Market Remarks

Morning Notes – Wednesday August 11, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed before 8:30 AM CPI report release;
  • The odds are for an up to sideways day  — watch for a break below 4416.50 for a change of sentiments
  • Key economic data report due during the day:
    • CPI ( 0.5% vs. 0.5% est.; prev. 0.9%) at 8:30 AM
    • Core CPI (0.3% vs. 0.4% est.; prev. 0.9%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4430.03, 4424.74, and 4415.97
  • Critical resistance levels for S&P 500 are 4443.76, 4452.51, and 4459.81
  • Key levels for E-mini futures: break above 4429.50, the high of 3:00 AM and break below 4416.50, the low of 10:00 PM on August 9

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2021) closed at 4430.25 and the index closed at 4436.75 – a spread of about -6.50 points; futures closed at 4430.00 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are mixed – at 8:15 AM, S&P 500 futures were down by -4.00; Dow up by +6; and NASDAQ down by -21.25

Markets Around The World

  • Markets in the East closed mixed –  Shanghai, Hong Kong, Tokyo, Sydney closed higher; Mumbai, Seoul, and Singapore closed lower;
  • European markets are mostly higher – Germany is lower;
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/CHF
    • NZD/USD
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.342%, up +10.8 basis points from two weeks ago;
    • 30-years is at 1.984%, up +9.5 basis points;
    • 2-years yield is at 0.241%, up +3.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.101, up from 1.027
  • VIX
    • At 16.92 @ 7:45 AM; up from the last close; above 5-day SMA;
    • Recent high =  25.09 on July 19; low =  16.33 on July 23
    • Sentiment: Risk-Off-Neutral

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

Monthly
  • Confirmed Uptrend
  • May 2021 was a Doji with a small upper shadow and a long lower shadow; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 80; broke above a downtrend line from January 2018
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows
Weekly:
  • The week ending on August 6 was a relatively small green candle with almost no upper shadow and a small lower shadow at all-time highs;
    • Stochastic (9,1, 3): %K crossed above %D; just above 90
    • RSI (9) is above 70
  • The week was up +41.26 or +0.9%; the 5-week ATR is 92.14
  • An up week; third in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4416.78, R1=4460.56, R2=4484.60; S1=4392.74, S2=4348.96; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small Doji candle at all-time-highs;
    • %K is below %D; near 90
    • RSI-9 is just above 60; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving along the upper bound of a Horizontal Channel that has been forming since July 23 between 4420.00 and 4380.00;
    • RSI-21 rising from below 40 to 50
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving sideways since 7:30 AM on August 6;
    • RSI-21 declining since 10:00 AM on August 10 from near 70 to 50
    • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting lower 2:30 PM on Tuesday
  • The Bollinger Band is relatively narrow and stable;
    • Stochastic (9, 1, 3): %K is below %D since 6:45 AM
  • Bias: Side

Previous Session

Major U.S. indices closed mostly higher on Tuesday, August 10 in higher volume.  NASDAQ Composite closed lower. The day’s price range was narrow. Major indices opened up then declined and then rose again in the afternoon session. S&P 500, DOw Jones Industrial Average, NYSE Composite, and Wilshire 5000 Total Market Index made all-time closing and intraday highs.

From Briefing.com:

The S&P 500 (+0.1%) and Dow Jones Industrial Average (+0.5%) set intraday and closing record highs on Tuesday, as value/cyclical stocks outperformed at the expense of the growth stocks. The Russell 2000 increased 0.2%, while the Nasdaq Composite (-0.5%) was dragged lower by its technology components. […]

The S&P 500 energy (+1.7%), materials (+1.5%), industrials (+1.0%), and financials (+1.0%) sectors finished with gains of at least 1.0%. Conversely, the information technology sector (-0.7%) — the market’s most heavily-weighted sector — declined 0.7% and was joined by the real estate (-1.1%) and health care (-0.2%) sectors in the red.

[…]

Specifying the moves in the Treasury market, the 2-yr yield increased three basis points to 0.23%, and the 10-yr yield increased three basis points to 1.34%. The U.S. Dollar Index increased 0.1% to 93.07 and closed at its highest level since March.

[…]
  • Productivity was up a weaker than expected 2.3% in the second quarter (Briefing.com consensus 3.4%) and unit labor costs increased a lower than expected 1.0% (Briefing.com consensus 1.1%). That followed a downward revision to Q1 productivity to 4.3% (from 5.4%) and unit labor costs to -2.8% (from 1.7%).
  • […]
  • The NFIB Small Business Optimism Index for July decreased to 99.7 from 102.5 in June.
[…]
  • S&P 500 +18.1% YTD
  • Dow Jones Industrial Average +15.2% YTD
  • Nasdaq Composite +14.7% YTD
  • Russell 2000 +13.4% YTD

Overseas: 

  • Europe: DAX +0.2%, FTSE +0.4%,CAC +0.1%
  • Asia: Nikkei +0.2%, Hang Seng +1.2%, Shanghai +1.0%

Commodities: 

  • Crude Oil +1.92 @ 68.43
  • Nat Gas +0.05 @ 4.11
  • Gold +3.80 @ 1731.70
  • Silver +0.02 @ 23.36
  • Copper +0.06 @ 4.35
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