Morning Notes – Wednesday August 5, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up to sideways day – watch for a break below 3309.00 for change of sentiments
  • Key economic data due:
    • ADP Non-Farm Employment Change ( 167K vs. 1200K est.; prev. 4314K) at 8:15 AM
    • Trade Balance ( -50.7B vs. -50.3B est.; prev. -54.8B ) at 8:30 AM
    • Final Services PMI ( 49.6 est.; prev. 49.6) at 9:45 AM
    • ISM Non-Manufacturing PMI ( 55.0 est.; prev. 57.1) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Uptrend since March 23 resumed
  • Daily: Uptrend since March 23 resumed
  • 120-Min: Up
  • 30-Min: Up
  • 15-Min: Up
  • 6-Min: Up-Side

Key Levels:

  • Critical support levels for S&P 500 are 3295.34, 3286.37 and 3272.17
  • Critical resistance levels for S&P 500 are 3317.77, 3328.45, and 3341.52
  • Key levels for E-mini futures: break above 3321.75, the high of 7:30 AM and break below 3309.00, the low of 4:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2020) closed at 3300.00 and the index closed at 3306.51 – a spread of about -6.50 points; futures closed at 3300.00 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are mostly higher – at 8:45 AM, S&P 500 futures were up by +15.25; Dow up by +183 and NASDAQ down by -1.00

Markets Around The World

  • Markets in East closed mixed – Shanghai, Hong Kong, Seoul, and Singapore were up; Tokyo, Sydney, and Mumbai were down
  • European markets are mostly higher – Switzerland is lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
     
  • Bond
    • 10-yrs yield is  at 0.545%, up from August 4 close of 0.515%;
    • 30-years is at 1.236% up from 1.191%
    • 2-years yield is at 0.113% up from 0.097%
    • The 10-Year-&-2-Year spread is at 0.432 up from 0.418
  • VIX
    • Is at 23.25; down -0.51 from August 4 close; at/below 5-day SMA;
    • Recent high 33.67 on July 14; low 22.17 on August 3
    • Sentiment: Risk-Neutral

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

Monthly
  • Uptrend under pressure
  • June 2020 was a green spinning candle with large  upper and lower shadows;
    • Stochastic %K is above %D and above 60; %K Bearish Divergence in January
    • RSI-9 turning up after declining to 34.91, the lowest level since April 2009, from above 75 in January and Bearish Divergence
    • Regaining the middle band of the 120-month regression channel after the third break of the channel since 2009 and first close below it
  • The sequence of higher highs and higher lows is broken
Weekly:
  • The week ending on July 31 was a green Bullish Engulfing candle with small upper and lower shadows
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI (9) is rising above 60
  • The week was up +55.49 or +1.7%; the 5-week ATR is 99.16 – first less than 100 points weekly range since February
  • The weekly week pivot point =3249.14, R1=3294.15, R2=3317.18; S1=3226.11, S2=3181.10; R1 pivot level was breached
  • An up week; fourth in last five weeks and seventh in last ten weeks
  • The all-time high of 3393.52, the last swing high, was during the week of February 17; broke below the low of the week of December 24, 2018; support near 2193.81, the high during the week of August 15, 2016; sequence of higher highs and higher lows broken
  • Above 10-week EMA, 39-week SMA and 89-week SMA
  • Uptrend since March 23 resumed
Daily
  • A relatively small Bullish Engulfing candlestick with almost no upper and lower shadows;
    • %K above %D; above 90
    • RSI-9 is rising toward 70; above 8-day RSI
  • Above 20-day EMA; above 200-day SMA, above 50-day EMA; above 100-day
  • Uptrend since March 23 resumed
2-Hour (E-mini futures)
  • Moving up since 10:00 AM on July 30 following a rounding bottom or a saucer like pattern that started on July 23
    • RSI-21 rising bove 75
    • %K is crisscrossing %D above 90;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Trending up since 12:30 PM on July 31; broke above a failed Double Top pattern
    • RSI-21 declining from near 75 to near 60; made Bearish Divergence at 7:30 AM
    • %K is crisscrossing %D;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) sloping up since 9:45 AM on Tuesday
  • The Bollinger Band is relatively stable
    • Stochastic (9, 1, 3): %K is crossing below %D
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Tuesday, August 4 in lower volume. Most indices made bullish candlestick formations like Bullish Engulfing and are trying to break above a resistance level created by June highs. All but two S&P sectors – Financials and Healthcare – closed higher.

From Briefing.com:

The S&P 500 gained 0.4% on Tuesday to close at session highs in a tight-ranged session, even as negotiations surrounding the next coronavirus relief bill remained deadlocked. The Nasdaq Composite (+0.4%) kept pace with the benchmark index to close at a record high, while the Dow Jones Industrial Average (+0.6%) and Russell 2000 (+0.7%) outperformed.

[…]

The energy sector rose 2.5% amid higher oil prices ($41.68/bbl, +0.66, +1.6%), followed by gains in the real estate (+1.4%), utilities (+1.4%), and materials (+1.3%) sectors. The health care (-0.5%) and financials (-0.4%) sectors were the lone holdouts.

[…]

Gold futures ($2020.80/ozt, +$33.80, +1.7%) also rallied to new highs above $2000/ozt. The U.S. Dollar Index declined 0.1% to 93.27 after trading higher in the morning.

[…]
  • The key takeaway from the report is the affirmation that business spending picked up in June as economies reopened, evidenced by a 3.4% increase in new orders for nondefense capital goods excluding aircraft that was up slightly from the 3.3% increase noted in the Advance Durable Goods Orders report.
[…]
  • Nasdaq Composite +21.9% YTD
  • S&P 500 +2.3% YTD
  • Dow Jones Industrial Average -6.0% YTD
  • Russell 2000 -9.1% YTD
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