Morning Notes – Monday August 23, 2021

/ August 23, 2021

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day — watch for a break below 4445.25 for a change of sentiments
  • Key economic data report due during the day:
    • Flash Manufacturing PMI (62.4 est.; prev. 63.4) at 9:45 AM
    • Flash Services PMI ( 59.1 est.; prev. 59.9) at 9:45 AM
    • Existing Home Sales ( 5.82 M est.; prev. 5.86M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4444.35, 4432.63, and 4427.54
  • Critical resistance levels for S&P 500 are 4462.12, 4471.45, and 4480.26
  • Key levels for E-mini futures: break above 4455.00, the high of 11:00 PM and break below 4445.25, the low of 3:45 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2021) closed at 4436.50 and the index closed at 4441.67 – a spread of about -4.50 points; futures closed at 4437.00 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +15.75; Dow by +176; and NASDAQ by +37.00

Markets Around The World

  • Markets in the East closed higher;
  • European markets are higher;
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are lower
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.272%, down -1.8 basis points from two weeks ago;
    • 30-years is at 1.889%, down -4.5 basis points;
    • 2-years yield is at 0.226%, up +1.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.046, up from 1.078
  • VIX
    • At 18.64 @ 7:00 AM; down from the last close; below 5-day SMA;
    • Recent high =  24.74 on August 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 20 was a relatively small red candle with long upper shadow and small upper shadow with an all-time intraday high;
    • Stochastic (9,1, 3): %K crossed below %D; from above 90
    • RSI (9) is near 70
  • The week was down -26.33 or -0.6%; the 5-week ATR is 92.70
  • A down week; second in the last five weeks, and fourth in the last ten weeks
  • The weekly pivot point=4429.89, R1=4492.04, R2=4542.42; S1=4379.51, S2=4317.36; S1/S2/S3 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green candle with almost no upper and lower shadows
    • %K is below %D; turning up from below 5
    • RSI-9 is just above 55; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving up since 4:00 AM on August 19 from the lower bound of a Horizontal Channel that was broken earlier to the upside; again broke above the old upper bound after a brief retracement near the middle of the channel;
    • RSI-21 is above 70
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Drifting higher since 10:00 Am on Friday after a share rise before that; moving sideways since 10::00 PM
    • RSI-21 moving around 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 12:00 AM
  • The Bollinger Band is narrow and stable
    • Stochastic (9, 1, 3): %K is below %D since 6:45 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Friday, August 20 in lower volume. Major Index opened higher and then mostly traded higher for the day.

For the week, the major US indices closed lower in higher volume. Markets in Europe and Asia closed lower. The dollar index was up, the US Treasury yields declined and the commodities mostly closed lower for the week.

From Briefing.com:

The major indices pared weekly losses on Friday, as investors looked past a host of concerns to buy the dip. The S&P 500 (+0.8%), Nasdaq Composite (+1.2%), and Dow Jones Industrial Average (+0.7%) rose between 0.7-1.2% while the Russell 2000 jumped 1.7% to close back above its 200-day moving average (2155).

Every sector in the S&P 500 closed higher, including information technology (+1.3%) and utilities (+1.2%) atop the standings and the consumer staples sector (+0.2%) at the bottom of the pack. Advancing issues outpaced declining issues by more than a 2:1 margin at the NYSE and Nasdaq — a reversal from yesterday.

[…]

The 10-yr yield increased two basis points to 1.26% while the 2-yr yield was unchanged at 0.21%. The U.S. Dollar Index decreased 0.1% to 93.45.

[…]
  • S&P 500 +18.3% YTD
  • Dow Jones Industrial Average +14.8% YTD
  • Nasdaq Composite +14.2% YTD
  • Russell 2000 +9.8% YTD
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