Morning Notes – Friday, January 19, 2024

/ January 19, 2024

Directional Bias for the Day:

  • S&P Futures are higher at 9:00 AM – moved up more than 20 points since 2:15 AM from a sideway move to all-time highs; retraced ten points from the high at 8:15 AM.
  • The odds are an up day – watch for a break below 4823.75 and a break below 4809.25 for a change of sentiments.
  • The major economic data reports due during the day:
    • Prelim UoM Consumer Sentiment (69.8 est.; prev. 69.7) at 10:00 AM.
    • Prelim UoM Inflation Expectations (prev. 3.1%) at 10:00 AM.
    • Existing Home Sales (3.83M est.; prev. 3.82M) at 10:00 AM.
  • Weekly: Up
  • Daily: Uptrend Under Pressure
  • 120-Min: Side-Up
  • 30-Min: Up
  • 15-Min: Up
  • 6-Min: Up-Side

Key Levels:

  • Critical support levels for the S&P 500 are 4785.79, 4766.10, and 4740.57.
  • Critical resistance levels for the S&P 500 are 4802.40, 4818.62, and 4842.85.
  • The key levels for E-mini futures are 4841.25, the high at 8:15 AM, and 4823.75, the low at 4:45 AM.

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (March 2024) closed at 4811.00, and the index closed at 4780.94 – a spread of about +30.00 points; the futures closed at 4811.25; the fair value is -0.25.
  • Pre-NYSE session open, futures were higher – at 8:45 AM, S&P 500 futures were up by +21.75, Dow by +190, and NASDAQ by +118.75

Markets Around the World

  • Markets in the East mostly closed mostly higher – Shanghai and Hong Kong closed down.
  • European markets are mixed – Germany, the UK, and Italy 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 mixed.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.151, up +16.0 basis points from two weeks ago.
    • The 30-year is at 4.367%, up +23.0 basis points.
    • The 2-year yield is at 4.355%, down -2.8 basis points.
    • The 10-Year-&-2-Year spread is at -0.204, up from -0.392
    • The 30-Year-&-10-Year spread is at 0.216, up from +0.146
  • VIX
    • At 13.62 @ 8:15 AM; down from the last close; below the 5-day SMA
    • Recent high = 15.40 on December 17; 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 green candle with a small upper shadow and a lower shadow equal to the real body. Closed above previous day’s Dragon Fly Doji indicating the bullish sentiments of the market.
  • The index has been trading within a Horizontal Channel between 4802.40 and 4682.11 since December 14, 2023 – a break above will have the 61.8% extension target near 4876.00, the 100% extension target near 4922.00, and the 161.8% extension target near 4997.00.
    • Stochastic (9, 1, 3): %K crossed above %D.
    • RSI-9 moved to just below 60; below 8-day EMA.
  • 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 higher since 12:00 PM on January 17 from near the middle of a Horizontal Trading Channel to its top – a break above will have the 61.8% extension target near 4927.00, the 100% extension target near 4981.00, and the 161.8% extension target near 5067.00.
    • RSI-21 has bounced up above 80 from below 30.
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Trending up since 1:30 PM on Wednesday – up almost 100 points.
    • RSI-21 has been moving above 65.
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 2:15 AM.
  • The Bollinger Band has been contracting since 8:00 AM with the price declining from the upper band to the middle band.
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Thursday, January 18 in higher volume. The major indices gapped up at the open and then a brief retracement traded higher in the afternoon and closed near the highs for the day.

The S&P sectors closed mixed – Consumer Staples, Energy, Utilities, Healthcare, and Real Estate closed lower and others closed higher. The dollar index closed up, and the commodities closed up too with the exception of NatGas. The US Treasury yields moved higher.

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