Market Remarks

Morning Notes – Tuesday August 17, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down day — watch for a break above 4459.50 for a change of sentiments
  • Key economic data report due during the day:
    • Retail Sales ( -1.1% vs. -0.2% est.; prev. 0.7%) at 8:30 AM
    • Core Retail Sales ( -0.4% vs. 0.2% est.; prev. 1.6%) at 8:30 AM
    • Industrial Production ( 0.5% est.; prev. 0.4%) at 9:15 AM
    • Capacity Utilization ( 75.7% est.; prev. 75.4%) at 9:15 AM
    • Business Inventories ( 0.8% est.; prev. 0.5%) at 10:00 AM
    • NAHB Housing Market Index ( 80 est.; prev. 80) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4452.71, 4437.66, and 4430.03
  • Critical resistance levels for S&P 500 are 4471.45, 4494.09, and 4508.48
  • Key levels for E-mini futures: break above 4459.00, the high of 5:15 AM and break below 4447.00, the low of 3:15 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2021) closed at 4473.75 and the index closed at 4479.71 – a spread of about -6.00 points; futures closed at 4474.00 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -23.25; Dow by -217; and NASDAQ by -77.25

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai closed higher;
  • European markets are mostly lower – the UK and Switzerland are up
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • 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 1.227%, up +5.3 basis points from two weeks ago;
    • 30-years is at 1.897%, up +4.4 basis points;
    • 2-years yield is at 0.209%, up +3.7 basis points;
    • The 10-Year-&-2-Year spread is at 1.018, up from 1.002
  • VIX
    • At 17.21 @ 8:00 AM; up from the last close; above 5-day SMA;
    • Recent high =  25.09 on July 19; low =  14.10 on June 29
    • Sentiment: Risk-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 13 was a relatively small green candle with small upper and lower shadows at all-time highs;
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI (9) is near 75
  • The week was up +31.48 or +0.7%; the 5-week ATR is 84.42
  • An up week; third in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4453.70, R1=4482.67, R2=4497.33; S1=4439.04, S2=4410.07; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A long-legged green candle with no upper shadow at all-time-highs;
    • %K is above %D; near 100
    • RSI-9 is above 70; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Retreating a bit second time after breaking above a Horizontal Channel that was formed from July 23 to August 6 between 4420.00 and 4380.00; the 61.8% extension target near 4463.00 is achieved; the 100% extension target is near 4486.00
    • RSI-21 has declined to 40 from near 70 and after making a Bearish Divergence
    • Below EMA20 but above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting lower since 4:00 PM on Monday from 4476.50 to below 4450.00;
    • RSI-21 moving just above 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 6:00 PM
  • The Bollinger Band is contracting since 7:15 AM
    • Stochastic (9, 1, 3): %K is below %D since 8:00 AM
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mixed on Monday, August 16 in higher volume. NASDAQ Composite, Russell 2000, NYSE Composite, and Wilshire 5000 Total Market Index closed lower. Dow Jones Industrial Average, S&P 500, and Dow Jones Transportation Average closed higher. Major Index opened lower but turned around after the first hour of trading and then traded higher for the rest of the day.

From Briefing.com:

The S&P 500 (+0.3%) and Dow Jones Industrial Average (+0.3%) eked out intraday and closing record highs on Monday after being down as much as 0.7-0.8% in the morning. This was the fifth straight session they set record highs. The Nasdaq Composite (-0.2%) closed slightly lower while the Russell 2000 fell 0.9%. […]

The health care (+1.1%), utilities (+0.7%), and consumer staples (+0.6%) sectors outperformed the tech sector and the benchmark index. Conversely, the energy (-1.8%), materials (-0.5%), consumer discretionary (-0.4%), and financials (-0.2%) sectors closed lower.

[…]

The 10-yr yield settled lower by four basis points to 1.26%, which reflected lingering growth concerns. The 2-yr yield decreased two basis points to 0.20%. The U.S. Dollar Index increased 0.1% to 92.62.

[…]

Reviewing Monday’s economic data, the Empire State Manufacturing for August decelerated to 18.3 (Briefing.com consensus 26.0) from 43.0 in July. Looking ahead, investors will receive Retail Sales for July, Industrial Production and Capacity Utilization for July, Business Inventories for June, and the NAHB Housing Market Index for August on Tuesday.

  • S&P 500 +19.3% YTD
  • Dow Jones Industrial Average +16.4% YTD
  • Nasdaq Composite +14.8% YTD
  • Russell 2000 +11.6% YTD

Overseas: 

  • Europe: DAX -0.3%, FTSE -0.9%,CAC -0.3%
  • Asia: Nikkei -1.6%, Hang Seng -0.8%, Shanghai flat

Commodities: 

  • Crude Oil -0.47 @ 67.34
  • Nat Gas +0.08 @ 3.95
  • Gold +9.10 @ 1789.00
  • Silver +0.07 @ 23.81
  • Copper -0.05@ 4.33
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