Morning Notes – Wednesday August 18, 2021

/ August 18, 2021

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down to a sideways day — watch for a break above 4448.75 for a change of sentiments
  • Key economic data report due during the day:
    • Building Permits ( 1.64M vs. 1.61M est.; prev. 1.59M) at 8:30 AM
    • Housing Starts (1.53M vs. 1.60M est.; prev. 1.65M) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4427.17, 4417.83, and 4402.30
  • Critical resistance levels for S&P 500 are 4448.67, 4458.39, and 4462.12
  • Key levels for E-mini futures: break above 4448.75, the high of 12:00 AM and break below 4432.50, the low of 8:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2021) closed at 4444.50 and the index closed at 4448.08 – a spread of about -3.50 points; futures closed at 4443.50 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -5.25; Dow by -81; and NASDAQ by -4.75

Markets Around The World

  • Markets in the East closed mostly higher – Sydney and Mumbai closed lower;
  • European markets are mixed – Germany, the UK, and France are down; Spain, Italy, Switzerland, and STOXX 600 are up
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • 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 1.268%, up +9.2 basis points from two weeks ago;
    • 30-years is at 1.930%, up +7.8 basis points;
    • 2-years yield is at 0.209%, up +3.3 basis points;
    • The 10-Year-&-2-Year spread is at 1.059, up from 1.000
  • VIX
    • At 17.94 @ 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 red candle with no upper shadow;
    • %K crossed below %D; from near 100 to 50
    • RSI-9 is below 60; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Declined from the all-time high of 4476.50 to near 4410.00, just below the upper bound of 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 bouncing up from near 20 at 12:00 PM on Tuesday to near 45;
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving down since 4:00 PM on Monday from 4476.50; bounce from a low of 4411.00 stalled near 4448.00;
    • RSI-21 moving just above 40
    • At/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 4:45 AM
  • The Bollinger Band is contracting since 6:30 AM
    • Stochastic (9, 1, 3): %K is crisscrossing %D lower
  • Bias: Side-Down

Previous Session

Major U.S. indices closed lower on Tuesday, August 17 in higher volume. Major Index gapped down at the open and then traded lower during the morning session before turning around in the afternoon and recouping some of the losses.

From Briefing.com:

The stock market struggled on Tuesday, with the S&P 500 (-0.7%) and Dow Jones Industrial Average (-0.8%) snapping five-session winning streaks. The Nasdaq Composite (-0.9%) and Russell 2000 (-1.2%) underperformed and declined closer to 1.0%, but the major indices did close off session lows on no specific news.

[…]

Despite the late comeback effort, the consumer discretionary sector (-2.3%) was still held back by Home Depot and its mega-cap components, while the materials (-1.2%) and industrials (-1.1%) sectors declined about 1%. The health care sector (+1.1%) was impressive with its 1.1% gain.

[…]

The 10-yr yield settled unchanged at 1.26% after trading at 1.22% prior to the open. The 2-yr yield increased one basis point to 0.21%. The U.S. Dollar Index increased 0.5% to 93.12.

[…]
  • Total retail sales declined 1.1% month-over-month (Briefing.com consensus -0.2%) following an upwardly revised 0.7% increase (from 0.6%) in June. Excluding autos, retail sales declined 0.4% month-over-month (Briefing.com consensus +0.2%) following an upwardly revised 1.6% increase (from +1.3%) in June.
  • […]
  • Total industrial production increased 0.9% in July (Briefing.com consensus 0.5%) following a downwardly revised 0.2% increase in June (from 0.4%). The capacity utilization rate increased to 76.1% (Briefing.com consensus 75.7%) from an unrevised 75.4% in June.
  • […]
  • Business Inventories increased 0.8% m/m in June (Briefing.com consensus 0.8%) following an upwardly revised 0.6% increase (from 0.5%) in May.
  • The NAHB Housing Market Index for August decreased to 75 (Briefing.com consensus 80.0) from 80 in July.
[…]
  • S&P 500 +18.4% YTD
  • Dow Jones Industrial Average +15.5% YTD
  • Nasdaq Composite +13.7% YTD
  • Russell 2000 +10.2% YTD

Overseas: 

  • Europe: DAX flat, FTSE +0.4%,CAC -0.3%
  • Asia: Nikkei -0.4%, Hang Seng -1.7%, Shanghai -2.0%

Commodities: 

  • Crude Oil -0.73 @ 66.61
  • Nat Gas -0.13 @ 3.82
  • Gold -2.70 @ 1786.30
  • Silver -0.20 @ 23.61
  • Copper -0.12 @ 4.21
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