Market Remarks

Morning Notes – Thursday, August 4, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a bit higher at 8:00 AM; down more than 15 points from the 6:30 AM high and a Double Top  resistance
  • The odds are for a sideways to down with elevated volatility – watch for a break above 4173.25 and below 4148.00 for clarity
  • The key economic data report due during the day:
    • BOE Official Bank Rate (1.75% vs. 1.75% est.; prev. 1.25%) at 7:00 AM
    • Challenger Job Cuts ( 36.3%; prev. 58.8%) at 7:30 AM
    • Unemployment Claims ( 262K est.; prev. 256K ) at 8:30 AM
    • Trade Balance ( -80.5B est.; prev. -85.5 B) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4150.91, 4144.95, and 4113.32
  • Critical resistance levels for S&P 500 are 4177.51, 4200.10, and 4227.62
  • Key levels for E-mini futures: break above 4173.25, the high at 6:30 PM on Tuesday and a break below 4148.00, the low at 3:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2022) closed at 4157.00,  and the index closed at 4155.17 – a spread of about +1.75 points; the futures closed at 4156.25; the fair value is +0.75
  • Pre-NYSE session open, futures are a bit higher – at 8:00 AM, S&P 500 futures were up by +1.50, Dow by +9; and NASDAQ by +11.00

Markets Around The World

  • Markets in the East closed mostly higher – Sydney and Mumbai closed lower
  • European markets are higher
  • Currencies (Compared to two weeks ago):
  • Up Down
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.748%, down -28.8 basis points from two weeks ago;
    • The 30-year is at 2.977%, down -19.3 basis points;
    • The 2-year yield is at 3.065%, down -16.8 basis points;
    • The 10-Year-&-2-Year spread is at -0.317, down  from -0.197
    • The 30-Year-&-10-Year spread is at 0.229, up from 0.134
  • VIX
    • At 21.93 @ 6:30 AM; a bit down from the last close; below the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 21.21 on July 29
    • Sentiment: Risk-Neutral-Off

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

Weekly:
  • The week ending on July 29 was a relatively large green candle
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI-9 is above 50 after making a Bullish Divergence on June 13
  • The week was up +168.47 or +4.3%; the 5-week ATR  is 196.93
  • An up week; third in the least five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4060.39, R1=4210.05, R2=4289.80; S1=3980.64, S2=3830.98; R1/R2 pivot levels were breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A green candle with almost no lower shadow and a small upper shadow at the June 2 high resistance; broke above a symmetrical triangle  on July 19 – the 61.8% extension target near 4070.00 is achieved, the 100% extension target is near 4190.00, and the 161.8% extension target is near 4380.00;  the 100% extension target for the ABCD pattern near 4025.00 is achieved, and the 161.8% extension target is near 4216.00
    • Stochastic (9, 1, 3): %K crossed above %D; above 80
    • RSI-9 is above 70 above 8-day EMA;
  • Above 20-day EMA, 50-day EMA, and 100-day SMA; below 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving sideways to up since 12:00 PM on August 3; the uptrend since 10:00 AM on July 14; broke above a Descending Triangle on July 19 – the 100% extension target near 4105.00 is achieved, and the 161.8% extension target is near 4235.00
    • RSI-21 is above 75; Potential Bearish Divergence
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Drifting sideways to up since 12:30 PM on August 3 between 4170.00 and 4148.00
    • RSI-21 is moving above 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 9:45 PM
  • The Bollinger Band is expanding a bit since 5:15 AM, with price walking up the upper band
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Wednesday, August 3, in mostly higher volume. Dow Jones Transportation Average traded in lower volume. Major indices opened higher and then drifted higher for the rest of the day. The indices are at resistance levels – prior highs and 10-day SMA.

From Briefing.com:

[…]

The S&P 500 tested last Friday’s high (4,140) early on and found some resistance before breaking above that level.

[…]

Trading volume, however, wasn’t particularly heavy, so the fear-of-missing-out trade hadn’t necessarily kicked into high gear yet.

Market breadth showed the big bias towards advancing issues. Advancers led decliners by a roughly 11-to-5 margin at both the NYSE and Nasdaq.

The mega caps proved to be a big support to the market today. The Vanguard Mega Cap Growth ETF (MGK) closed up 2.7% versus a 1.6% gain in the S&P 500. The Invesco S&P 500 Equal Weight ETF (RSP), for its part, closed up 1.0%.

[…]

WTI crude oil futures fell 3.6% to $90.91/bbl. Unleaded gasoline futures fell 3.8% to $2.93/gal.

[…]

Energy (-3.0%) was the lone sector in negative territory while mega cap components pushed information technology (+2.7%), consumer discretionary (+2.5%), and communication services (+2.5%) to the top of the leaderboard.

[…]

The 2-yr note yield rose three basis points to settle at 3.10% while the 10-yr note yield rose one basis point to 2.75%.

[…]
  • Weekly MBA Mortgage Applications Index 1.2%; Prior -1.8%
  • July IHS Markit Services PMI – Final 47.3%; Prior 47.0%
  • June Factory Orders 2.0% (Briefing.com consensus 0.9%); Prior was revised to 1.8% from 1.6%
  • […]
  • July ISM Non-Manufacturing Index 56.7% (Briefing.com consensus 53.8%); Prior 55.3%
[…]

Dow Jones Industrial Average: -9.7% YTD
S&P 400: -11.7% YTD
S&P 500: -12.8% YTD
Russell 2000: -14.9% YTD
Nasdaq Composite: -19.0% YTD

Overseas: 

  • Europe: DAX +1.0%, FTSE +0.5%, CAC +1.0%
  • Asia: Nikkei +0.5%, Hang Seng +0.4%, Shanghai -0.7%

Commodities: 

  • Crude Oil -3.42 @ 90.91
  • Nat Gas +0.60 @ 8.35
  • Gold -1.50 @ 1782.50
  • Silver +0.04 @ 20.06
  • Copper -0.01 @ 3.48
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