Market Remarks

Morning Notes – Friday August 20, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
    • they were lower before 9:00 AM; the move up started at 7:15 from 4378.50 level and gained nearly 30 points
  • The odds are for an up day with elevated volatility — watch for a break below 4396.25 for a change of sentiments
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4400.81, 4382.99, and 4367.73
  • Critical resistance levels for S&P 500 are 4418.61, 4423.93, and 4441.55
  • Key levels for E-mini futures: break above 4406.25, the high of 8:45 PM and break below 4378.50, the low of 7:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2021) closed at 4402.25 and the index closed at 4405.80 – a spread of about -2.50 points; futures closed at 4401.50 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +4.75; Dow by +25; and NASDAQ by +45.75

Markets Around The World

  • Markets in the East closed higher – Mumbai was closed for trading;
  • European markets are lower;
  • 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 1.237%, up +5.3 basis points from two weeks ago;
    • 30-years is at 1.870%, up +3.0 basis points;
    • 2-years yield is at 0.209%, up +2.9 basis points;
    • The 10-Year-&-2-Year spread is at 1.028, up from 1.004
  • VIX
    • At 21.36 @ 9:00 AM; down from the last close; above 5-day SMA;
    • Recent high =  25.09 on July 19; low =  15.19 on August 13
    • Sentiment: Risk-On

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 green candle thrusting candle with small upper and lower shadows
    • %K is below %D; turning up from below 5
    • RSI-9 is below 50; below 8-day EMA
  • Below 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Bouncing up from the lower bound of a Horizontal Channel that was broken earlier to the upside; near the middle of the channel; if the break below is sustained then the 61.8% extension target is near 4327.00 and the 100% extension target is near 4304.00
    • RSI-21 is near 50
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Bouncing up since 3:30 AM; broke above a downtrend line from 3:30 PM high;
    • RSI-21 moving just above 50
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 1:00 PM on Thursday
  • The Bollinger Band is expanding since 8:15 AM
    • Stochastic (9, 1, 3): %K is above %D since 8:00 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mostly lower on Thursday, August 19 in higher volume. S&P 500 and NASDAQ Composite closed higher. Major Index gapped down at the open, bounced back after the gap ad then started filling it up. After a brief decline in the early afternoon, the indices closed near the highs for the day.

From Briefing.com:

The large-cap indices closed little changed on Thursday, as relative strength in the growth/defensive-oriented stocks belied a mostly negative session. The S&P 500 (+0.1%) and Nasdaq Composite (+0.1%) both gained 0.1% while the Dow Jones Industrial Average (-0.2%) lost 0.2%.

The small-cap Russell 2000 (-1.2%) dropped 1%, posting its sixth straight decline and closing below its 200-day moving average (2152) for the first time since last September.

[…]

Most stocks succumbed to the early selling pressure, as declining issues outpaced advancing issues by more than a 2:1 margin at the NYSE and Nasdaq. The S&P 500 energy sector (-2.7%) was easily the weakest performer, losing 2.7% as oil prices ($63.69/bbl, -1.75, -2.7%) continued to decline. The other cyclical sectors declined by less than 1.0%.

[…]

The counter-cyclical consumer staples (+0.9%), real estate (+0.9%), health care (+0.5%), and utilities (+0.4%) sectors also supported the cause, illustrating a defensive mindset.

[…]

The 10-yr yield decreased three basis points to 1.24%. The 2-yr yield was unchanged at 0.21%. The U.S. Dollar Index advanced 0.5% to 93.57.

[…]
  • For the week ending August 14, initial claims decreased 29,000 to 348,000 (Briefing.com consensus 370,000), which is the lowest reading since March 14, 2020. Continuing claims for the week ending August 7 decreased 79,000 to 2.82 million, which is also the lowest level since March 14, 2020.
  • […]
  • The Conference Board’s Leading Economic Index (LEI) increased 0.9% in July (Briefing.com consensus 0.8%) after increasing a downwardly revised 0.5% (from 0.7%) in June.
[…]
  • S&P 500 +17.3% YTD
  • Dow Jones Industrial Average +14.0% YTD
  • Nasdaq Composite +12.8% YTD
  • Russell 2000 +8.0% YTD

Overseas: 

  • Europe: DAX -1.3%, FTSE -1.5%,CAC -2.4%
  • Asia: Nikkei -1.1%, Hang Seng -2.1%, Shanghai -0.6%

Commodities: 

  • Crude Oil -1.07 @ 63.93
  • Nat Gas +0.01 @ 3.86
  • Gold -7.40 @ 1780.50
  • Silver -0.36 @ 23.13
  • Copper -0.08 @ 4.04
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