Market Remarks

Morning Notes – Thursday September 2, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day – watch for a break below 4527.75 for a change of fortunes
  • Key economic data report due during the day:
    • Challenger Job Cuts (-86,4%; prev. -92.8%) at 7:30 AM
    • Unemployment Claims ( 340K vs. 342K est.; prev. 353K) at 8:30 AM
    • Revised Nonfarm Productivity  ( 2.1$ vs. 2.4% est; prev. 2.3%) at 8:30 AM
    • Revised Unit Labor Costs ( 1.3% vs. 1.0% est; prev. 1.0% ) at 8:30 AM
    • Trade Balance ( -70.1B vs. -70.7B est; -75.7B) at 8:30 AM
    • Factory Orders ( 0.4% est; prev. 1.5%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4522.02, 4518.35, and 4518.50
  • Critical resistance levels for S&P 500 are 4536.81, 4537.36, and 4542.83
  • Key levels for E-mini futures: break above 4532.25, the high of 4:45 AM and break below 4527.75, the low of 6:45 PM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2021) closed at 4522.00 and the index closed at 4524.09 – a spread of about -2.00 points; futures closed at 4521.15 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +9.00; Dow by +59; and NASDAQ by +41.50

Markets Around The World

  • Markets in the East closed mostly higher – Sydney and Seoul closed lower
  • European markets are mixed – Germany, France, Switzerland, and STOXX 600 are higher; the UK, Spain, and Italy are lower
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are higher
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.302%, up +2.9 basis points from two weeks ago;
    • 30-years is at 1.919%, up +0.5 basis points;
    • 2-years yield is at 0.212%, down -0.1 basis points;
    • The 10-Year-&-2-Year spread is at 1.090, up from 1.060
  • VIX
    • At 16.04 @ 6:30 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-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 small red Haramin candle within a small read candle; small upper and lower shadows near all-time highs
    • %K is below %D above 90; potential Bearish Divergence
    • RSI-9 turned below 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)
  • Sideways to down since 10:00 AM on August 30; uptrend since 4:00 AM on August 19 after a sideways move;
    • RSI-21 moving down since 12:00 PM on August 30 from above 80 in steps; made a Bearish Divergence at 2:00 AM on August 31; around 55
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting sideways to down since 10:00 AM on August 30
    • RSI-21 is moving between 65 and 40 since 3:00 AM on August 31
    • 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 2:00 AM after moving down from 10:00 AM on Wednesday
  • The Bollinger Band is expanding since 2:00 AM with price first walking up the upper band and then declining to the middle band
    • Stochastic (9, 1, 3): %K crossed above %D at 7:00 Am from below 20
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Wednesday, September 1 in lower volume. Dow Jones Industrial Average 2000 closed higher. the day’s price range was small. The major indices opened up and then traded higher before giving up some of the gains in the afternoon trading.

From Briefing.com:

The Nasdaq Composite (+0.3%) eked out fresh record highs on the first day of September, as new money continued to flow into the market’s largest stocks amid softer economic data. The S&P 500 (unch) closed little changed after coming within one point of its all-time high (4537.36) with a 0.3% gain in the afternoon.

To its credit, the small-cap Russell 2000 (+0.6%) outperformed the Nasdaq, while the Dow Jones Industrial Average declined 0.1%.

Notwithstanding the relative strength in the small-caps, there was a pro-defensive bias: the S&P 500 real estate (+1.7%) and utilities (+1.3%) sectors advanced more than 1.0% while Apple (AAPL 152.51, +0.68, +0.5%), Alphabet (GOOG 2916.84, +7.60, +0.3%), and Facebook (FB 382.05, +2.67, +0.7%) set all-time highs.

Conversely, the cyclical energy (-1.5%), financials (-0.6%), industrials (-0.4%), and materials (-0.3%) sectors underperformed in negative territory.

[…]

The 10-yr yield was unchanged at 1.30%, and the 2-yr yield increased one basis point to 0.21%. The U.S. Dollar Index decreased 0.1% to 92.52. WTI crude futures increased 0.2%, or $0.11, to $68.55/bbl amid an expected OPEC+ decision to keep production-increases steady at 400,000 bpd.

[…]
  • The August ISM Manufacturing Index checked in at 59.9% (Briefing.com consensus 58.5%), up from 59.5% in July. A number above 50.0% is indicative of expansion. August marked the 15th straight month of expansion for the manufacturing sector, and at a faster pace than what was seen in July.
  • […]
  • Total construction spending increased 0.3% m/m in July (Briefing.com consensus +0.2%) following a downwardly revised flat reading (from +0.1%) for June. Total private construction rose 0.3% m/m while total public construction spending increased 0.7%. On a year-over-year basis, total construction spending was up 9.0%.
  • […]
  • The ADP Employment Change report estimated 374,000 jobs were added to private-sector payrolls in August, which was well below the Briefing.com consensus of 660,000. The increase in July was downwardly revised to 326,00 from 330,000.
  • Total construction spending increased 0.3% m/m in July (Briefing.com consensus +0.2%) on the heels of an unrevised 0.1% increase in June.
  • The final IHS Market Manufacturing PMI for August checked in at 61.1, down from 61.2 in the preliminary reading.
[…]
  • S&P 500 +20.5% YTD
  • Nasdaq Composite +18.8% YTD
  • Russell 2000 +15.8% YTD
  • Dow Jones Industrial Average +15.4% YTD

Overseas: 

  • Europe: DAX -0.1%, FTSE +0.4%, CAC +1.2%
  • Asia: Nikkei +1.3%, Hang Seng +0.6%, Shanghai +0.7%

Commodities: 

  • Crude Oil -0.06 @ 68.44
  • Nat Gas +0.24 @ 4.62
  • Gold -3.20 @ 1814.70
  • Silver +0.18 @ 24.19
  • Copper -0.09 @ 4.28
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