Market Remarks

Morning Notes – Friday August 13, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher a bit at 8:45 AM
  • The odds are for a sideways to an up day — watch for a break  above 4459.75 and below 4451.00 for clarity
  • Key economic data report due during the day:
    • Import Prices ( 0.3% vs. 0.6% est.; prev. 1.1%) at 8:30 AM
    • Prelim UoM Consumer Sentiment  ( 81.2 est.; prev. 81.2) at 10:00 AM
    • Prelim UoM Inflation Expectations ( prev. 4.7%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4452.95, 4435.96, and 4430.03
  • Critical resistance levels for S&P 500 are 4469.75, 4478.66, and 4495.56
  • Key levels for E-mini futures: break above 4459.75, the high of 5:00 AM and break below 4451.00, the low of 8:00 PM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2021) closed at 4454.50 and the index closed at 4460.83 – a spread of about -6.25 points; futures closed at 4454.50 for the day; the fair value is +0.0
  • Pre-NYSE session open, futures are mixed – at 8:30 AM, S&P 500 futures were up by +3.00; Dow up by +61; and NASDAQ down by -7.50

Markets Around The World

  • Markets in the East closed mostly lower –  Sydney and Mumbai closed higher;
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.367%, up +9.8 basis points from two weeks ago;
    • 30-years is at 2.013%, up +9.7 basis points;
    • 2-years yield is at 0.225%, up +1.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.142, up from 1.058
  • VIX
    • At 15.61 @ 8:00 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-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 green candle at all-time-highs with almost no upper shadow and a small lower shadow;
    • %K is above %D; above 90
    • RSI-9 is near 70; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Broke above a Horizontal Channel that formed from July 23 to August 6 between 4420.00 and 4380.00 after moving along its upper bound for a few days; the 61.8% extension target is near 4463.00 and the 100% extension target is near 4486.00
    • RSI-21 is around 65 after getting near 75
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Broke above an Ascending Triangle – the 100% extension target near 4456.50 is achieved; the 161.8% extension  is near 4465.00;
    • RSI-21 moving around 60
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting sideways to up since 8:30 PM
  • The Bollinger Band is contracting a bit since 7:30 AM;
    • Stochastic (9, 1, 3): %K is above %D since 7:30 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Thursday, August 12 in mostly lower volume.  Russell 2000 and NYSE Composite closed lower. Dow Jones Industrial Average traded in higher volume. Major indices opened higher but then declined a bit in the first hour of trading before turning around and trading higher for the rest of the day. S&P 500, DOw Jones Industrial Average, 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 (+0.04%) eked out another pair of intraday and closing record highs on Thursday. They were both down 0.3-0.4% in the morning following a Producer Price Index report for July that was worse than feared.

The Nasdaq Composite increased 0.4% as some money rotated back into large growth stocks, while the Russell 2000 (-0.3%) closed slightly lower.

[…]

The 10-yr yield increased three basis points to 1.37% after trading at 1.36% prior to the report.

[…]

The health care sector (+0.8%) was the best-performing sector, though, as weakness in the semiconductor stocks held back the information technology sector (+0.6%). The Philadelphia Semiconductor Index fell 1.1%. The energy (-0.5%), industrials (-0.2%), and materials (-0.2%) sectors also closed lower after outperforming the past two days.

[…]

Recapping some other moves, the 2-yr yield increased one basis point to 0.22%, the U.S. Dollar Index increased 0.1% to 92.99, and WTI crude futures decreased 0.2%, or $0.16, to $69.11/bbl.

[…]
  • The Producer Price Index for final demand increased 1.0% month-over-month in July (Briefing.com consensus 0.5%) on the heels of a 1.0% increase in June. The index for final demand, less foods and energy, also increased 1.0% month-over-month (Briefing.com consensus 0.5%), matching a similar increase in June. On a year-over-year basis, the Producer Price Index for final demand was up 7.8% on an unadjusted basis, versus 7.3% in June. That is the largest advance since it was first calculated in November 2010. The index for final demand, less foods and energy, was up 6.2% versus 5.6% in June.
  • […]
  • Initial claims for the week ending August 7 decreased by 12,000 to 375,000 (Briefing.com consensus 383,000) while continuing claims for the week ending July 31 decreased by 114,000 to 2.866 million.
  • [….]

 

  • S&P 500 +18.8% YTD
  • Dow Jones Industrial Average +16.0% YTD
  • Nasdaq Composite +15.0% YTD
  • Russell 2000 +13.7% YTD

Overseas: 

  • Europe: DAX +0.7%, FTSE -0.4%,CAC +0.4%
  • Asia: Nikkei -0.2%, Hang Seng -0.5%, Shanghai -0.2%

Commodities: 

  • Crude Oil -0.23 @ 69.07
  • Nat Gas -0.14 @ 3.92
  • Gold -2.90 @ 1751.70
  • Silver -0.43 @ 23.12
  • Copper -0.02 @ 4.35
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