Market Remarks

Morning Notes – Wednesday, August 10, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; the futures shot up 60 points following a favorable inflation report at 8:30
  • The odds are for an up day with volatility and a good chance of moving sideways to down from the pre-open levels around 4200.00 elevated volatility – watch for a break below 4155.00 for a change of sentiments
  • The key economic data report due during the day:
    • CPI ( 0.0% vs.; prev. 0.2% est.; prev. 1.3%) at 8:30 AM
    • Core CPI ( 0.3% vs. 0.5% est.; prev. 0.7%) at 8:30 AM
    • Final Wholesale Inventories ( 1.9% est. prev. 1.9%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4186.62, 4151.91, and 4132.50
  • Critical resistance levels for S&P 500 are 4200.10, 4227.62, and 4270.43
  • Key levels for E-mini futures: break above 4201.50, the high at 8:30 AM and a break below 4155.00, the high at 7:30 PM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2022) closed at 4125.00,  and the index closed at 4122.47 – a spread of about +2.50 points; the futures closed at 4124.5; the fair value is -0.75
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +69.50, Dow by +400; and NASDAQ by +296.75

Markets Around The World

  • Markets in the East closed lower
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • Dollar index
  • 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 mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.695%, down -9.2 basis points from two weeks ago;
    • The 30-year is at 2.956%, down -5.3 basis points;
    • The 2-year yield is at 3.259%, up +20.6 basis points;
    • The 10-Year-&-2-Year spread is at -0.564, down from -0266
    • The 30-Year-&-10-Year spread is at 0.261, up from 0.222
  • VIX
    • At 22.14 @ 8:30 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-On

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 small red Spinning Top candle near 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 is below %D;
    • RSI-9 is just above 60; below 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 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 rising since 12:00 AM; just below 60;
    • At/above EMA20, which at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Bouncing off the lower bound of a trading range around  a 4113.00 level
    • RSI-21 is rising since 2:00 AM; just below 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 3:45 AM
  • The Bollinger Band is expanding since 3:45 AM, with price walking up the upper band.
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Tuesday, August 9, in mostly lower volume. Dow Jones Industrial Average traded in higher volume.

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

From Briefing.com:

[…]

The selling was broad-based but semiconductors, and semiconductor equipment makers, stuck out as particularly weak

[…]

The PHLX Semiconductor Index (SOX) closed down 4.6% amid growing concerns that the cyclical semiconductor industry could be entering an extended slowdown phase.

[…]

The Vanguard Mega Cap Growth ETF (MGK) closed down 1.0% versus a 0.6% loss in the Invesco S&P 500 Equal Weight ETF (RSP) and a 0.4% loss in the S&P 500.

[…]

Besides information technology, the top laggards were consumer discretionary (-1.5%) and communication services (-0.7%) thanks to their mega cap components.

[…]

Separately, the 2-yr note yield rose six basis points to 3.26% while the 10-yr note yield rose three basis points to 2.80%.

[…]
  • Q2 Productivity-Prel -4.6% (Briefing.com consensus -4.5%); Prior was revised to -7.4% from -7.3%; Q2 Unit Labor Costs – Prel 10.8% (Briefing.com consensus 9.3%); Prior was revised to 12.7% from 12.6%
  • […]
  • July NFIB Small Business Optimism 89.9; Prior 89.5

Dow Jones Industrial Average: -9.8% YTD
S&P 400: -12.1% YTD
S&P 500: -13.5% YTD
Russell 2000: -14.8% YTD
Nasdaq Composite: -20.1% YTD

Overseas: 

  • Europe: DAX -1.1%, FTSE +0.1%, CAC -0.5%
  • Asia: Nikkei -0.9%, Hang Seng -0.2%, Shanghai +0.3%

Commodities: 

  • Crude Oil -0.30 @ 90.37
  • Nat Gas +0.26 @ 7.83
  • Gold +5.80 @ 1811.20
  • Silver -0.15 @ 20.47
  • Copper -0.01 @ 3.58
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