Market Remarks

Morning Notes – Thursday August 26, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a sideways day to down day — watch for a break above 4498.00 and a break below 4480.25 for clarity
  • Key economic data report due during the day:
    • Prelim GDP  ( 6.7% est.; prev. 6.5%) at 8:30 AM
    • Unemployment Claims ( 345K est.; prev. 348K) at 8:30 AM
    • Jackson Hole Symposium

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 4484.60, 4478.67, and 4465.95
  • Critical resistance levels for S&P 500 are 4501.71, 4510.57, and 4519.43
  • Key levels for E-mini futures: break above 4498.00, the high of 3:45 PM on Wednesday and break below 4480.25, the low of 3:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2021) closed at 4492.50 and the index closed at 4496.19 – a spread of about -3.75 points; futures closed at 4493.00 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are mixed – at 8:00 AM, S&P 500 futures were down by -4.00; Dow up by +10; and NASDAQ down by -24.25

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 17.43 @ 7:00 AM; up from the last close; at/above 5-day SMA;
    • Recent high =  24.74 on August 19; low =  15.19 on August 13
    • Sentiment: Risk-Neutral-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 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 to up since 12:00 PM on August 23
    • RSI-21 declining since 12:00 PM on August 23 in steps from above 80 to near 55
    • At/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 Wednesday, August 25 in mixed volume. Dow Jones Transportation Average and NASDAQ Composite 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 (+0.2%) eked out intraday and closing record highs on Wednesday, as the bull market continued to attract buying interest in a lower-volume session. The S&P 500 tagged the 4,500 level for the first time but struggled to break above it.

The Dow Jones Industrial Average increased 0.1%, and the Russell 2000 increased 0.4%.

[…]

The S&P 500 financials sector (+1.2%) keyed off the curve-steepening activity, rising to the top of the leaderboard while the energy sector (+0.7%) continued to rebound with oil prices ($68.34, +0.84, +1.2%). The industrials (+0.6%) and materials (+0.4%) sectors rose modestly.

[…]

Conversely, the health care (-0.3%), information technology (-0.1%), real estate (-0.2%), and consumer staples (-0.1%) sectors underperformed with small declines as demand for defensive-oriented stocks decreased.

[…]

The CBOE Volatility Index (16.79, -0.43, -2.5%) retraced below the 17.00 level, reflecting decreased hedging interest as the major indices drifted higher on another slow, summer day. The 2-yr yield increased one basis point to 0.23%. The U.S. Dollar Index decreased 0.1% to 92.83.

[…]
  • Total durable goods orders declined 0.1% month-over-month in July (Briefing.com consensus -0.3%) and orders, excluding transportation, increased 0.7% (Briefing.com consensus +0.3%) following an upwardly revised 0.6% increase (from 0.3%) in June. On a year-over-year basis, durable goods orders were up 25.3%, while orders, excluding transportation, were up 17.7%.
  • […]
  • The weekly MBA Mortgage Applications Index increased 1.6% following a 3.9% decline in the prior week.
[…]
  • S&P 500 +19.7% YTD
  • Nasdaq Composite +16.7% YTD
  • Dow Jones Industrial Average +15.7% YTD
  • Russell 2000 +13.4% YTD

Overseas: 

  • Europe: DAX -0.3%, FTSE +0.3%,CAC +0.2%
  • Asia: Nikkei flat, Hang Seng -0.1%, Shanghai +0.7%

Commodities: 

  • Crude Oil +0.74 @ 68.39
  • Nat Gas +0.02 @ 3.93
  • Gold -13.20 @ 1794.50
  • Silver unch @ 23.89
  • Copper +0.01 @ 4.27
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