Morning Notes – Tuesday August 25, 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 3440.00 – watch for a break below 3425.00 for change of sentiments
  • Key economic data due:
    • HPI ( 0.3% est.; prev. -0.3%) at 9:00 AM
    • S&P/CS Composite-20 HPI (3.6% est.; prev. 3.7%) at 9:00 AM
    • CB Consumer Confidence ( 93.0 est.; prev. 92.6) at 10:00 AM
    • New Home Sales ( 787K est.; prev. 776K) at 10:00 AM
    • Richmond Manufacturing Index ( 10 est.; prev. 10) 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

Key Levels:

  • Critical support levels for S&P 500 are 3432.09, 3414.02, and 3399.43
  • Critical resistance levels for S&P 500 are 4437.87, 3444.46, and 3456.83
  • Key levels for E-mini futures: break above 3448.75, the high of 3:00 AM and break below 3425.00, the low of 4:30 PM on Monday

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2020) closed at 3428.50 and the index closed at 3431.28 – a spread of about -2.75 points; futures closed at 3427.50 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures are mixed – at 8:15 AM, S&P 500 futures were up by +12.00; Dow up by +159 and NASDAQ down by -26.00

Markets Around The World

  • Markets in East closed mostly higher – Shangai and Hong Kong closed lower
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Platinum
    • Palladium
    • Coffee
    • Cotton
    • Cocoa
    • Gold
    • Silver
    • Copper
    • Sugar
  • Bond
    • 10-yrs yield closed at 0.646%, up from August 21 close of 0.640%;
    • 30-years is at 1.350% down from 1.353%
    • 2-years yield is at 0.154% down from 0.169%
    • The 10-Year-&-2-Year spread is at 0.492 up from 0.471
  • VIX
    • Is at 22.35; down -0.02 from August 24 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 that gapped up at the open with almost no upper and lower shadows; all-time intraday and closing highs
    • %K is above %D; above 90
    • RSI-9 is above 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 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 declining since 10:00 PM from near 80 to below 70
    • %K is crisscrossing %D lower from near 100;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving up since 8:00 AM on August 21; broke above an ascending triangle at 6:00 PM on Monday; 100% extension target near 3444.75 is achieved and 161.8% extension target is near 3475.50
    • RSI-21 declined from near 80 to near 60 after making a Bearish Divergence at 10:00 PM
    • %K crisscrossing %D higher from near 10 at 4:30 AM
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways since 11:45 PM
  • The Bollinger Band stable and relatively narrow
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Monday, August 24 in mostly higher volume. S&P 500 and Russell 2000 traded in lower volume. Indices are breaking above recent resistance levels. All S&P sectors except Healthcare closed higher.

From Briefing.com:

The S&P 500 (+1.0%) and Nasdaq Composite (+0.6%) rose to new record highs on Monday, as sentiment was boosted by news the FDA approved emergency use authorization for convalescent plasma in hospitalized COVID-19 patients. The Dow Jones Industrial Average gained 1.4%, and the Russell 2000 gained 1.0%.

[…]

The S&P 500 energy (+2.8%), financials (+2.3%), industrials (+1.8%), and materials (+1.7%) sectors set the performance pace.

The health care sector (-0.5%) was the only S&P 500 sector that closed lower today.

[…]

WTI crude futures increased 0.7%, or $0.30, to $42.61/bbl. Natural gas futures increased 1.5% to $2.612/MMBtu. Unleaded gasoline futures increased 3.9% to $1.26/gallon.

U.S. Treasuries finished near their flat lines in a muted session, suggesting bond investors were less enthused about the vaccine news. The 2-yr yield was flat at 0.15%, and the 10-yr yield increased one basis point to 0.65%. The U.S. Dollar Index increased 0.1% to 93.30.

[…]
  • Nasdaq Composite +26.8% YTD
  • S&P 500 +6.2% YTD
  • Dow Jones Industrial Average -0.8% YTD
  • Russell 2000 -6.0% YTD
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