Market Remarks

Morning Notes – Tuesday, August 23, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; the futures are moving sideways to down since 3:30 AM around 4140.00
  • The odds are for a sideways to down day with volatility – watch for a break above 4157.00 and a break below 4118.00 for clarity
  • The key economic data report due during the day:
    • Flash Services PMI ( 49.8 est.; prev. 47.3) at 9:45 AM
    • Flash Manufacturing PMI ( 51.8 est.; prev. 52.2 ) at 9:45 AM
    • New Home Sales ( 574K est.; prev. 590K) at 10:00 AM
    • Richmond Manufacturing PMI ( -3 est.; prev. 0) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4129.86, 4112.21, and 4090.24
  • Critical resistance levels for S&P 500 are 4149.39, 4163.10, and 4195.08
  • Key levels for E-mini futures: break above 4157.00, the high at 4:00 AM and a break below 4118.00, the low at 2:30 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2022) closed at 4142.75, and the index closed at 4137.99 – a spread of about +4.75 points; the futures closed at 4141.25; the fair value is +1.50
  • Pre-NYSE session open, futures are higher – at 7:00 AM, S&P 500 futures were up by +6.00, Dow by +34; and NASDAQ by +18.00

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai closed up
  • European markets are mostly lower – Germany and Italy are up
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.037%, up +27.2 basis points from two weeks ago;
    • The 30-year is at 3.242%, up +24.4 basis points;
    • The 2-year yield is at 3.314%, up +10.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.277, up from -0.440
    • The 30-Year-&-10-Year spread is at 0.205, up from 0.233
  • VIX
    • At 23.55 @ 6:30 AM; down from the last close; above the 5-day SMA;
    • Recent high = 24.68 on August 2; low = 19.12 on August 12
    • Sentiment: Risk-On-Neutral

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

Weekly:
  • The red candle with no lower shadow and a small upper shadow;
    • Stochastic (9,1, 3): %K crossed below %D from above 90
    • RSI-9 is turning down just below 60
  • The week was down -112.41 or -2.6%; the 5-week ATR  is 167.40
  • A down week; first in the least five weeks and fourth in the previous ten weeks;
  • The weekly pivot point=4220.52, R1=4273.31, R2=4378.06; S1=4115.77, S2=4062.98; S1 pivot level was breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A red candle that gapped down with a small lower shadow and almost no upper shadow; turning down from the 200-D SMA on August 16
    • Stochastic (9, 1, 3): %K is below %D; near 0
    • RSI-9 is below 50; below 8-day EMA;
  • Below 20-day EMA; above 50-day EMA and 100-day SMA; below 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Trending down since 2:00 PM on August 16; near a support level around 4110.00
    • RSI-21 is bouncing up since 2:00 PM on Monday from near 10; Bullish Divergence at 2:00 AM
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Downtrend since 2:00 PM on August 16 – lower lows and lower highs; moving sideways since 3:30 AM between 4157.00 and 4137.00
    • RSI-21 is rising since 10:00 AM on Monday from below 20 to near 50; Bullish Divergence at 2:#0 AM
    • At/above EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 7:00 PM on August 22
  • The Bollinger Band is expanding a bit since 3:00 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Monday, August 22, in mixed volume. NASDAQ Composite and Russell 2000 traded in lower volume.

The major indices gapped down at the open and then mostly drifted lower for the rest of the day. All S&P sectors closed lower.

From Briefing.com:

[…]

The 10-yr note yield rose five basis points to 3.04% while the 2-yr note yield rose eight basis points to 3.33%.

The selling was broad-based, leaving many stocks lower, but mega caps and growth stocks were notably weak. The Vanguard Mega Cap Growth ETF (MGK) closed down 2.6% versus a 2.1% loss in the Invesco S&P 500 Equal Weight ETF (RSP) and the S&P 500. The Russell 3000 Growth Index (-2.4%) closed behind the Russell 3000 Value Index (-2.0%).

[…]

Every sector closed with losses ranging from 0.3% (energy) to 2.8% (consumer discretionary). Consumer discretionary (-2.8%), information technology (-2.8%), and communication services (-2.7%), home to key mega cap names, brought up the rear.

[…]

WTI crude oil futures settled 0.2% lower at $90.63/bbl after dipping below $87.00/bbl earlier in the session.

[…]

Dow Jones Industrial Average: -9.0% YTD
S&P 400: -11.3% YTD
S&P 500: -13.2% YTD
Russell 2000: -14.7% YTD
Nasdaq Composite: -20.9% YTD

Overseas: 

  • Europe: DAX -2.3%, FTSE -0.2%, CAC -1.8%
  • Asia: Nikkei -0.5%, Hang Seng -0.6%, Shanghai +0.6%

Commodities: 

  • Crude Oil +0.15 @ 90.63
  • Nat Gas +0.40 @ 9.74
  • Gold -12.90 @ 1750.10
  • Silver -0.17 @ 18.89
  • Copper -0.01 @ 3.65

 

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