Market Remarks

Morning Notes – Monday August 9, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day with a good chance of sideways to an up move from the pre-open levels around 4425.00 — watch for a break below 4412.00 for clarity
  • Key economic data report due during the day:
    • JOLTS Jobs Openings ( 9.27M est.; prev. 9.21M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4429.27, 4415.97, and 4400.23
  • Critical resistance levels for S&P 500 are 4440.82, 4447.22, and 4453.62
  • Key levels for E-mini futures: break above 4427.75, the high of 3:00 AM and break below 4412.25, the low of 8:00 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2021) closed at 4429.25 and the index closed at 4436.52 – a spread of about -7.25 points; futures closed at 4429.50 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are mostly lower – at 9:00 AM, S&P 500 futures were down by -4.25; Dow down by -58, and NASDAQ up by +2.00

Markets Around The World

  • Markets in the East closed mostly higher –  Seoul was lower; Tokyo and Singapore were closed for trading
  • European markets are mixed – Germany, the UK, and Spain are down; France, Italy, Switzerland, and STOXX 600  are higher
  • Currencies (from two weeks ago):
    Up Down
    • GBP/USD
    • NZD/USD
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.285%, down -0.1 basis points from two weeks ago;
    • 30-years is at 1.938%, up +1.3 basis points;
    • 2-years yield is at 0.212%, up +0.6 basis points;
    • The 10-Year-&-2-Year spread is at 1.073, down from 1.080
  • VIX
    • At 17.22 @ 8:15 AM; up from the last close; below 5-day SMA;
    • Recent high =  25.09 on July 19; low =  16.33 on July 23
    • Sentiment: Risk-Neutral-Off

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

Monthly
  • Confirmed Uptrend
  • May 2021 was a Doji with a small upper shadow and a long lower shadow; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 80; broke above a downtrend line from January 2018
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows
Weekly:
  • The week ending on August 6 was a relatively small green candle with almost no upper shadow and a small lower shadow at all-time highs;
    • Stochastic (9,1, 3): %K crossed above %D; just above 90
    • RSI (9) is above 70
  • The week was up +41.26 or +0.9%; the 5-week ATR is 92.14
  • An up week; third in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4416.78, R1=4460.56, R2=4484.60; S1=4392.74, S2=4348.96; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small tear-drop green candle with almost no lower  shadow and a small upper shadows at all-time highs;
    • %K is above %D but turning down; above 90
    • RSI-9 is above 60; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving along the upper bound of a Horizontal Channel that has been forming since July 23 between 4420.00 and 4380.00;
    • RSI-21 rising above 60 after falling to near 40 from near 70;
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving sideways since 3:30 PM on August 5;
    • RSI-21 is above 50
    • Above EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 12:00 AM
  • The Bollinger Band is beginning to expand with price at the upper band;
    • Stochastic (9, 1, 3): %K is above %D since 6:045 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Friday, August 6 in mostly higher volume.  NASDAQ Composite closed lower and Dow Jones Transportation Average traded in lower volume. Major indices opened higher and then drifted higher. S&P 500, Dow Jones Industrial Average, NYSE Composite, and Wilshire 5000 Total Market Index made all-time intraday and closing higher.

For the week, the major US indices closed higher in mostly lower volume. DTRAN traded in lower volume. Markets in Asia and Europe closed higher. The dollar index was up for the week, energy futures were mixed, metals were down and the soft commodities were mixed. The US Treasury Yields ticked up. All but two S&P sectors – Consumer Staples and Telecom – closed higher for the week.

From Briefing.com:

The S&P 500 (+0.2%) and Dow Jones Industrial Average (+0.4%) closed at record highs on Friday following the better-than-expected employment report for July. The Russell 2000 gained 0.5% while the Nasdaq Composite declined 0.4% amid a jump in long-term interest rates. […]

For example, the cyclical financials (+2.0%), materials (+1.5%), and energy (+0.9%) sectors rose between 1-2%, the 10-yr yield rose seven basis points to 1.29%, and the U.S. Dollar Index advanced 0.6% to 92.79.

The higher rates, however, exerted valuation-oriented pressure on the growth stocks within the information technology (-0.1%) and consumer discretionary (-0.7%) sectors. The counter-cyclical health care (-0.1%), real estate (-0.2%), consumer staples (-0.1%), and utilities (-0.1%) sectors also closed lower.

[…]

WTI crude futures fell 1.2%, or $0.81, to $68.28/bbl, which misaligned with the growth optimism since there remained concerns about the Delta variant impacting oil demand. The 2-yr yield was unchanged at 0.20%.

[…]
  • The July employment report was a good one. Nonfarm payrolls increased by 943,000, average hourly earnings rose 0.4% month-over-month and were up 4.0% year-over-year, the unemployment rate fell to 5.4%, and the average workweek increased from a year ago. Job gains were widespread across industry groups, though it was no surprise that leisure and hospitality (+380,000) saw the biggest gain.
  • […]
  • Consumer credit increased by $37.6 bln in June (Briefing.com consensus $20.5B) after increasing an upwardly revised $36.7 bln (from $35.3 bln) in May.
  • […]
  • Wholesale inventories increased 1.1% m/m in June (Briefing.com consensus 0.8%) following a downwardly revised 0.8% increase (+1.3%) in May.
  • S&P 500 +18.1% YTD
  • Nasdaq Composite +15.1% YTD
  • Dow Jones Industrial Average +15.0% YTD
  • Russell 2000 +13.8% YTD
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