Morning Notes – Monday August 10, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with a good chance of sideways move from pre-open levels around 3350.00 – watch for a break above 3343.50 for change of sentiments
  • Key economic data due:
    • JOLTS Job Openings ( 5.30M est.; prev. 5.40M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3337.34, 3328.72, and 3318.14
  • Critical resistance levels for S&P 500 are 3360.76, 3375.05, and 3386.69
  • Key levels for E-mini futures: break above 3355.50, the high of 1:30 AM and break below 3343.50, the low of 4:00 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2020) closed at 3344.75 and the index closed at 3351.28 – a spread of about -6.75 points; futures closed at 3344.75 for the day; the fair value is 0.00
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +1.75; Dow by +80 and NASDAQ by +4.25

Markets Around The World

  • Markets in East closed mostly higher – Hong Kong was down; Tokyo and Singapore were closed for trading;
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • NatGas
  • Bond
    • 10-yrs yield is  at 0.551%, down from August 7 close of 0.562%;
    • 30-years is at 1.227% down from 1.229%
    • 2-years yield is at 0.117% down from 0.119%
    • The 10-Year-&-2-Year spread is at 0.434 down  from 0.443
  • VIX
    • Is at 22.76; up +0.55 from August 7 close; at/below 5-day SMA;
    • Recent high 33.67 on July 14; low 20.97 on August 6
    • 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 August 7 was a green candle that gapped up with almost no upper and lower shadows
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI (9) is rising above 60
  • The week was up +80.16 or +2.5%; the 5-week ATR is 82.23
  • The weekly week pivot point =3329.45, R1=3374.37, R2=3397.37; S1=3306.36, S2=3286.44; R1/R2 pivot levels were 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
Daily
  • A relatively small green candle that looks like Harami with small upper and lower shadows;
    • %K above %D; above 90
    • RSI-9 is rising toward 75; above 8-day RSI
  • Above 20-day EMA; above 200-day SMA, above 50-day EMA; above 100-day
  • Uptrend since March 23
2-Hour (E-mini futures)
  • Moving up since 10:00 AM on July 30; broke above a descending triangle at 6:00 AM on August 3; 100% extension target near 3337.00 is achieved and 1.618% extension target is near 3376.00
    • RSI-21 declining since 2:00 PM on Thursday and made Bearish Divergence few times
    • %K is crisscrossing %D above 90;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Trending sideways to up to since 4:00 PM on August 6; moving up since 10:30 AM on July 30;
    • RSI-21 moving down since 4:30 PM from above 65; just above 50
    • %K is crisscrossing %D;
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways to down since 2:00 AM
  • The Bollinger Band is narrowing
    • Stochastic (9, 1, 3): %K is crossing above %D around 50
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Friday, August 7 in mostly higher volume. NASDAQ Composite closed lower and Dow Jones Transportation traded in lower volume. All S&P sectors except Technology closed higher.

For the week, major U.S. indices closed higher in mostly lower volume. DTRAN traded in higher volume. All S&P sectors closed higher for the week. Most Asian and European exchanges closed higher. Dollar Index edged up. Crude oil, gold, and silver also closed up but copper was down. Treasury yields gained.

From Briefing.com:

The S&P 500 eked out a 0.1% gain on Friday to close out a strong week for equities. The Russell 2000 outperformed with a 1.6% gain, as a better-than-feared July employment report contributed to the outperformance of small-caps and value-oriented stocks.

The Dow Jones Industrial Average increased 0.2%, while the Nasdaq Composite fell 0.9% amid relative weakness in the mega-cap stocks.

[…]

Optimism surrounding the data fueled the gains in the S&P 500 financials (+2.2%), industrials (+1.7%), utilities (+1.8%), and real estate (+1.4%) sectors, which are four of the five sectors down this year. The top-weighted information technology sector pulled back 1.6% today.

[…]

U.S. Treasuries finished with modest losses. The 2-yr yield increased two basis points to 0.13%, and the 10-yr yield increased three basis points to 0.56%. The U.S. Dollar Index advanced 0.7% to 93.41. WTI crude futures fell 1.9%, or $0.78, to $41.17/bbl.

[…]
  • The Employment Situation Report for July can fairly be labeled better than feared given the surprisingly weak ADP Employment Change Report seen earlier in the week. The government’s official report indicated that private-sector payrolls increased by 1.462 million in July. The nonfarm payrolls number was even larger at 1.763 million.
    • The key takeaway from the report is that the labor market is recovering from the shock of the COVID-induced seizure, but still has a long way to go, evidenced by the 10.2% unemployment rate and a 55.1% employment-population ratio that is far below the 60.7% level seen a year ago.
  • Wholesale inventories decreased 1.4% in June (Briefing.com consensus -2.0%) following an unrevised 1.2% decline in May.
[…]
  • Nasdaq Composite +22.7% YTD
  • S&P 500 +3.7% YTD
  • Dow Jones Industrial Average -3.9% YTD
  • Russell 2000 -6.0% YTD

..NYSE Adv/Dec 1867/1034. ..NASDAQ Adv/Dec 1901/1358.

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