Market Remarks

Morning Notes – Friday September 3, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with volatility – the price action will be significantly influenced by the Non-Farm Payroll report at 8:30 AM
  • Key economic data report due during the day:
    • Non-Farm Employment Change ( 720K est.; prev. 943K) at 8:30 AM
    • Average Hourly Earnings  ( 0.3% est; prev. 0.4%) at 8:30 AM
    • Unemployment Rate ( 5.2% est; prev. 5.4% ) at 8:30 AM
    • Final Services PMI ( 55.2 est; prev. 55.2) at 10:00 AM
    • ISM Services PMI ( 61.9 est; prev. 64.1) 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 4526.88, 4522.02, and 4518.35
  • Critical resistance levels for S&P 500 are 4545.85, 4557.01, and 4568.17
  • Key levels for E-mini futures: break above 4545.50, the high of 11:00 PM and break below 45347.00, the low of 7:30 PM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2021) closed at 4536.00 and the index closed at 4536.95 – a spread of about -1.00 points; futures closed at 4535.25 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +7.75; Dow by +39; and NASDAQ by +20.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, and Singapore closed lower; Tokyo, Sydney, Mumbai, and Seoul closed higher
  • European markets are mostly lower – Germany and the UK are higher
  • 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 mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.294%, up +5.2 basis points from two weeks ago;
    • 30-years is at 1.907%, up +3.1 basis points;
    • 2-years yield is at 0.212%, down -0.6 basis points;
    • The 10-Year-&-2-Year spread is at 1.082, up from 1.024
  • VIX
    • At 16.26 @ 6:45 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-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 Doji at all-time highs
    • %K crossed above %D above 90; potential Bearish Divergence
    • RSI-9 turned up just 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)
  • Moving sideways since 10:00 AM on August 30; an ascending triangle is forming; 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; just above 60
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting sideways to up since 10:00 AM on August 30
    • RSI-21 is drifting down since 10:30 PM after making a Bearish Divergence
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 3:45 AM
  • The Bollinger Band contracted at around 3:00 AM
    • Stochastic (9, 1, 3): %K is below %D around 20
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Thursday, September 2 in mostly lower volume. Russell 2000 traded in lower volume. S&P 500, NASDAQ Composite, NYSE Composite, and Wilshire 5000 Total Market Index made all-time closing and intraday highs. Dow Jones Industrial Average 2000 closed higher. The major indices opened up and then traded sideways till 12:00 PM then declined before rising again in the least hour of trading.

From Briefing.com:

The S&P 500 (+0.3%) and Nasdaq Composite (+0.1%) eked out intraday and closing record highs on Thursday, although they closed off session highs amid softness in the growth stocks. The Dow Jones Industrial Average increased 0.4% while the Russell 2000 increased 0.7%. […]

The shift into “value” was best manifested in the 0.6% gain in the Russell 1000 Value Index, which was better than the gains in the S&P 500 and Nasdaq. The S&P 500 energy (+2.5%) and industrials (+1.0%) sectors — two cyclical groups often lumped into the value category — were pockets of strength.

The energy sector was impressive with a 2.5% gain, largely due to the 2% gain in oil prices ($69.96/bbl, +1.41, +2.1%). WTI crude futures settled close to $70.00 per barrel.

[…]

The S&P 500 information technology (-0.1%), communication services (-0.7%), and consumer discretionary (-0.1%) sectors — which contain the mega-cap stocks — were the only sectors that closed lower.

[…]

The Treasury market held steady ahead of the August employment report tomorrow. The 2-yr yield was unchanged at 0.21%, and the 10-yr yield decreased one basis point to 1.29%. The U.S. Dollar Index decreased 0.2% to 92.23.

[…]
  • For the week ending August 28, initial claims decreased by 14,000 to 340,000 (Briefing.com consensus 348,000), which is the lowest level since March 14, 2020. Continuing claims for the week ending August 21 decreased by 160,000 to 2.748 million, which is also the lowest level since March 14, 2020.
  • […]
  • The trade deficit for July narrowed to $70.1 billion (Briefing.com consensus -$74.0 billion) from an upwardly revised $73.2 billion (prior -$75.7 billion) in June. The narrowing was the result of July exports being $2.8 billion more than June exports, and July imports being $0.4 billion less than June imports.
  • […]
  • Factory orders for manufactured goods increased 0.4% m/m in July, as expected, following a 1.5% increase in June. Shipments of manufactured goods were up 1.6% after increasing 1.9% in June.
  • […]
  • Q2 productivity was revised down to 2.1% (Briefing.com consensus 2.5%) from the advance estimate of 2.3% and unit labor costs were revised up to 1.3% (Briefing.com consensus 0.8%) from the advance estimate of 1.0%.
[…]
  • S&P 500 +20.8% YTD
  • Nasdaq Composite +19.0% YTD
  • Russell 2000 +16.7% YTD
  • Dow Jones Industrial Average +15.8% YTD

Overseas: 

  • Europe: DAX +0.1%, FTSE +0.2%, CAC +0.1%
  • Asia: Nikkei +0.3%, Hang Seng +0.2%, Shanghai +0.8%

Commodities: 

  • Crude Oil +1.40 @ 69.84
  • Nat Gas +0.02 @ 4.64
  • Gold -2.80 @ 1811.90
  • Silver -0.25 @ 23.94
  • Copper +0.03 @ 4.31
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