Morning Notes – Monday August 24, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with a good chance of sideways to down move from pre-open levels near 3320.00 – watch for a break below 3393.05 for change of sentiments
  • No key economic data due:

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

Key Levels:

  • Critical support levels for S&P 500 are 3399.96, 3382.41, and 3374.79
  • Critical resistance levels for S&P 500 are 3325.63, 3429.21, and 3458.45
  • Key levels for E-mini futures: break above 3424.00, the high of 8:00 AM and break below 3393.50, the low of 8:00 PM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2020) closed at 3393.75 and the index closed at 3397.16 – a spread of about -3.50 points; futures closed at 3392.50 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are positive – at 9:00 AM, S&P 500 futures were up by +29.50; Dow by +277 and NASDAQ by +129.00

Markets Around The World

  • Markets in East closed higher
  • European markets are higher
  • 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 0.636%, down from August 21 close of 0.640%;
    • 30-years is at 1.345% down from 1.353%
    • 2-years yield is at 0.145% down from 0.169%
    • The 10-Year-&-2-Year spread is at 0.491 up from 0.471
  • VIX
    • Is at 22.26; down -0.28 from August 21 close; below 5-day SMA;
    • Recent high 33.67 on July 14; low 20.28 on August 11
    • Sentiment: Risk-On

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

Monthly
  • Uptrend Resumed
  • July 2020 was a green candle with almost no¬† upper and lower shadows;
    • Stochastic %K is above %D and above 80; %K Bearish Divergence in January
    • RSI-9 rising above 60 but still below a downtrend line from January 2018 high
    • Rising above 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 21 was a small green candle with almost no upper shadow and small lower shadow
    • Stochastic (9,1, 3): %K crossed below %D; above 90
    • RSI (9) is rising and near 70
  • The week was up +24.31 or +0.7%; the 5-week ATR is 67.22
  • The weekly week pivot point=3383.94, R1=3413.18, R2=3429.21; S1=3367.91, S2=3338.67; R1 pivot level was breached
  • An up week; fourth in last five weeks and eight in last ten weeks
  • Made all-time high of 3393.96, breaking above the last swing high of 3393.52 made during the week of February 17; last swing low 2965.66 made during the week of June 15
  • Above 10-week EMA, 39-week SMA and 89-week SMA
  • Uptrend since March 23
Daily
  • A small green candle with almost no upper and lower shadows; all-time intraday and closing highs
    • %K is above %D; above 90
    • RSI-9 is above 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 8:00 AM on August 21; Moving up since 10:00 AM on July 30; broke above a descending triangle at 6:00 AM on August 3;
    • RSI-21 above 75
    • %K is crisscrossing %D above 90;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving up; broke above an ascending triangle at 6:00 PM; 61.8% extension target near 3425.50 is achieved, 100% extension target is near 3444.75, and 161.8% extension target is near 3475.50
    • RSI-21 rising since 6:00 PM; near 75
    • %K crossed below %D above 80;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving up since 9:45 AM on Friday
  • The Bollinger Band stable and relatively narrow
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Friday, August 21 in mostly higher volume. Russell 2000 and NYSE Composite closed lower. Dow Jones Transportation Average traded in lower volume. Most indices are trading within a narrow band for the past few days.

For the week, major U.S. indices closed mixed. S&P 500, NASDAQ Composite, and Wilshire 5000 Total Market index closed higher. Europe and Asia were mostly down. Gold declined but crude oil and copper advances. Dollar index was up for the week.

From Briefing.com:

The stock market enjoyed another banner week, which ended with the S&P 500 (+0.3%) and Nasdaq Composite (+0.4%) at fresh record highs. The two indices gained 0.7% and 2.7% for the week, respectively. The Dow (+0.7%) outperformed today, ending the week unchanged.

[…]

Most of the remaining ten sectors spent the bulk of the day in negative territory, but the continued outperformance in technology emboldened some late buying elsewhere. As a result, only four sectors ended in the red with losses ranging from 0.3% (financials) to 0.6% (energy) while heavily-weighted groups like industrials (+0.3%) and consumer discretionary (+0.3%) recorded gains.

[…]

Treasuries ended mixed with shorter tenors ending lower while the long bond outperformed. The 10-yr note ended little changed with its yield at 0.64%.

[…]

Today’s economic data was limited to Existing Home Sales for July, which soared 24.7% m/m to a seasonally adjusted annual rate of 5.86 million (Briefing.com consensus 5.39 million). That is the largest monthly increase on record, eclipsing the prior record seen in June. Total sales in July were up 8.7% from a year ago.

[…]
  • Nasdaq Composite +26.1% YTD
  • S&P 500 +5.2% YTD
  • Dow Jones Industrial Average -2.1% YTD
  • Russell 2000 -6.9% YTD
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