Market Remarks

Morning Notes – Thursday September 10, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with elevated volatility – watch for a break above 3400.00 for change of sentiment
  • Key economic data due:
    • Unemployment Claims ( 884K vs. 838K est.; prev. 881K) at 8:30 AM
    • Core PPI ( 0.4% vs 0.2% est.; prev.0.5%) at 8:30 AM
    • PPI ( 0.3% vs. 0.2% est.; prev. 0.6%) at 8:30 AM
    • ECB Press Conference at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3397.27, 3385.56 and 3366.84
  • Critical resistance levels for S&P 500 are 3424.77, 3451.01, and 3479.15
  • Key levels for E-mini futures: break above 3424.00, the high of 4:00 PM and break below 3400.00, the high of 6:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2020) closed at 3396.50 and the index closed at 3398.96 – a spread of about -1.50 points; futures closed at 3400.25 for the day; the fair value is -3.75
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +10.50; Dow by +51, and NASDAQ by +103.50

Markets Around The World

  • Markets in the East closed mixed – Tokyo, Sydney, Mumbai, and Seoul closed up; Shanghai, Hong Kong, and Singapore closed lower
  • European markets are mixed – Germany, U.K., and Itlay are higher; France, Spain, Switzerland, and STOXX-600 are lower;
  • Currencies:
    Up Down
    • EUR/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Coffee
    • Cotton
    • Cocoa
    • Crude Oil
    • NatGas
    • Copper
    • Sugar
  • Bond
    • 10-years yield is at 0.713%, up from September 9 close of 0.703%;
    • 30-years is at 1.477% up from 1.458%
    • 2-years yield is at 0.141% down from 0.129%
    • The 10-Year-&-2-Year spread is at 0.572 down  from 0.574
  • VIX
    • Is at 29.43; up +0.62 from September 9 close; below 5-day SMA;
    • Recent high =  37.12 on June 14; low =  20.28 on August 11
    • Sentiment: Risk-Neutral to On

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 September 4 was a relatively large red spinning top candle with upper and lower shadows almost equal to the real body
    • Stochastic (9,1, 3): %K is below %D; near 65
    • RSI (9) declined to near 66 from above 75
  • The week was down -81.05 or -2.3%; the 5-week ATR is 107.74
  • The weekly week pivot point=3454.90, R1=3560.17, R2=3693.38; S1=3321.69, S2=3216.42; R1/R2/S1/S2 pivot levels were breached
  • A down week; fifth in the last five weeks and eight in last ten weeks
  • Made an all-time intraday high; 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 opened higher with almost no lower shadow and upper shadow two-third of the real body; declined from high in the last half hour of trading; at a minor resistance level
    • %K is crossing above %D from near zero
    • RSI-9 turning up from near 30 to near 45; below 8-day RSI
  • Below 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Rising from a low of 3295.50 at 6:00 PM on September 8; sideways move since 10:00 Am at September 9 between 3380.00 and 3424.00
    • RSI-21 making a down-sloping flag since 12:00 PM on Wednesday in zigzag from above 65 to below 50
  • ABove EMA20, at/below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Breaking above a down-sloping flag since 1:00 PM on Wednesday from a high of 3424.00 to a low of 3380.00; pole is 128.50 points from a low of 3295.50 – 61.8% extension target is near 3459.50 and 100% extension target is near 3508,5
    • RSI-21 breaking above a down-sloping flag
    • %K is above %D above 80 after making a knee at 7:00 AM
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) sideways to down since 3:30 PM
  • The Bollinger Band is expanding since 8:30 AM with price walking up the upper band
    • Stochastic (9, 1, 3): %K is above %D above 90
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Wednesday, September 9 in lower volume after three days’ decline. All S&P sectors closed higher.

From Briefing.com:

The S&P 500 rebounded 2.0% on Wednesday amid gains across all 11 of its sectors, although the market did lose some steam into the close. The Nasdaq Composite rose 2.7% amid strength in technology stocks, while the Dow Jones Industrial Average (+1.6%) and Russell 2000 (+1.5%) underperformed.

Eight sectors advanced more than 1.0%, but the 3.4% gain in the information technology sector was the most influential given its top-weighted position in the S&P 500. Note, it was also the sector that led the market lower yesterday.

The materials (+2.6%) and consumer discretionary (+2.3%) sectors also outpaced the benchmark index, while the energy sector (+0.6%) was today’s laggard despite a 3.5% gain in oil prices ($38.05/bbl, +$1.29).

[…]

U.S. Treasuries ended the session mixed. The 2-yr yield declined one basis point to 0.13%, while the 10-yr yield increased two basis points to 0.70%. The U.S. Dollar Index declined 0.2% to 93.24.

[…]
  • July job openings increased to 6.618 mln from a revised 6.001 mln in June (from 5.889 mln).
  • The weekly MBA Mortgage Applications Index increased 2.9% following a 2.0% decline in the prior week.
[…]
  • Nasdaq Composite +24.2% YTD
  • S&P 500 +5.2% YTD
  • Dow Jones Industrial Average -2.1% YTD
  • Russell 2000 -8.5% YTD

..NYSE Adv/Dec 2188/768. ..NASDAQ Adv/Dec 2258/1058.
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