Market Remarks

Morning Notes – Tuesday September 7, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are slightly lower; drifting down since 9:30 Am on Monday
  • The odds are for a down to sideways day – watch for a break above 4539.00 and a break below 4529.25 for clarity
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4521.30, 4515.80, and 4507.30
  • Critical resistance levels for S&P 500 are 4541.45, 4545.85, and 4552.88
  • Key levels for E-mini futures: break above 4538.25, the high of 7:15 AM and break below 4529.25, the low of 5:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2021) closed at 4534.50 and the index closed at 4535.43 – a spread of about -1.00 points; futures closed at 4534.50 for the day; the fair value is 0.0
  • Pre-NYSE session open, futures are a bit lower – at 8:45 AM, S&P 500 futures were down by -0.50; Dow by -3; and NASDAQ by -2.25

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai, and Seoul closed lower
  • European markets are lower
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.372%, up +11.7 basis points from two weeks ago;
    • 30-years is at 1.985%, up +11.3 basis points;
    • 2-years yield is at 0.208%, down -1.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.164, up from 1.033
  • VIX
    • At 17.22 @ 8:30 AM; up from the last close; above 5-day SMA;
    • Recent high =  24.74 on August 19; low =  15.19 on August 13
    • Sentiment: Risk-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 September 3 was a green candle that opened higher with a small upper shadow and almost no lower shadow; at all-time highs
    • Stochastic (9,1, 3): %K crossed  above %D; near 100
    • RSI-9 is above 70
  • The week was up +26.06 or +0.6%; the 5-week ATR is 66.42
  • An up week; fourth in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4531.68, R1=4539.60, R2=4563.77; S1=4517.51, S2=4499.59; 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 near all-time highs
    • %K is below %D above 90; potential Bearish Divergence
    • RSI-9 is 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 to up within an up-sloping channel since 8:00 AM on August 30; uptrend since 4:00 AM on August 19 after a sideways move;
    • RSI-21 is moving within 65 and 40 since 4:00 AM on August 31
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting down since 9:30 AM on September 6
    • RSI-21 is drifting down since 9:30 AM on Monday
    • At/below EMA20, which is at/below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 7:15 PM
  • The Bollinger Band is contracting slightly since 7:30 AM
    • Stochastic (9, 1, 3): %K is below %D since 7:30 AM
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly lower on Friday, September 3 in mostly lower volume. NASDAQ Composite advanced. S&P 500 traded in higher volume.

For the week, the major US indices mostly closed higher in mostly higher volume.  Dow Jones Transportation Average and Dow Jones Industrial Average closed lower and S&P 500 and Russell 200 traded in lower volume. Markets in Asia closed higher but European markets were mixed. The dollar index was down, the hard commodities were up, the soft commodities were mixed, and the US Treasury yields were up for the week.

From Briefing.com:

The stock market ended a quiet week on a mixed note, as the S&P 500 (-0.03%) and Dow (-0.2%) ticked lower while the Nasdaq (+0.2%) hit another new closing record. Small caps underperformed, sending the Russell 2000 lower by 0.5%. […]

The top-weighted technology sector (+0.4%) held a modest gain throughout the day while health care (+0.1%), communication services (+0.1%), real estate (+0.04%), and consumer discretionary (+0.01%) turned positive as the day went on.

[…]

On the downside, utilities (-0.8%) finished at the bottom of the leaderboard while materials (-0.7%), industrials (-0.6%), financials (-0.6%), and energy (-0.5%) ended with slimmer losses.

[…]

Treasuries revisited this week’s highs in immediate reaction to the August jobs report but reversed swiftly to their lowest levels of the week. The 10-yr yield rose three basis points to 1.32%, finishing the day between its 50-day (1.309%) and 200-day moving averages (1.341%).

Today’s volume was below average with just over 700 million shares changing hands at the NYSE floor.

[…]
  • August nonfarm payrolls increased by 235,000 (Briefing.com consensus 750,000). The 3-month average for total nonfarm payrolls decreased to 750,000 from 876,000 in July. July nonfarm payrolls revised to 1,053,000 from 943,000 June nonfarm payrolls revised to 962,000 from 938,000.
  • […]
  • August unemployment rate was 5.2% (Briefing.com consensus 5.2%), versus 5.4% in July. Persons unemployed for 27 weeks or more accounted for 37.4% of the unemployed versus 39.3% in July. The U6 unemployment rate, which accounts for unemployed and underemployed workers, was 8.8%, versus 9.2% in July.
  • August average hourly earnings increased 0.6% (Briefing.com consensus 0.3%) versus a 0.4% increase in July. Over the last 12 months, average hourly earnings have risen 4.3%, versus 4.1% for the 12 months ending in July.
  • […]
  • The ISM Non-Manufacturing Index for August decreased to 61.7% (Briefing.com consensus 62.0%) from a record high 64.1% in July. The dividing line between expansion and contraction is 50.0%. The August reading marks the fifteenth straight month of growth for the services sector.
[…]
  • S&P 500 +20.8% YTD
  • Nasdaq Composite +19.2% YTD
  • Russell 2000 +16.1% YTD
  • Dow Jones Industrial Average +15.6% YTD
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