Morning Notes – Tuesday August 11, 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 3365.00 – watch for a break below 3357.00 for change of sentiments
  • Key economic data due:
    • PPI ( 0.6% vs. 0.3% est.; prev. -0.2%) at 8:30 AM
    • Core PPI ( 0.5% v. 0.1% est.; prev. -0.3%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3353.61, 3335.44, and 3328.72
  • Critical resistance levels for S&P 500 are 3375.05, 3386.69, and 3393.52
  • Key levels for E-mini futures: break above 3379.00, the high of 6:00 AM and break below 3357.00, the low of 2:30 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2020) closed at 3355.00 and the index closed at 3360.47 – a spread of about -5.50 points; futures closed at 3352.75 for the day; the fair value is +2.25
  • Pre-NYSE session open, futures are mixed – at 9:00 AM, S&P 500 futures were up by +18.00; Dow up by +350 and NASDAQ down by -43.00

Markets Around The World

  • Markets in East closed mostly higher – Shanghai and Singapore were down;
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Cotton
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cocoa
  • Bond
    • 10-yrs yield isĀ  at 0.627%, up from August 10 close of 0.574%;
    • 30-years is at 1.307% up from 1.248%
    • 2-years yield is at 0.149% up from 0.133%
    • The 10-Year-&-2-Year spread is at 0.478 up from 0.441
  • VIX
    • Is at 21.26; up -0.87 from August 10 close; 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 largeĀ  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 small green candle that looks like Doji with almost no upper shadow and small lower shadow;
    • %K is crossing below %D; above 90
    • RSI-9 is near 70; 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; 1.618% extension target near 3376.00 is achieved;
    • RSI-21 declining since 4:00 AM from 80
    • %K is crisscrossing %D;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Trending up to since July 30 in steps; retracing since 5:30 AM from 3379.00
    • RSI-21 declining from near 70 to below 60
    • %K is below %D;
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving since 9:00 AM on August 7
  • The Bollinger Band expanded from 3:00 Am to 8:00 AM; flattening since
    • Stochastic (9, 1, 3): %K is below %D below 20
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Monday, August 10 in mixed volume. NASDAQ Composite closed lower in lower volume. S&P 500 also traded in lower volume.

Dow Jones Industrial Average and Dow Jones Transportation Average were the leaders on Monday.

From Briefing.com:

The S&P 500 increased 0.3% on Monday, rising for the seventh straight session on the back of strong gains from the value-oriented and cyclical stocks. The Dow Jones Industrial Average (+1.3%) and Russell 2000 (+1.0%) gained at least 1.0%, while the Nasdaq Composite declined 0.4% amid relative weakness in the mega-caps.

[…]

The broader trend, though, was heavily in favor of beaten-down cyclical stocks like those within the energy (+3.1%) and industrials (+2.4%) sectors, which rose more than 2.0%. The materials (+1.0%) and consumer discretionary (+0.7%) sectors followed suit, while communication services (-0.5%), information technology (-0.3%), and health care (-0.3%) lagged.

[…]

U.S. Treasuries finished near their flat lines. The 2-yr yield remained unchanged at 0.13%, and the 10-yr yield increased one basis point to 0.57%. The U.S. Dollar Index gained 0.2% to 93.58. WTI crude futures gained 1.9%, or $0.78, to $41.95/bbl.

[…]
  • Nasdaq Composite +22.2% YTD
  • S&P 500 +4.0% YTD
  • Dow Jones Industrial Average -2.6% YTD
  • Russell 2000 -5.0% YTD
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