Morning Notes – Thursday, February 8, 2024

/ February 8, 2024

Directional Bias for the Day:

  • S&P Futures are lower at 8:45 AM – moving between a 20-point range since 10:30 AM on Wednesday.
  • The odds are for a sideways to an up day – watch for a break above 5020.00 or a break below 5002.50 for clarity.
  • The major economic data report due during the day:
    • Unemployment Claims (218K vs. 221K est.; prev. 227K) at 8:30 AM
    • Final Wholesale Inventories (0.4% est.; prev. 0.4%) at 10:00 AM
  • Weekly: Up
  • Daily: Uptrend
  • 120-Min: Up
  • 30-Min: Up-Side
  • 15-Min: Side-Down
  • 6-Min: Side-Down

Key Levels:

  • Critical support levels for the S&P 500 are 4982.87, 4969.05, and 4957.77.
  • Critical resistance levels for the S&P 500 are 4999.89, 5006.95, and 5018.84.
  • The key levels for E-mini futures are 5020.00, the high at 3:00 PM, and 5002.50, the low at 12:30 PM on Wednesday.

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2024) closed at 5015.50, and the index closed at 4995.06 – a spread of about +20.50 points; the futures closed at 5015.25; the fair value is -0.25.
  • Pre-NYSE session open, futures were lower – at 8:30 AM, the S&P 500 futures were down by -9.50, Dow by -8, and NASDAQ by -35.75.

Markets Around the World

  • Markets in the East closed mixed – Shanghai, Tokyo, Syndey, and Seoul closed up. Hong Kong, Mumbai, and Singapore closed down.
  • European markets are mostly higher – the UK and Switzerland are down.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • NZD/USD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower.
    • Precious metals are mixed.
    • Industrial metals are lower.
    • Soft commodities are mixed.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.110, down -6.8 basis points from two weeks ago.
    • The 30-year is at 4.310%, down -10.3 basis points.
    • The 2-year yield is at 4.445%, up +4.7 basis points.
    • The 10-Year-&-2-Year spread is at -0.335, down from -0.220
    • The 30-Year-&-10-Year spread is at 0.200, down from +0.235
  • VIX
    • At 13.06 @ 8:30 AM; up from the last close; below the 5-day SMA
    • Recent high = 15.40 on December 17; low = 12.41 on January 24; Sentiment: Risk-Off

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

Weekly:
  • The week ending on February 2 was a green candle with small upper and lower shadows closing at the all-time high.
  • Broke above a down-sloping Flag on November 14 – the 100% extension target around 4901.00 is achieved, and the 161.8% extension target is near 5395.00.
    • Stochastic (9,1, 3): %K is below the %D above 90.
    • RSI-9 is around 75.
  • The week was up +67.64 or +1.4%; the 5-week ATR is 103.43.
  • Fourth up week in the last five weeks and ninth in the previous ten weeks
  • The weekly pivot point=4929.35, R1=5007.55, R2=5056.49; S1=4877.41, S2=4796.21; R1/R2/S1 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A green candle that gapped up and closed with almost no upper and lower shadow following a couple of Harami candles.
  • Broke above a Horizontal Channel between 4802.40 and 4682.11 on January 19 – the161.8% extension target is near 4997.00 is achieved.
    • Stochastic (9, 1, 3): %K is above %D.
    • RSI-9 is above 70 after making a Bearish Divergence; above 8-day EMA.
  • Above 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA – in sequence.
  • Uptrend
2-Hour (E-mini futures)
  • Moving up since 4:00 PM on January 31 in an up-down pattern.
  • Broke above a Horizontal Trading Channel between 4841.25 and 4702.00 on January 19 – the 100% extension target near 4981.00 is achieved and the 161.8% extension target is near 5067.00.
    • RSI-21 has declined to below 60 from above 80 at 4:00 PM on Wednesday.
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Drifting sideways to down since 10:30 AM on Wednesday between 5020.00 and 5002.50.
    • RSI-21 has declined to below 50 from near 75.
    • Below EMA20, but above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 3:00 PM on Wednesday.
  • The Bollinger Band has been expanding a bit since 5:30 AM with the price walking down the lower band.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly higher on Wednesday, February 7 in mostly higher volume. Russell 200 closed down and Dow Jones Transportation Average traded in lower volume. The major indices gapped up at the open and then mostly traded higher for the rest of the day. S&P 500, Dow Jones Industrial Average, NASDAQ Composite, NYSE Composite, and Wilshire 5000 Total Market Index closed at all-time highs. All except DJIA made all-time intraday highs.

All but two S&P sectors – Consumer Staples and Real Estate – closed higher. The dollar index was down, and the energy futures and the precious metals were mixed. The industrial metals closed lower, and the soft commodities closed mixed. Bonds fell and the US Treasury Yields closed up.

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