Morning Notes – Tuesday August 31, 2021

/ August 31, 2021

Directional Bias For The Day:

  • S&P Futures are lower; declined from 4542.25 at 2:#0 AM to below 4520.00
  • The odds are for a down day – watch for a break above 4530.25 for a change of fortunes
  • Key economic data report due during the day:
    • HPI ( 1.9% est.; prev. 1.7%) at 9:00 AM
    • S&P/CS Composite-20 HPI ( 18.7% est.; prev. 17.0%) at 9:00 AM
    • Chicago PMI (68.0 est.; prev. 73.4) at 9:45 AM
    • CB Consumer Confidence ( 122.9 est.; prev. 129.1) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4520.35, 4513.76, and 4507.30
  • Critical resistance levels for S&P 500 are 4531.02, 4537.36, and 4539.51
  • Key levels for E-mini futures: break above 4530.25, the high of 6:45 AM and break below 4517.75, the low of 10:15 AM on Monday

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2021) closed at 4525.25 and the index closed at 4528.79 – a spread of about -3.50 points; futures closed at 4525.25 for the day; the fair value is 0.00
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -2.25; Dow by -16; and NASDAQ by -3.75

Markets Around The World

  • Markets in the East closed mostly higher – Singapore closed lower
  • European markets are lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.285%, up +2.8 basis points from two weeks ago;
    • 30-years is at 1.900%, down -2.4 basis points;
    • 2-years yield is at 0.207%, down -0.2 basis points;
    • The 10-Year-&-2-Year spread is at 1.078, up from 1.048
  • VIX
    • At 16.25 @ 6:30 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-Neutral-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 27 was a Bullish Engulfing candle at all-time highs with a small upper shadow and almost no lower shadow;
    • Stochastic (9,1, 3): %K crossed  above %D; near 100
    • RSI-9 is above 70
  • The week was up +67.70 or +1.5%; the 5-week ATR is 70.62
  • An up week; third in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4491.00, R1=4531.70, R2=4554.04; S1=4468.66, S2=4427.96; 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 that opened up with almost no lower shadow and a small upper shadow at all-time highs
    • %K is above %D near 100; potential Bearish Divergence
    • RSI-9 s near 70; above 8-day EMA;  potential Bearish Divergence
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Declined since 2:00 AM from 4542.25 to 4525.00; uptrend since 4:00 Am on August 19 after sideways move;
    • RSI-21 declined from above 80 to near 50 after making a Bearish Divergence
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Drifting sideways to down since 10:30 AM on August 30
    • RSI-21 has declined to near 40 from near 80 and after a Bearish Divergence at 2:00 AM
    • At/above EMA10 of EMA50, which is below EMA20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 3:30 AM
  • The Bollinger Band is expanding since 5:15 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher since:30 AM and after making a Bullish Divergence
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mixed on Monday, August 30 in mixed volume. S&P 500, NASDAQ Composite, and Wilshire 5000 Total Market Index closed higher. They also made all-time closing and intraday highs. Dow Jones Industrial Average, Dow Jones Transportation Average, Russell 2000, and NYSE Composite closed lower. S&P 500 and Russell 2000 traded in lower volume.

From Briefing.com:

The S&P 500 (+0.4%) and Nasdaq Composite (+0.9%) set intraday and closing record highs on Monday, as money continued to flow into the large growth stocks. The Dow Jones Industrial Average (-0.2%) and Russell 2000 (-0.5%), however, closed lower amid relative weakness in the value stocks.

[…]

The S&P 500 information technology (+1.1%), consumer discretionary (+0.9%), and communication services (+0.7%) sectors, which are home to these widely-owned names, were among the best-performing sectors today.

The defensive-oriented real estate (+1.2%) and health care (+0.6%) sectors also outperformed, while the cyclical financials (-1.5%), energy (-1.2%), materials (-0.2%), and industrials (-0.2%) sectors closed lower. The financials and energy sectors declined more than 1.0%.

[…]

Monday’s economic data was limited to Pending Home Sales, which unexpectedly decreased 1.8% m/m in July (Briefing.com consensus +0.5%) following a downwardly revised 2.0% decline (from -1.9%) in June.

[…]
  • S&P 500 +20.6% YTD
  • Nasdaq Composite +18.5% YTD
  • Dow Jones Industrial Average +15.7% YTD
  • Russell 2000 +14.7% YTD

Overseas: 

  • Europe: DAX +0.2%, FTSE closed for bank holiday, CAC +0.1%
  • Asia: Nikkei +0.5%, Hang Seng +0.5%, Shanghai +0.2%

Commodities: 

  • Crude Oil +0.31 @ 69.04
  • Nat Gas -0.07 @ 4.31
  • Gold -9.50 @ 1811.30
  • Silver -0.10 @ 23.97
  • Copper +0.06 @ 4.38
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