Market Remarks

Morning Notes – Wednesday September 2, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with a good chance of sideways to down move from pre-open levels around 3550.00 – watch for a break above 3556.25 and break below 3532.00 for clarity
  • Key economic data due:
    • ADP Non-Farm Employment Change ( 428K vs. 1250K est. ; prev. 212K) at 8:15 AM
    • Factory Orders ( 6.0% est.; prev.6.2%) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Up
  • 30-Min: Up
  • 15-Min: Up
  • 6-Min: Up-Side

Key Levels:

  • Critical support levels for S&P 500 are 3528.03, 3516.44, and 3506.26
  • Critical resistance levels for S&P 500 are 3549.86, 3560, and 3571.68
  • Key levels for E-mini futures: break above 3556.25, the high of 6:00 AM and break below 3532.00, the low of 9:00 PM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2020) closed at 3535.00 and the index closed at 3526.65 – a spread of about -1.75 points; futures closed at 3537.00 for the day; the fair value is -2.00
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +10.00; Dow down by +108 and NASDAQ up by +84.00

Markets Around The World

  • Markets in East closed mostly higher – Shanghai and Hong Kong closed down
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.679%, up from September 1 close of 0.672%;
    • 30-years is at 1.430% up from 1.425%
    • 2-years yield is at 0.133% up from 0.125%
    • The 10-Year-&-2-Year spread is at 0.546 down  from 0.547
  • VIX
    • Is at 25.95; down -0.17 from September 1 close; above 5-day SMA;
    • Recent high 33.67 on July 14; low 20.28 on August 11
    • Sentiment: Risk-Neutral

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

Monthly
  • Uptrend Resumed
  • August 2020 was a green candle with almost small upper shadow and almost no lower shadow;
    • Stochastic %K is above %D and above 90; %K Bearish Divergence in January
    • RSI-9 rising near 70; breaking above a downtrend line from January 2018 high
    • Rising above the upper band of the 120-month regression channel for the first time after February 2020; broke below the lower channel in march 2020
  • The sequence of higher highs and higher lows is resumed
Weekly:
  • The week ending on August 28 was a relatively large green candle with almost no upper and lower shadows
    • Stochastic (9,1, 3): %K crisscrossing %D; above 90
    • RSI (9) is rising above 75
  • The week was up +110.85 or +3.3%; the 5-week ATR is 73.65
  • The weekly week pivot point=3476.79, R1=3540.45, R2=3572.89; S1=3444.35, S2=3380.69; R1/R2/R3 pivot levels were breached
  • An up week; fifth in last five weeks and eight in last ten weeks
  • Made all-time closing and intraday highs; last swing low 2965.66 made during the week of June 15
  • Above 10-week EMA, 39-week SMA and 89-week SMA
  • Uptrend since March 23
Daily
  • A green candle that is breaking above the recent sideways move;
    • %K is crisscrossing %D; above 90
    • RSI-9 is turning up; above 80; above 8-day RSI
  • Above 20-day EMA; above 200-day SMA, above 50-day EMA; above 100-day
  • Uptrend
2-Hour (E-mini futures)
  • Moving up after brief dip on August 31; all-time high at 6:00 AM
    • RSI-21 turned down from above 80
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving up after a brief sideways move on Monday
    • RSI-21 turning down from above 75
    • %K is below %D
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving up since 9:15 PM on Sunday
  • The Bollinger Band narrowing since 7:00 AM; price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D lower
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Tuesday, September 1 in mixed volume. NASDAQ Composite and Dow Jones Transportation Average traded in higher volume. NASDAQ Composite also made an all-time closing high. S&P 500 and Wilshire 5000 Total Market Index made all-time closing and intraday highs.

From Briefing.com:

The S&P 500 (+0.8%) and Nasdaq Composite (+1.4%) rallied to fresh record highs on Tuesday, with the Nasdaq getting an added boost from the momentum in the mega-caps and growth stocks. The wealth spread around to the Russell 2000 (+1.1%) and Dow Jones Industrial Average (+0.8%), too. […]

The manufacturing data helped lift the S&P 500 materials (+2.8%) and industrials (+1.0%) sectors into positive territory with the information technology (+1.9%), communication services (+1.0%), and consumer discretionary (+1.1%) sectors. Each advanced at least 1.0%.

Conversely, the utilities (-1.1%), health care (-1.0%), and energy (-0.9%) sectors underperformed and declined around 1.0%.

[…]

U.S. Treasuries ended the day higher after reclaiming overnight losses. The 2-yr yield declined two basis points to 0.11%, and the 10-yr yield declined two basis points to 0.67%. The U.S. Dollar Index increased 0.2% to 92.34 after being down 0.4% in the morning. WTI crude futures increased 0.3%, or $0.14, to $42.76/bbl.

[…]
  • The ISM Manufacturing Index for August increased to 56.0% (Briefing.com consensus 54.5%) from 54.2% in July. The dividing line between expansion and contraction is 50.0%. The August reading is the highest level for the index since January 2019.
    • The key takeaway from the report is that it is a reflection of an encouraging rebound in manufacturing activity following the sharp contraction seen in April and May.
  • Total construction spending increased 0.1% m/m in July (Briefing.com consensus +1.0%) on the heels of an upwardly revised 0.5% decline (from -0.7%) in June. Total private construction spending rose 0.6% and total public construction spending fell 1.3%.
[…]
  • Nasdaq Composite +33.1% YTD
  • S&P 500 +9.2% YTD
  • Dow Jones Industrial Average +0.4% YTD
  • Russell 2000 -5.4% YTD

..NYSE Adv/Dec 1875/1085. ..NASDAQ Adv/Dec 1790/1534.
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