yield is at 4.363%, up +2.2 basis points.
    • The 10-Year-&-2-Year spread is at -0.257, up from -0.434
    • The 30-Year-&-10-Year spread is at 0.206, up from +0.149
  • VIX
    • At 14.32 @ 7:30 AM; down from the last close; above the 5-day SMA
    • Recent high = 15.57 on November 9; low = 12.35 on January 11; Sentiment: Risk-On

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

Weekly:
  • The week ending on January 12 was a green candle closing at the highest level since December 2021.
  • 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 crossed above the %D.
    • RSI-9 has turned up to 70.
  • The week was up +86.59 or +1.8%; the 5-week ATR is 91.91.
  • Fourth up week in the last five weeks and ninth in the previous ten weeks
  • The weekly pivot point=4762.02, R1=4864.21, R2=4864.60; S1=4721.63, S2=4659.44; R1/R2 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A Dragon Fly Doji that gapped down.
    • Stochastic (9, 1, 3): %K is below %D.
    • RSI-9 dipped below 50; below 8-day EMA.
  • At/above 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA – in sequence.
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Drifting lower since 4:00 AM on January 11 from near the upper bound of a Horizontal Trading Channel to its middle.
    • RSI-21 has bounced up above 60 from below 30.
    • Above EMA20, but at/below EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Bouncing up since 1:30 PM on Wednesday within a downtrend since 9:30 AM on January 12 – below a downtrend line.
    • RSI-21 has moved above 65 after making a Bullish Divergence at 1:30 PM on Wednesday.
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 5:30 AM.
  • The Bollinger Band has been expanding since 5:30 AM with the price walking up the upper band.
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Wednesday, January 17 in mostly lower volume. NASDAQ Composite traded in higher volume.

The major indices gapped down at the open and traded lower until the afternoon before recovering some of the loss by the close of the day.

All S&P sectors closed lower. The dollar index was up, so was the crude oil. Mosty other commodities closed lower. The US Treasury yields moved higher.

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