Market Remarks

Morning Notes – Thursday August 12, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher a bit before the 8:30 AM economic reports release;
  • The odds are for a sideways to a down day  — watch for a break  above 4444.25 and below 4430.00 for clarity
  • Key economic data report due during the day:
    • PPI ( 0.6% est.; prev. 1.0%) at 8:30 AM
    • Core PPI (  0.5% est.; prev. 1.0%) at 8:30 AM
    • Unemployment Claims ( 375K est.; prev. 385K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4442.11, 4436.42, and 4430.03
  • Critical resistance levels for S&P 500 are 4449.44, 4452.62, and 4457.54
  • Key levels for E-mini futures: break above 4444.25, the high of 6:30 AM and break below 4430.00, the low of 11:30 AM on August 11

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2021) closed at 4441.00 and the index closed at 4437.70 – a spread of about -6.75 points; futures closed at 4440.50 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +2.00; Dow by +31; and NASDAQ by +4.75

Markets Around The World

  • Markets in the East closed mixed –  Shanghai, Hong Kong, Tokyo, and Seoul closed lower; Sydney, Mumbai, and Singapore closed higher;
  • European markets are mostly higher – the UK is lower;
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/CHF
    • NZD/USD
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.339%, up +7.8 basis points from two weeks ago;
    • 30-years is at 2.004%, up +9.3 basis points;
    • 2-years yield is at 0.217%, up +0.6 basis points;
    • The 10-Year-&-2-Year spread is at 1.122, up from 1.050
  • VIX
    • At 16.06 @ 7:45 AM; unchanged from the last close; below 5-day SMA;
    • Recent high =  25.09 on July 19; low =  16.33 on July 23
    • Sentiment: Risk-On-Neutral

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 relatively small green Spinning Top candle at all-time-highs with an upper shadow smaller than the lower shadow;
    • %K crossed above %D; above 90
    • RSI-9 is just above 65; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Breaking above a Horizontal Channel that was forming since July 23 between 4420.00 and 4380.00 after moving along its upper bound for a few days;
    • RSI-21 drifting down since 8:00 AM on Wednesday
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • At the upper bound of an Ascending Triangle – a break above 4443.25 will have a 61.8% extension target near  4451.540, a 100% extension target near 4456.50, and a 161.8% extension near 4465.00;
    • RSI-21 drifting down since 9:00 AM on August 11 from near 70 to 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 drifting sideways to up since 4:45 PM
  • The Bollinger Band is contracting a bit since 7:00 AM;
    • Stochastic (9, 1, 3): %K is crisscrossing %D lower
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Wednesday, August 11 in mostly higher volume.  NASDAQ Composite closed lower. Dow Jones Industrial Average and NASDAQ Composite traded in lower volume. Major indices opened higher but then declined in the late morning before recovering and making newer highs before the close. S&P 500, DOw Jones Industrial Average, NYSE Composite, and Wilshire 5000 Total Market Index made all-time closing and intraday highs.

From Briefing.com:

The S&P 500 (+0.3%) and Dow Jones Industrial Average (+0.6%) set intraday and closing record highs on Wednesday, as value/cyclical stocks continued to sport a bullish bias following a better-than-feared Consumer Price Index (CPI) report for July.

The Russell 2000 increased 0.5% after being down as much as 0.8% intraday. The Nasdaq Composite, however, declined 0.2% along with the Russell 1000 Growth Index (-0.2%).

[…]

It took a very strong 10-yr note auction to bring it back down to its unchanged mark of 1.34% after it traded at 1.37% intraday.

[…]

The S&P 500 materials (+1.4%), industrials (+1.3%), and financials (+1.2%) sectors increased by at least 1.0% on Wednesday.

Interestingly, the health care sector (-1.0%) was the only sector in the S&P 500 that closed lower,

[…]

The 2-yr yield decreased two basis points to 0.21%. The U.S. Dollar Index decreased 0.2% to 92.90. WTI crude futures rose 1.4%, or $0.94, to $69.27/bbl.

[…]
  • Total CPI, driven by increases in the indexes for shelter, food, energy, and new vehicles, increased 0.5% month-over-month in July, as expected, while core CPI, which excludes food and energy, rose 0.3% (Briefing.com consensus 0.4%). On a year-over-year basis, total CPI was unchanged at 5.4% and core CPI moderated to 4.3% from 4.5%.
  • […]
  • The Treasury Budget for July showed a $302.1 bln deficit, versus a $63.0 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the July deficit can’t be compared to the June deficit of $174.2 bln.
  • […]
  • The  weekly MBA Mortgage Applications Index increased 2.8% following a 1.7% decline in the prior week.
[…]
  • S&P 500 +18.4% YTD
  • Dow Jones Industrial Average +15.9% YTD
  • Nasdaq Composite +14.6% YTD
  • Russell 2000 +14.0% YTD

Overseas: 

  • Europe: DAX +0.4%, FTSE +0.8%,CAC +0.6%
  • Asia: Nikkei +0.7%, Hang Seng +0.2%, Shanghai +0.1%

Commodities: 

  • Crude Oil +0.87 @ 69.30
  • Nat Gas -0.05 @ 4.06
  • Gold +22.90 @ 1754.60
  • Silver +0.18 @ 23.54
  • Copper +0.02 @ 4.37
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