Market Remarks

Morning Notes – Wednesday August 25, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed;
  • The odds are for a sideways day — watch for a break above 4487.50 and a break below 4476.75 for clarity
  • Key economic data report due during the day:
    • Durable Goods Orders ( -0.3% est.; prev. 0.9%) at 8:30 AM
    • Core Durable Goods Orders ( 0.5% est.; prev. 0.5%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4478.67, 44465.95, and 4450.29
  • Critical resistance levels for S&P 500 are 4491.54, 4497.64, and 4502.46
  • Key levels for E-mini futures: break above 4487.50, the high of 4:15 AM and break below 4476.75, the low of 12:45 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2021) closed at 4483.00 and the index closed at 4486.23 – a spread of about -3.25 points; futures closed at 4482.50 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are little changed – at 8:00 AM, S&P 500 futures were down by -1.00; Dow up by +4; and NASDAQ down by -6.50

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong and Mumbai were down
  • European markets are mostly higher – Germany, Italy, and Switzerland are lower;
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • USD/CAD
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.290%, down -5.2 basis points from two weeks ago;
    • 30-years is at 1.907%, down -7.7 basis points;
    • 2-years yield is at 0.246%, up +0.6 basis points;
    • The 10-Year-&-2-Year spread is at 1.044, up from 1.102
  • VIX
    • At 17.33 @ 7:00 AM; up from the last close; below 5-day SMA;
    • Recent high =  24.74 on August 19; low =  15.19 on August 13
    • 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 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 small green candle at all-time highs;
    • %K is above %D; above 90
    • RSI-9 is just above 60; above 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; broke above the previous all-time high on Monday; Drifting sideways since 12:00 PM on August 23
    • RSI-21 rising since 10:00 PM from near 50 to above 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Drifting sideways since 11:00 AM on August 23
    • RSI-21 is drifting lower since 12:00 Pm on August 23 from above 80 to just below 50;
    • At/below EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 3:00 PM on August 23
  • The Bollinger Band is relatively narrow and stable
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday, August 24 in mostly lower volume.  Dow Jones Transportation Average traded in lower volume. The day’s price range was small and the move was mostly sideways. S&P 500, NASDAQ Composite, and Wilshire 5000 Total Market Index made all-time closing and intraday highs.

From Briefing.com:

The S&P 500 (+0.2%) and Nasdaq Composite (+0.5%) rose modestly on Tuesday, setting intraday and closing record highs in a tame session. The Nasdaq topped the 15,000 level for the first time ever while the S&P 500 flirted with the 4,500 level.

The Dow Jones Industrial Average increased just 0.1%. The Russell 2000 outperformed its large-cap peers with a 1.0% gain.

[…]

The S&P 500 energy (+1.6%), consumer discretionary (+0.8%), materials (+0.7%), financials (+0.7%), and industrials (+0.5%) sectors finished atop the sector standings. Energy stocks derived their strength from the continued rebound in oil prices ($67.50, +1.90, +2.9%)

Conversely, the consumer staples (-0.8%), real estate (-0.7%), utilities (-0.6%), and health care (-0.3%) sectors closed lower for the second straight day.

[…]

The 10-yr yield rose four basis points to 1.29% while the 2-yr yield slipped one basis point to 0.22% following a strong $60 bln 2-yr note auction. The U.S. Dollar Index decreased 0.2% to 92.88.

[…]
  • New home sales increased 1.0% month-over-month in July to a seasonally adjusted annual rate of 708,000 (Briefing.com consensus 700,000) from an upwardly revised 701,000 (from 676,000) in June. On a yr/yr basis, which encompasses a tough pandemic comparison period, new home sales were down 27.2%.
[…]
  • S&P 500 +19.4% YTD
  • Nasdaq Composite +16.5% YTD
  • Dow Jones Industrial Average +15.6% YTD
  • Russell 2000 +13.0% YTD

Overseas: 

  • Europe: DAX +0.3%, FTSE +0.2%,CAC -0.3%
  • Asia: Nikkei +0.9%, Hang Seng +2.5%, Shanghai +1.1%

Commodities: 

  • Crude Oil +2.07 @ 67.65
  • Nat Gas -0.03 @ 3.91
  • Gold +0.70 @ 1807.70
  • Silver +0.25 @ 23.89
  • Copper +0.03 @ 4.26
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