Morning Notes – Friday, April 5, 2024

/ April 5, 2024

Directional Bias for the Day:

  • S&P Futures have been drifting higher since 8:30 PM forming an upsloping flag within a downtrend – a bearish chart pattern.
  • The odds are for a volatile day with a higher probability of a down day. Watch for the reaction to the Non-Farm Payroll report at 8:30 AM.
  • The major economic data report due during the day:
    • Non-Farm Employment Change (212K est.; prev. 275K) at 8:30 AM.
    • Unemployment Rate (3.9% est.; prev. 3.9%) at 8:30 AM.
    • Average Hourly Earnings (0.3% est.; prev. 0.1%) at 8:30 AM.
  • Weekly: Up
  • Daily: Uptrend
  • 120-Min: Side-Down
  • 30-Min: Down-Side
  • 15-Min: Down-Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for the S&P 500 are 5146.06, 5131.59, and 5113.35.
  • Critical resistance levels for the S&P 500 are 5177.78, 5184.24, and 5198.04.
  • The key levels for E-mini futures are 5240.00, the high at 2:45 PM on Thursday, and 5191.50, the low at 8:30 PM.

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (June 2024) closed at 5197.50, and the index closed at 5147.21 – a spread of about +50.25 points; the futures closed at 5197.25; the fair value is +0.25.
  • Pre-NYSE session open, futures were higher – at 7:45 AM, the S&P 500 futures were up by +20.00, Dow by +98, and NASDAQ by +83.00.

Markets Around the World

  • Markets in the East closed mostly lower – Mumbai closed down; Shanghai was closed.
  • European markets are lower.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/CHF
  • AUD/USD
  • USD/CAD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher.
    • Precious metals are higher.
    • Industrial metals are higher.
    • Soft commodities are mixed.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.309, up +3.8 basis points from two weeks ago.
    • The 30-year is at 4.472%, up +3.0 basis points.
    • The 2-year yield is at 4.658%, up +1.5 basis points.
    • The 10-Year-&-2-Year spread is at -0.349, up from -0.372.
    • The 30-Year-&-10-Year spread is at 0.163, down 0.171.
  • VIX
    • At 16.62 @ 7:30 AM; up from the last close; above the 5-day SMA
    • Recent high = 17.94 on February 13; low = 12.40 on March 21; Sentiment: Risk-Off

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

Weekly:
  • The week ending on March 29 was a green spinning top candle at the all-time highs with small upper and lower shadows.
  • 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 above the %D; near 100.
    • RSI-9 is above 80.
  • The week was up +20.17 or +0.4%; the 5-week ATR is 101.93.
  • Third up week in the last five weeks and seventh in the previous ten weeks
  • The weekly pivot point=5240.87, R1=5278.33, R2=5302.30; S1=5216.90, S2=5179.44; No pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A large Bearish Engulfing candle with almost no lower shadow and a small upper shadow.
  • Moving up within an upsloping channel since late October 2023.
    • Stochastic (9, 1, 3): %K is below the %D after making a Bearish Divergence
    • RSI-9 has declined sharply to 40 after making a coiling pattern since January; below 8-day EMA.
  • Below 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA.
  • Uptrend
2-Hour (E-mini futures)
  • Declining since March 31. Broke below the lower bound of an upsloping Linear Regression channel of one StdDev since early-January.
  • Broke below a Double Top on April 2 and the bounce above did not last. The 100.0% extension target around 5192.00 has been achieved. The 161.8% extension targets is around 5150.00.
    • RSI-21 has bounced up to near 40 from below 20 on Thursday.
    • Below EMA20, which is below EMA10 of EMA50.
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Bouncing up from a low of 5191.50 forming an upsloping flag within a downtrend. A break below 5191.50 will have a 61.8%, 100%, and 161.8% extension targets around 5147.00, 5102.00, and 5030.00 respectively.
    • RSI-21 has been moving between 50 and 60 since 9:30 AM on Wednesday.
    • At/above EMA20, which is below EMA10 of EMA50.
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting sideways to higher since 9:15 PM.
  • The Bollinger Band is narrow and stable.
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Thursday, April 4 in mostly higher volume. Dow Jones Industrial Average traded in lower volume. The major indices gapped up at the open and traded higher until mid-day when they gave up the ghost and sharply declined. S&P 500 gave up more than 100 points. The losses by other indices from their intra-day highs were comparable.

All S&P sectors closed lower. The dollar index closed down, the energy futures and precious metals closed mixed, industrial metals closed higher. and the soft commodities closed mostly higher. The bonds rose and the US Treasury Yields closed down.

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