Market Remarks

Morning Notes – Thursday, August 11, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; the futures up 20 points since 4:45 AM after moving sideways from 8:15 PM
  • The odds are for an up day with volatility and a good chance of moving sideways to down from the pre-open levels around 4245.00 – watch for a break below 4213.00 for a change of sentiments
  • The key economic data report due during the day:
    • PPI ( -0.5% vs.; prev. 0.2% est.; prev. 1.2%) at 8:30 AM
    • Core PPI ( 0.2% vs. 0.4% est.; prev. 0.4%) at 8:30 AM
    • Unemployment Claims ( 262K vs. 264K Est.,; prev. 248K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4211.03, 4193.69, and 4177.26
  • Critical resistance levels for S&P 500 are 4257.69, 4270.43, and 4281.54
  • Key levels for E-mini futures: break above 4245.50, the high at 8:30 AM and a break below 4213.00, the high at 4:45 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2022) closed at 4210.50, and the index closed at 4210.24 – a spread of about +0.25 points; the futures closed at 4210.0; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +30.25, Dow by +252; and NASDAQ by +96.75

Markets Around The World

  • Markets in the East closed lower – Tokyo was closed for trading
  • European markets are mostly higher – the UK is down
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.786%, up +5.2 basis points from two weeks ago;
    • The 30-year is at 3.042%, up +4.0 basis points;
    • The 2-year yield is at 3.210%, up +18.6 basis points;
    • The 10-Year-&-2-Year spread is at -0.424, down from -0290
    • The 30-Year-&-10-Year spread is at 0.256, down from 0.268
  • VIX
    • At 19.83 @ 8:45 AM; up from the last close; below the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 18.45 on April 4
    • Sentiment: Risk-On

The trend and patterns in various time frames for S&P 500:

Weekly:
  • The small Spinning Top week at/above the previous week’s close.
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI-9 is above 50 after making a Bullish Divergence on June 13
  • The week was up +14.90 or +0.4%; the 5-week ATR  is 173.07
  • An up week; fourth in the least five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4130.89, R1=4181.96, R2=4218.74; S1=4094.11, S2=4043.04; No pivot levels were breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A green candle that gapped up above the June 2 high resistance; broke above a symmetrical triangle on July 19 – the 100% extension target near 4190.00 is achieved, and the 161.8% extension target is near 4380.00;  the 161.8% extension target near 4216.00 is achieved.
    • Stochastic (9, 1, 3): %K is above %D; near 100
    • RSI-9 is above 70; above 8-day EMA;
  • Above 20-day EMA, 50-day EMA, and 100-day SMA; below 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Broke above the June 2 high resistance, resuming the uptrend since 10:00 AM on July 14; broke above a Descending Triangle on July 19 – the 161.8% extension target near 4235.00 is achieved.
    • RSI-21 is rising; just below 90;
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Bouncing off the 20-bar EMA;
    • RSI-21 is moving just below 70
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 7:30 AM
  • The Bollinger Band is expanding since 7:30 AM, with price walking up the upper band.
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Wednesday, August 10, in higher volume. The major indices gapped up at the open and then drifted higher for the rest of the day. All S&P sectors closed higher, and the US Treasury Yields were mixed.

From Briefing.com:

[…]

The three main indices saw some up and down price action but ultimately closed with sizable gains. The Nasdaq and S&P 500, which breached the 4,200 level, closed just below session highs.

[…]

The mega caps, growth stocks, and cyclical sectors led the way after those areas sold off heavily in recent sessions. The Vanguard Mega Cap Growth ETF (MGK), up 2.9%, closed ahead of the broader market. The Russell 3000 Growth Index (+2.7%) closed ahead of the Russell 3000 Value Index (+1.9%). The PHLX Semiconductor Index (SOX) closed up 4.3%.

S&P 500 sector performance reflected a risk-on mindset. The materials (+2.9%), consumer discretionary (+2.9%), communication services (+2.8%), and information technology (+2.8%) sectors topped the leaderboard.

The buying was broad-based with all 11 S&P 500 sectors closing in the green with gains ranging from 0.5% (utilities) to 2.9% (materials). The Invesco S&P 500 Equal Weight ETF (RSP) jumped 2.1% on the day.

[…]

Advancer led decliners by a roughly 6-to-1 margin at the NYSE and a less than 3-to-1 margin at the Nasdaq.

[…]

The 2-yr note yield, which was at 3.27% just before the release, dropped to 3.08% in its wake before settling the day at 3.19%. The 10-yr note yield, which was at 2.80% just before the release, fell to 2.69% in its wake but gave back just about everything and settled at 2.79%.

[…]
  • Total CPI was unchanged month-over-month (Briefing.com consensus +0.2%), leaving it up 8.5% year-over-year versus 9.1% in June. Core CPI, which excludes food and energy, was up 0.3% month-over-month (Briefing.com consensus +0.5%), leaving it up 5.9% year-over-year versus 5.9% in June.
  • […]
  • Weekly MBA Mortgage Applications Index showed 0.2% increase versus the prior increase of 1.2%.
  • June Wholesale Inventories rose 1.8% (Briefing.com consensus 1.9%) versus the prior revised increase of 1.9% (from 1.8%).

Dow Jones Industrial Average: -8.3% YTD
S&P 400: -9.9% YTD
S&P 500: -11.7% YTD
Russell 2000: -12.3% YTD
Nasdaq Composite: -17.8% YTD

Overseas: 

  • Europe: DAX +1.2%, FTSE +0.2%, CAC +0.5%
  • Asia: Nikkei -0.7%, Hang Seng -2.0%, Shanghai -0.5%

Commodities: 

  • Crude Oil +1.48 @ 91.85
  • Nat Gas +0.40 @ 8.23
  • Gold -3.70 @ 1807.50
  • Silver +0.11 @ 20.58
  • Copper +0.06 @ 3.64
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