Morning Notes – Friday August 27, 2021

/ August 27, 2021

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for a sideways day to down day from pre-open levels around 4478.00 – watch for a break above 4484.25 and a break below 4473.50 for clarity
  • Key economic data report due during the day:
    • Core PCE Price Index ( 0.3% vs. 0.3% est.; prev. 0.4%) at 8:30 AM
    • Good Trade Balance ( -86.4B vs. -90.8B est.; prev. -92.2B) at 8:30 AM
    • Personal Income ( 1.1% vs. 0.2% est.; prev. 0.1%) at 8:30 AM
    • Personal Spending ( 0.3% vs. 0.4% est.; prev. 1.0%) at 8:30 AM
    • Prelim Wholesale Inventories ( 0.6% vs. 1.0% est.; prev. 1.1% ) 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: Down-Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for S&P 500 are 4468.99, 4450.29, and 4432.63
  • Critical resistance levels for S&P 500 are 4487.62, 4495.90, and 4501.71
  • Key levels for E-mini futures: break above 4484.25, the high of 3:30 PM and break below 4473.50, the low of 7:45 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2021) closed at 4466.00 and the index closed at 4470.00 – a spread of about -4.00 points; futures closed at 4466.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +10.00; Dow by +68; and NASDAQ by +40.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Mumbai, and Seoul closed higher; Hong Kong, Tokyo, Sydney, and Singapore were down
  • European markets are mostly lower – Italy and Switzerland are higher;
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • EUR/USD
    • USD/CAD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.342%, down -2.5 basis points from two weeks ago;
    • 30-years is at 1.941%, down -7.2 basis points;
    • 2-years yield is at 0.238%, up +1.3 basis points;
    • The 10-Year-&-2-Year spread is at 1.104, up from 1.142
  • VIX
    • At 17.85 @ 6:45 AM; lower from the last close; above 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 Bearish Engulfing candle, relatively larger than the past few day’s small-sized candles, with almost no upper and lower shadows;
    • %K crossed below %D from above 90; Bearish Divergence
    • RSI-9 turned down from above 65; above 8-day EMA; Bearish Divergence
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving sideways to down since 10:00 AM on August 23 within the all-time high of 4498.00 and 4460.00
    • RSI-21 rising from near 20 at 2:00 PM on August 25
    • 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 moving along 40;
    • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 9:30 PM
  • The Bollinger Band is narrowing since 5:45 AM
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Side-Down

Previous Session

Major U.S. indices closed lower on Thursday, August 26 in mostly higher volume. Dow Jones Transportation Average traded in lower volume. The major indices opened lower and then after the morning session mostly traded lower.

From Briefing.com:

The stock market’s rebound momentum was put to a halt on Thursday, with the major indices losing between 0.5% (Dow Jones Industrial Average) and 1.1% (Russell 2000) amid some negative-sounding headlines. Both the S&P 500 (-0.6%) and Nasdaq Composite (-0.6%) snapped five-session winning streaks.

[…]

Ten of the 11 S&P 500 sectors closed lower, led by energy (-1.5%) as oil prices ($67.35, -0.99, -1.5%) retraced some rebound gains. The heavily-weighted information technology sector (-0.6%) exerted influential pressure on the market with a 0.6% decline, while the real estate sector (+0.1%) was spared from today’s selling activity.

[…]

The 10-yr yield settled unchanged at 1.34%, and the 2-yr yield settled unchanged at 0.23%. The U.S. Dollar Index increased 0.2% to 93.05.

[…]
  • The second estimate for Q2 GDP checked in at 6.6% (Briefing.com consensus 6.6%) versus the advance estimate of 6.5% and the GDP Deflator edged up to 6.1% (Briefing.com consensus 6.0%) from the advance estimate of 6.0%.
  • […]
  • Initial claims for the week ending August 21 increased by 4,000 to 353,000 (Briefing.com consensus 355,000) while continuing claims for the week ending August 14 decreased by 3,000 to 2.862 million.
[…]
  • S&P 500 +19.0% YTD
  • Nasdaq Composite +16.0% YTD
  • Dow Jones Industrial Average +15.1% YTD
  • Russell 2000 +12.1% YTD

Overseas: 

  • Europe: DAX -0.4%, FTSE -0.4%,CAC -0.2%
  • Asia: Nikkei +0.1%, Hang Seng -1.1%, Shanghai -1.1%

Commodities: 

  • Crude Oil -0.52 @ 67.87
  • Nat Gas +0.29 @ 4.22
  • Gold -1.50 @ 1793.00
  • Silver -0.41 @ 23.49
  • Copper -0.03 @ 4.24
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