Morning Notes – Monday August 30, 2021

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day – watch for a break below 4500.75 for a change of fortunes
  • Key economic data report due during the day:
    • Pending Home Sales ( 0.5% est.; prev. -1.9%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4507.30, 4496.47, and 4479.29
  • Critical resistance levels for S&P 500 are 4523.77, 4538.16, and 4563.00
  • Key levels for E-mini futures: break above 4513.25, the high of 7:30 PM and break below 4500.75, the low of 9:30 PM


  • On Friday at 4:00 PM, S&P futures (September 2021) closed at 4505.00 and the index closed at 4509.37 – a spread of about -4.50 points; futures closed at 4505.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +4.00; Dow by +19; and NASDAQ by +14.75

Markets Around The World

  • Markets in the East closed higher
  • European markets are mostly higher – Spain and Switzerland are lower;
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.312%, up +.5 basis points from two weeks ago;
    • 30-years is at 1.918%, down -3.0 basis points;
    • 2-years yield is at 0.231%, up +1.8 basis points;
    • The 10-Year-&-2-Year spread is at 1.081, up from 1.084
  • VIX
    • At 16.60 @ 6:45 AM; down from the last close; below 5-day SMA;
    • Recent high =  24.74 on August 19; low =  15.19 on August 13
    • Sentiment: Risk-Neutral-On

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

  • 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
  • The week ending on August 27 was a Bullish Engulfing candle at all-time highs with a small upper shadow and almost no lower shadow;
    • Stochastic (9,1, 3): %K crossed  above %D; near 100
    • RSI-9 is above 70
  • The week was up +67.70 or +1.5%; the 5-week ATR is 70.62
  • An up week; third in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4491.00, R1=4531.70, R2=4554.04; S1=4468.66, S2=4427.96; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
  • A relatively larger green candle looking like a Bullish Engulfing candle, at all-time highs
    • %K crossed above %D near 100; potential Bearish Divergence
    • RSI-9 turned up above 65; above 8-day EMA;  potential Bearish Divergence
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving sideways since 12:00 PM on August 27 after rising from another sideways move;
    • RSI-21 declined from around 75 to below 70; potential Bearish Divergence
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting sideways to up since 10:30 AM on August 27
    • RSI-21 is moving around 60;
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 3:00 PM on Friday
  • The Bollinger Band is relatively narrow and stable
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Friday, August 27 in mixed volume. The indices opened higher and achieved most of the gains in the early trading before settling into a sideways to up move. Dow Jones Transportation Average and NASDAQ Composite traded in lower volume. S&P 500, NASDAQ Composite, and Wilshire 5000 Total Market Index made all-time intraday and closing highs. The major indices opened lower and then after the morning session mostly traded lower. Dow Transports are breaking above a downtrend line from the all-time high on May 10, 2021.

For the week, the major US indices closed higher in lower volume. The markets in Asia and Europe closed mostly higher. The dollar index was down, the commodities closed higher – cattle futures were down. The US Treasury yields moved up. All but 4 S&P sectors – the defensive sectors, Consumer Staples, Utilities, Healthcare, and Real Estate – closed higher


The S&P 500 (+0.9%) and Nasdaq Composite (+1.2%) rallied to record highs on Friday, as the market reacted positively to Fed Chair Powell’s Jackson Hole speech on the economy and monetary policy. The Dow Jones Industrial Average was the relative underperformer with a 0.7% gain, while the Russell 2000 pulled ahead with a 2.9% gain.


The equity gains were relatively broad-based: Nine of the 11 S&P 500 sectors finished in positive territory, growth stocks and value stocks rose alike, and advancing issues outpaced declining issues by a 5:1 margin at the NYSE and by a 3:1 margin at the Nasdaq.

The information technology sector (+1.0%) was an influential leader, but the energy sector (+2.6%) increased the most amid higher oil prices ($68.77/bbl, +1.42, +2.1%) and rebound momentum. The health care (-0.2%) and utilities (-0.03%) sectors closed slightly lower.


The 10-yr yield decreased three basis points to 1.31%, and the 2-yr yield decreased one basis point to 0.22%. The U.S. Dollar Index decreased 0.4% to 92.68.

  • Personal income was up 1.1% month-over-month in July ( consensus +0.2%), bolstered by a 1.0% increase in wages and salaries and a 2.9% increase in personal current transfer receipts (think Child Tax Credit payments). Personal spending increased 0.3% ( consensus +0.4%), but real PCE declined 0.1% with the PCE Price Index up 0.4% ( consensus +0.4%). The core PCE Price Index, which excludes food and energy, increased 0.3% ( consensus +0.3%).
  • […]
  • The final University of Michigan Consumer Sentiment Index for August checked in at 70.3 ( consensus 70.7), nearly even with the preliminary reading of 70.2. The final reading for July was 81.2. The downturn from July was one of the largest losses since 1978.
  • […]
  • The Advance report for International Trade in Goods for July showed a deficit of $86.4 billion, versus a revised $92.1 billion (from $91.2 billion) in June. The Advance report for Retail Inventories for July increased 0.4%, while the Advance report for Wholesale Inventories for July increased 0.6%.
  • S&P 500 +20.1% YTD
  • Nasdaq Composite +17.4% YTD
  • Dow Jones Industrial Average +15.8% YTD
  • Russell 2000 +15.3% YTD
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