Morning Notes – Friday August 6, 2021

/ August 6, 2021

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with elevated volatility — watch for a break below 4417.00 for a change of fortunes
  • Key economic data report due during the day:
    • Non-Farm Employment Change( 943K vs. 870K est.; prev. 850K) at 8:30 AM
    • Unemployment Rate ( 5.4% vs. 5.7% est.; prev. 5.9%) at 8:30 AM
    • Average Hourly Earnings ( 0.4% vs. 0.3% est
    • Final Wholesale Inventories ( 0.8% est.; prev. 0.8%) at 10:00  AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4415.97, 4400.23, and 4389.09
  • Critical resistance levels for S&P 500 are 4436.29, 4443.47, and 4457.19
  • Key levels for E-mini futures: break above 4425.25, the high of 6:15 AM and break below 4417.00, the low of 3:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2021) closed at 4421.50 and the index closed at 4429.10 – a spread of about -7.50 points; futures closed at 4421.50 for the day; the fair value is 0.00
  • Pre-NYSE session open, futures are mixed – at 8:15 AM, S&P 500 futures were up by +3.00; Dow up by +29, and NASDAQ down -19.75

Markets Around The World

  • Markets in the East closed mostly lower –  Tokyo and Sydney closed up
  • European markets are mostly higher – Spain and Switzerland are lower
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.217%, down -4.8 basis points from two weeks ago;
    • 30-years is at 1.863%, down -3.9 basis points;
    • 2-years yield is at 0.208%, down -0.3 basis points;
    • The 10-Year-&-2-Year spread is at 1.009, down from 1.054
  • VIX
    • At 17.12 @ 8:15 AM; down from the last close; below 5-day SMA;
    • Recent high =  25.09 on July 19; low =  16.33 on July 23
    • Sentiment: Risk-On-Neutral

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

Monthly
  • Confirmed Uptrend
  • May 2021 was a Doji with a small upper shadow and a long lower shadow; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 80; broke above a downtrend line from January 2018
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows
Weekly:
  • The week ending on July 30 was a Doji candle with almost equal-sized upper and lower shadows;
    • Stochastic (9,1, 3): %K crossed below %D; just below 80
    • RSI (9) is just around 70
  • The week was down -16.53 or -0.4%; the 5-week ATR is 94.73
  • A down week; second in the last five weeks, and third in the last ten weeks
  • The weekly pivot point=4399.25, R1=4425.98, R2=4456.71; S1=4368.52, S2=4341.79; No pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green candle with almost no lower and upper shadows at all-time highs;
    • %K crossed above %D; near 100
    • RSI-9 is above 60; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving within a Horizontal Channel since July 23 between 4420.00 and 4380.00; at the upper bound of the pattern
    • RSI-21 near 70;
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving sideways since 10:30 AM on July 23;  moving up since 11:30 AM on August 4;
    • RSI-21 is above 60 50
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting higher since 5:00 AM on Thursday
  • The Bollinger Band was narrow till 4:45 AM and expanding slightly since with price near the upper band;
    • Stochastic (9, 1, 3): %K is below %D since 6:00 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Thursday, August 5 in lower volume. Major indices opened higher and then traded sideways before moving higher again near the close. NASDAQ Composite made all-time intraday and closing higher. S&P 500 and Wilshire 5000 Total Market Index made all-time closing highs.

From Briefing.com:

The S&P 500 (+0.6%) and Nasdaq Composite (+0.8%) closed at record highs on Thursday, as encouraging economic data helped liven up risk sentiment after a tough session yesterday. The Dow Jones Industrial Average rose 0.8%, keeping pace with the Nasdaq, while the Russell 2000 leaped ahead with a 1.8% gain.

[…]

The breadth of the gains was decent: nine of the 11 S&P 500 sectors closed higher, advancing issues outpaced declining issues by roughly a 2:1 margin at the NYSE and Nasdaq, and growth stocks rose alongside value stocks.

From a sector perspective, the energy (+1.3%), financials (+1.2%), and utilities (+1.1%) sectors led the advance with gains over 1.0%. Conversely, the health care (-0.4%) and materials (-0.1%) sectors were excluded from the advance.

[…]

In the Treasury market, the 10-yr yield increased three basis points to 1.22%, and the 2-yr yield increased three basis points to 0.20%. The U.S. Dollar Index was little changed at 92.27. WTI crude futures increased 1.4%, or $0.93, to $69.09/bbl.

[…]
  • Initial jobless claims for the week ending July 31 decreased by 14,000 to 385,000 (Briefing.com consensus 375,000). Continuing claims for the week ending July 24 decreased by 366,000 to 2.930 million, which is the lowest level since March 14, 2020.
  • […]
  • The trade deficit widened to $75.7 billion in June (Briefing.com consensus -$72.2 billion) from an upwardly revised $71.0 billion (from -$71.2 billion) in May. Exports were $1.2 billion more than May exports while imports were $6.0 billion more than May imports.
[…]
  • S&P 500 +17.9% YTD
  • Nasdaq Composite +15.6% YTD
  • Dow Jones Industrial Average +14.6% YTD
  • Russell 2000 +13.2% YTD

Overseas: 

  • Europe: DAX +0.3%, FTSE -0.1%, CAC +0.5%
  • Asia: Nikkei +0.5%, Hang Seng -0.8%, Shanghai -0.3%

Commodities: 

  • Crude Oil +1.07 @ 69.06
  • Nat Gas -0.03 @ 4.14
  • Gold -7.70 @ 1806.80
  • Silver -0.25 @ 25.25
  • Copper +0.01 @ 4.35
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