Market Remarks

Morning Notes – Tuesday, August 30, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:00 AM; the futures are declining since 6:00 AM from 4072.75; at the lower end of a Double Top – a break below 4059.00 will have a 61.8% extension target around 4050.00, and the 100% extension target would be around 4045.00
  • The odds are for an up day with elevated volatility – watch for a break above 4048.75 for a change of sentiments
  • The key economic data report due during the day:
    • HPI ( 0.8% est.; prev. 1.4% ) at 9:00 AM
    • S&P/CS Composite-20 HPI ( 19.2% est.p; prev. 20.5%) at 9:00 AM
    • CB Consumer Confidence ( 97.6 est.; prev. 95.7) at 10:00 AM
    • JOLTS Job Openings ( 10.37M est.; prev. 10.70M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4052.17, 4029.18, and 4017.42
  • Critical resistance levels for S&P 500 are 4077.03, 4099.51, and 4111.92
  • Key levels for E-mini futures: break above 4072.75, the high at 6:00 AM and a break below 4048.75, the high at 12:15 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2022) closed at 4032.00, and the index closed at 4030.61 – a spread of about +1.25 points; the futures closed at 4031.25; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 7:00 AM, S&P 500 futures were up by +32.25, Dow by +210, and NASDAQ by +135.50

Markets Around The World

  • Markets in the East closed mostly higher –  Shanghai and Hong Kong closed down
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.11%, up +31.9 basis points from two weeks ago;
    • The 30-year is at 3.247%, up +15.1 basis points;
    • The 2-year yield is at 3.437%, up +25.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.327, down from -0.387
    • The 30-Year-&-10-Year spread is at 0.137, down from 0.305
  • VIX
    • At 25.19 @ 6:30 AM; down from the last close; above the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 21.77 on August 25
    • Sentiment: Risk-On

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

Weekly:
  • The red candle that gapped down with no lower and upper shadows;
    • Stochastic (9,1, 3): %K is below %D just above 50
    • RSI-9 is below 50
  • The week was down -170.82 or -4.0%; the 5-week ATR  is 152.61
  • A down week; second in the least five weeks and fourth in the previous ten weeks;
  • The weekly pivot point=4106.12, R1=4154.58, R2=4251.50; S1=4009.20, S2=3960.74; S1/S2/S3 pivot levels were breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A Doji candle below the previous day’s low; the gap created at the open was filled;
    • Stochastic (9, 1, 3): %K is below %D; turning up from 0
    • RSI-9 is below 40; below 8-day EMA;
  • Below 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Trending down since 2:00 PM on August 16; broke below a support level near 4110.00 and the neckline of a Head-&-Shoulder pattern – the 61.8% extension target is near 3982.00, and the 100% extension target is near 3768.00; bouncing up from a low at 4006.75 to the resistance of the broken neckline at 4110.75
    • RSI-21 is bouncing from just above ten at 6:00 PM on Sunday; above 50
    • Above EMA20, but below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Drifting sideways to up since 6:00 PM from a low of 4006.75; forming an upsloping flag;
    • RSI-21 has drifted up from near ten since 7:00 PM on Sunday to 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up since 10:45 PM on Sunday
  • The Bollinger Band is expanding a bit since 3:00 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Monday, August 29, in lower volume. The major indices gapped down at the open but turned around in the late morning and advanced before declining again. Most made red Spinning Top of Doji candles. All but two S&P sectors – Energy and Utility – closed down.

From Briefing.com:

[…]

The advance-decline line favored decliners by a roughly 2-to-1 margin at both the NYSE and the Nasdaq.

[…]

The Russell 2000 closed down 0.9%; the S&P Mid Cap 400 closed down 0.7%; the Vanguard Mega Cap Growth ETF (MGK) closed down 1.0%; the Invesco S&P 500 Equal Weight ETF (RSP) closed down 0.6%.

[…]

The Russell 3000 Growth Index closed down 0.9% while the Russell 3000 Value Index closed down 0.5%.

[…]

Only two S&P 500 sectors closed with gains, utilities (+0.3%) and energy (+1.5%).

[…]

Treasury yields settled higher with the 2-yr note yield rising two basis points to 3.42% while the 10-yr note yield rose eight basis points to 3.11%.

[…]

Dow Jones Industrial Average: -11.7% YTD
S&P 400: -12.6% YTD
S&P 500: -15.4% YTD
Russell 2000: -16.1% YTD
Nasdaq Composite: -23.2% YTD

Overseas: 

  • Europe: DAX -0.6%, FTSE market closed, CAC -0.8%
  • Asia: Nikkei -2.7%, Hang Seng -0.7%, Shanghai +0.1%

Commodities: 

  • Crude Oil +3.78 @ 96.91
  • Nat Gas +0.06 @ 9.30
  • Gold -0.00 @ 1750.20
  • Silver -0.21 @ 18.56
  • Copper -0.08 @ 3.61
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