Market Remarks

Morning Notes – Tuesday September 1, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed;
  • The odds are for a sideways to up day – watch for a break above 3516.25 and break below 3494.25 for clarity
  • Key economic data due:
    • Final Manufacturing PMI ( 53.1 vs. 53.6 est. ; prev. 53.6 ) at 9:45 AM
    • ISM Manufacturing PMI ( 56.0 vs. 54.6 est.; prev. 54.2 ) at 10:00 AM
    • Construction Spending  ( 0.1% vs. 1.0% est.; prev. -0.5%) at 10:00 AM
    • ISM Manufacturing Prices ( 59.5 ; prev. 53.2 ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3493.25, 3484.32, and 3468.35
  • Critical resistance levels for S&P 500 are 3514.77, 3524.30 and 3533.82
  • Key levels for E-mini futures: break above 3516.25, the high of 3:30 AM and break below 3494.25, the low of 9:00 PM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2020) closed at 3492.50 and the index closed at 3500.31 – a spread of about -7.75 points; futures closed at 3499.00 for the day; the fair value is -6.50
  • Pre-NYSE session open, futures are mixed – at 9:00 AM, S&P 500 futures were down by -2.50; Dow down by -117 and NASDAQ up by +66.50

Markets Around The World

  • Markets in East closed mostly higher – Tokyo and Sydney closed down
  • European markets are mostly lower – Switzerland is up
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • Dollar index
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • NatGas
    • Copper
  • Bond
    • 10-yrs yield is at 0.713%, up from August 31 close of 0.693%;
    • 30-years is at 1.487% up from 1.452%
    • 2-years yield is at 0.141% up from 0.139%
    • The 10-Year-&-2-Year spread is at 0.572 up  from 0.554
  • VIX
    • Is at 26.07; down -0.34 from August 31 close; above 5-day SMA;
    • Recent high 33.67 on July 14; low 20.28 on August 11
    • Sentiment: Risk-Neutral

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

Monthly
  • Uptrend Resumed
  • August 2020 was a green candle with almost small upper shadow and almost no lower shadow;
    • Stochastic %K is above %D and above 90; %K Bearish Divergence in January
    • RSI-9 rising near 70; breaking above a downtrend line from January 2018 high
    • Rising above the upper band of the 120-month regression channel for the first time after February 2020; broke below the lower channel in march 2020
  • The sequence of higher highs and higher lows is resumed
Weekly:
  • The week ending on August 28 was a relatively large green candle with almost no upper and lower shadows
    • Stochastic (9,1, 3): %K crisscrossing %D; above 90
    • RSI (9) is rising above 75
  • The week was up +110.85 or +3.3%; the 5-week ATR is 73.65
  • The weekly week pivot point=3476.79, R1=3540.45, R2=3572.89; S1=3444.35, S2=3380.69; R1/R2/R3 pivot levels were breached
  • An up week; fifth in last five weeks and eight in last ten weeks
  • Made all-time closing and intraday highs; last swing low 2965.66 made during the week of June 15
  • Above 10-week EMA, 39-week SMA and 89-week SMA
  • Uptrend since March 23
Daily
  • A relatively small candle; little change for the last few days
    • %K is crossing below %D; above 90
    • RSI-9 is turning down; above 80; above 8-day RSI
  • Above 20-day EMA; above 200-day SMA, above 50-day EMA; above 100-day
  • Uptrend since March 23
2-Hour (E-mini futures)
  • Moving sideways to down since 2:00 PM on August 28; all-time high at 10:00 PM on August 30
    • RSI-21 turned down from above 60 at 2:00 AM; Bearish Divergence at 10:00 PM on August 30;
  • At/below EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways since 11:00 PM on August 27;
    • RSI-21 moving down since 3:30 AM; Bearish Divergence at 10:00 AM on August 30
    • %K crisscrossing %D lower
  • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving up since 9:15 PM
  • The Bollinger Band narrowing since 7:00 AM; price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly lower on Monday, August 31 in mostly higher volume. NASDAQ Composite closed higher and Dow Jones Transportation Average traded in lower volume. NASDAQ Composite also made all-time closing and intraday highs. All but three S&P sectors – Technology, Utility, and Healthcare – closed lower.

From Briefing.com:

Mega-cap tech powered the Nasdaq Composite to a 0.7% gain and to new record highs on Monday. The S&P 500 set an intraday record high but declined 0.2% amid relative weakness in the broader market. The Dow Jones Industrial Average fell 0.8%, and the Russell 2000 fell 1.0%.

There was an absence of new macro developments, so the same tech-related stocks continued to set the winning pace at the expense of the cyclical stocks within the energy (-2.2%), materials (-1.5%), financials (-1.2%), and industrials (-1.2%) sectors. Declining issues outpaced advancing issues by more than a 2:1 margin at the NYSE.

[…]

U.S. Treasuries saw modest gains amid the underlying weakness in the stock market. The 2-yr yield declined two basis points to 0.13%, and the 10-yr yield declined four basis points to 0.69%. The U.S. Dollar Index declined 0.2% to 92.19. WTI crude futures declined 0.8%, or $0.35, to $42.62/bbl.

[…]
  • Nasdaq Composite +31.2% YTD
  • S&P 500 +8.3% YTD
  • Dow Jones Industrial Average -0.4% YTD
  • Russell 2000 -6.4% YTD

..NYSE Adv/Dec 904/2069. ..NASDAQ Adv/Dec 1229/2115.
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