Market Remarks

Morning Notes – Thursday, September 5, 2024

Sunil Sharma

Directional Bias for the Day:

  • S&P Futures are lower at 8:45 AM. Near the lower bound of a trading range lasting since mid-day yesterday.
  • The odds are for a sideways to a down day. Watch for a break above 5540.00 for a change in sentiments.
  • The economic data due during the day:
    • ADP Non-Farm Employment Change (99K vs. 144K est.; prev. 111K) at 8:15 AM.
    • Unemployment Claims (227K vs. 231K est.; prev. 232K) at 8:30 AM
    • Revised Nonfarm Productivity (2.5% vs. 2.4% est.; prev. 2.3%) at 8:30 AM
    • Revised Unit Labor Costs (0.4% vs. 0.8% est.; prev. 0.9%) at 8:30 AM
    • Final Service PMI (55.0 est.; prev. 55.2) at 9:45 AM
    • ISM Services PMI (51.3 est.; prev. 51.4) at 10:00 AM.
  • Weekly: Uptrend Resumed
  • Daily: Uptrend Under Pressure
  • 120-Min: Side-Down
  • 30-Min: Side
  • 15-Min: Side-Down
  • 6-Min: Side-Down

Key Levels:

  • Critical support levels for the S&P 500 are 5504.33, 5463.22, and 5422.09.
  • Critical resistance levels for the S&P 500 are 5528.06, 5552.99, and 5577.93.
  • The key levels for E-mini futures are 5540.00, the high at 3:15 PM on Wednesday and 5515.00, the low at 3:00 PM on Wednesday.

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2024) closed at 5528.00, and the index closed at 5520.07 – a spread of about +8.00 points; the futures closed at 5530.00; the fair value is -2.00.
  • Pre-NYSE session open, futures were lower – at 8:30 AM, the S&P 500 futures were down by -14.25, Dow by -14, and NASDAQ by -115.25.

Markets Around the World

  • Markets in the East closed mixed – Shanghai, Sydney, and Singapore closed up; Hong Kong, Tokyo, Mumbai, and Seoul closed down.
  • European markets are mixed – Germany, Spain, and Italy are higher; the UK, France, Switzerland and STOXX 600 are lower.
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • USD/CAD
  • INR/USD
  • EUR/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower.
    • Precious metals are lower.
    • Industrial metals are lower.
    • Soft commodities are mixed.
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.759, down -4.6 basis points from two weeks ago.
    • The 30-year is at 4.060%, down -2.0 basis points.
    • The 2-year yield is at 3.774%, down -16.9 basis points.
    • The 10-Year-&-2-Year spread is at -0.015, up from -0.138.
    • The 30-Year-&-10-Year spread is at 0.301, up from 0.275.
  • VIX
    • At 20.81 @ 8:00 AM; up from the last close; above the 5-day SMA
    • Recent high = 29.47 on August 08; low = 14.46 on August 19; Sentiment: Risk-Off

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

Weekly:
  • The week ending on August 30 was a relatively small green candle with almost no upper shadow and a small lower shadow. Still closed just 0.6% below the all-time high of 5669.67.
    • Stochastic (9,1, 3): %K is above %D.
    • RSI-9 is just below 70.
  • The week was up 80.36 or 1.4%; the 5-week ATR is 205.60.
  • Second up week in the last five weeks and fifth in the previous ten weeks
  • The weekly pivot point=5620.32, R1=5679.70, R2=5710.99; S1=5589.03, S2=5529.65; S1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A large green candle, within previous day’s lower shadow, with a small lower shadow and a large upper shadow.
    • Stochastic (9, 1, 3): %K is below the %D.
    • RSI-9 is around 45; below the 8-day EMA.
  • Below 20-day EMA and 50-day EMA; above 100-day SMA and 200-day SMA.
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving sideways after breaking below a trading range between 5669.75 and 5561.25. The 61.8% retracement target is around 5494.00, the 100% retracement target is around 5452.00, and the 161.8% retracement target is around 5385.00.
    • RSI-21 is around 35 after bouncing up from around 10.
    • Below EMA20, which is below the EMA10 of EMA50.
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Breaking below a trading range that lasted form 12:00 PM on Wednesday. The 61.8% extension target is around 5500.00, the 100% extension target is around 5490.00, and the 161.8% extension target is around 5475.00.
    • RSI-21 has dipped below 40.
    • Below EMA20, which is below EMA10 of EMA50.
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways since 7:30 PM.
  • The Bollinger Band has started to expand since 8:00 AM with the price at the lower bound.
  • Bias: Side-Down

Previous Session

Most major U.S. indices closed mostly lower on Wednesday, September 4 in lower volume. Dow Jones Industrial Average and Dow Jones Transportation Average traded in higher volume. The indices traded within a narrow range and mostly moved sideways from their pre-open levels. 

The dollar index closed lower at 101.30, the energy futures closed down, the precious metals closed up, the industrials metals closed mixed, and so did most of the soft commodities. The US Treasury yields closed lower as the bonds rose.

From Briefing.com

The stock market settled little changed from yesterday’s close. There wasn’t much carryover selling interest after the S&P 500 found support on an early test of its 50-day moving average (5,506). The index dropped below that level in the afternoon, but ultimately settled the day above the key, short-term support level.

[…]

The 2-yr note yield declined 12 basis points to 3.77% and the 10-yr note yield also settled at 3.77%, down eight basis points from yesterday.

The rate-sensitive real estate (+0.3%) and utilities (+0.9%) sectors were winning standouts today. Meanwhile, energy (-1.4%) was the only sector down more than 0.5% after oil prices dropped below $70.00/bbl. WTI crude oil futures settled 1.8% lower at $69.13/bbl, reflecting lingering concerns about growth prospects impacting demand.

  • S&P 500: +15.7% YTD
  • Nasdaq Composite: +13.8% YTD
  • Dow Jones Industrial Average: +8.7% YTD
  • S&P Midcap 400: +8.0% YTD
  • Russell 2000: +5.8% YTD

Reviewing today’s economic data:

  • Weekly MBA Mortgage Applications Index 1.6%; Prior 0.5%
  • July Trade Balance -$78.8 bln (Briefing.com consensus -$78.5 bln); Prior was revised to -$73.0 bln from -$73.1 bln
  • July Factory Orders 5.0% (Briefing.com consensus 4.5%); Prior -3.3%
  • July JOLTS – Job Openings 7.673 mln; Prior was revised to 7.910 mln from 8.184 mln
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