Market Remarks

Morning Notes – Tuesday August 24, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher but declining since 2:45 AM;
  • The odds are for a sideways to down day — watch for a break above 4485.25 for a change of sentiments
  • Key economic data report due during the day:
    • New Home Sales (698K est.; prev. 676K) at 10:00 AM
    • Richmond Manufacturing Index ( 25 est.; prev. 27) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4478.67, 44465.95, and 4450.29
  • Critical resistance levels for S&P 500 are 4489.88, 4496.18, and 4512.82
  • Key levels for E-mini futures: break above 4485.25, the high of 6:45 AM and break below 4475.00, the low of 3:45 PM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2021) closed at 4475.00 and the index closed at 4479.53 – a spread of about -4.50 points; futures closed at 4475.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +6.75; Dow by +58; and NASDAQ by +29.75

Markets Around The World

  • Markets in the East closed higher;
  • European markets are mostly lower – Germany is higher;
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • EUR/USD
    • USD/CAD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.255%, down -6.2 basis points from two weeks ago;
    • 30-years is at 1.872%, down -9.1 basis points;
    • 2-years yield is at 0.222%, down -0.2 basis points;
    • The 10-Year-&-2-Year spread is at 1.033, up from 1.093
  • VIX
    • At 17.24 @ 7:00 AM; up from the last close; below 5-day SMA;
    • Recent high =  24.74 on August 19; low =  15.19 on August 13
    • Sentiment: Risk-On-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 20 was a relatively small red candle with long upper shadow and small upper shadow with an all-time intraday high;
    • Stochastic (9,1, 3): %K crossed below %D; from above 90
    • RSI (9) is near 70
  • The week was down -26.33 or -0.6%; the 5-week ATR is 92.70
  • A down week; second in the last five weeks, and fourth in the last ten weeks
  • The weekly pivot point=4429.89, R1=4492.04, R2=4542.42; S1=4379.51, S2=4317.36; S1/S2/S3 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green candle that gapped up with no lower shadow and small upper shadow;
    • %K crossed above %D; above 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 up since 4:00 AM on August 19 from the lower bound of a Horizontal Channel that was broken earlier to the upside; broke above the previous all-time high on Monday;
    • RSI-21 has declined from above 80 and after making a Bearish Divergence at 2:00 AM
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Drifting sideways to down since 2:30 AM from 4492.00 to near 4480.00
    • RSI-21 moved below 60 from above 80 and after making a Bearish Divergence at 2:30 AM
    • At/below EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 2:30 AM
  • The Bollinger Band has expanded a bit after narrowing from 3:45 PM to 2:00 AM
    • Stochastic (9, 1, 3): %K is mostly below %D since 3:00 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Monday, August 23 in mostly lower volume.  Dow Jones Transportation Average traded in lower volume. Major Index opened up and then traded higher for most of the day before declining a bit near the end of the session. NASDAQ Composite and Wilshire 5000 Total Market Index made all-time closing and intraday highs. S&P 500 made the all-time intraday high.

From Briefing.com:

The stock market had a strong start to the week, as investors remained steadfast in buying the dip amid some encouraging Covid news. The S&P 500 (+0.9%) and Nasdaq Composite (+1.6%) set intraday record highs, with the Nasdaq also closing at a record high.

The Dow Jones Industrial Average (+0.6%) trailed its large-cap peers with a 0.6% gain while the Russell 2000 (+1.9%) and iShares Micro-Cap ETF (IWC 143.33, +3.87, +2.8%) outperformed after underperforming last week.

[…]

The gains were relatively broad-based, as advancing issues outpaced declining issues by a 2:1 margin at the NYSE and a 3:1 margin at the Nasdaq. Seven of the 11 S&P 500 sectors closed higher, including the energy sector (+3.8%), which rose 4% as oil prices ($65.60, +3.35, +5.4%) rebounded 5%.

The heavily-weighted information technology sector (+1.3%) advanced 1.3%, while the defensive-oriented utilities (-1.3%), real estate (-0.4%), consumer staples (-0.4%), and health care (-0.02%) sectors were excluded from the advance amid some slippage into the close.

[…]

The 10-yr yield decreased one basis point to 1.26% while the 2-yr yield increased one basis point to 0.23%. The U.S. Dollar Index decreased 0.5% to 92.99.

[…]
  • Existing home sales increased 2.0% m/m in July to a seasonally adjusted annual rate of 5.99 million (Briefing.com consensus 5.85 million) from an upwardly revised 5.87 million (from 5.86 million) in June. Total sales in July were up 1.5% from a year ago.
  • […]
  • The preliminary IHS Markit Manufacturing PMI decreased to 61.2 in August from 63.4 in July. The preliminary IHS Markit Services PMI decreased to 55.2 in August from 59.9 in July.
[…]
  • S&P 500 +19.3% YTD
  • Nasdaq Composite +15.9% YTD
  • Dow Jones Industrial Average +15.5% YTD
  • Russell 2000 +11.8% YTD

Overseas: 

  • Europe: DAX +0.3%, FTSE +0.3%,CAC +0.9%
  • Asia: Nikkei +1.8%, Hang Seng +1.1%, Shanghai +1.5%

Commodities: 

  • Crude Oil +3.63 @ 65.67
  • Nat Gas +0.10 @ 3.95
  • Gold +22.50 @ 1807.00
  • Silver +0.62 @ 23.64
  • Copper +0.10 @ 4.23
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