Market Remarks

Morning Notes – Tuesday, August 9, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM; the futures are drifting lower since 12:00 AM
  • The odds are for a down day with elevated volatility – watch for a break above 4150.25 for a change of sentiments
  • A Double Bottom pattern is emerging – a lasting break below 4129.25 will have a 61.8% extension target near 4133.00 and the 100% extension target near 4103.00
  • The key economic data report due during the day:
    • Prelim Nonfarm Productivity (-4.6% vs.; prev. -4.6% est.; prev. -7.3%) at 8:30 AM
    • Prelim Unit Labor Costs ( 10.8% vs. 9.4% est.; prev. 12.6%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4124.93, 4111.49, and 4107.31
  • Critical resistance levels for S&P 500 are 4151.91, 4160.16, and 4186.62
  • Key levels for E-mini futures: break above 4150.25, the high at 5:15 AM and a break below 4123.50, the low at 8:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2022) closed at 4141.50,  and the index closed at 4140.06 – a spread of about +1.50 points; the futures closed at 4141.75; the fair value is -0.25
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -14.50, Dow by -44; and NASDAQ by -98.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Sydney, and Seoul closed up; Hong Kong and Tokyo were down; Mumbai and Singapore were closed for trading
  • European markets are mostly lower – Spain is higher
  • Currencies (Compared to two weeks ago):
Up Down
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • Dollar index
  • EUR/USD
  • USD/JPY
  • USD/CHF
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.765%, down -5.5 basis points from two weeks ago;
    • The 30-year is at 2.998%, down -5.1 basis points;
    • The 2-year yield is at 3.205%, up +17.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.440, down from -0213
    • The 30-Year-&-10-Year spread is at 0.233, up from 0.229
  • VIX
    • At 21.87 @ 6:45 AM; up from the last close; above the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 21.21 on July 29
    • Sentiment: Risk-Off

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

Weekly:
  • The small Spinning Top week at/above the previous week’s close.
    • 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 +14.90 or +0.4%; the 5-week ATR  is 173.07
  • An up week; fourth in the least five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4130.89, R1=4181.96, R2=4218.74; S1=4094.11, S2=4043.04; No pivot levels were breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A red candle that looks like a Shooting Star candle 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 below %D; above 90
    • RSI-9 dipped below 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 down since 12:00 PM on August 3 from the June 2 high resistance; 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 declining – near 35;
    • Below EMA10 of EMA50, which is below EMA20
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Breaking below a sideways move – Double Bottom – after declining on Monday
    • RSI-21 is falling; below 35
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting down since 5:30 AM
  • The Bollinger Band is expanding a bit since 5:30 AM, with price walking down the lower band.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly higher on Monday, August 8, in mixed volume. S&P 500 and NASDAQ Composite closed down in lower volume.

The major indices gapped up at the open but started to decline in the first half-hour of trading.

From Briefing.com:

[…]

The main indices trended higher in the early going before losing steam around midmorning and giving back those gains. The market moved sideways from that point, closing just off intraday lows.

[…]

Separately, WTI crude oil futures tipped back above the $90.00/bbl mark today, settling up 2.2% to $90.67/bbl.

[…]

Also, the 2s10s spread widened today. The 2-yr note yield fell three basis points to 3.20% while the 10-yr note yield fell eight basis points to 2.77%.

[…]

Dow Jones Industrial Average: -9.7% YTD
S&P 400: -11.3% YTD
S&P 500: -13.1% YTD
Russell 2000: -13.5% YTD
Nasdaq Composite: -19.2% YTD

Overseas: 

  • Europe: DAX +0.8%, FTSE +0.6%, CAC +0.8%
  • Asia: Nikkei +0.3%, Hang Seng -0.8%, Shanghai +0.3%

Commodities: 

  • Crude Oil +1.94 @ 90.67
  • Nat Gas -0.49 @ 7.57
  • Gold +15.10 @ 1805.40
  • Silver +0.79 @ 20.62
  • Copper +0.04 @ 3.59
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