Market Remarks

Morning Notes – Monday, August 22, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; the futures are moving sideways to down since 4:15 AM around 4180.00 and after  opening the week with a down gap and declining by more than 40 points
  • The odds are for a down day with volatility – watch for a break above 4189.00 and 4206.25
  • No key economic data report is due during the day.

Directional Bias Before Open:

  • Weekly: In Correction
  • Daily: Uptrend Under Pressure
  • 120-Min: Down
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min: Down-Side

Key Levels:

  • Critical support levels for S&P 500 are 4177.26, 4151.91, and 4143.74
  • Critical resistance levels for S&P 500 are 4201.41, 4218.70, and 4233.92
  • Key levels for E-mini futures: break above 4189.75, the high at 7:15 AM and a break below 4175.50, the low at 5:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2022) closed at 4230.75, and the index closed at 4228.48 – a spread of about +2.25 points; the futures closed at 4231.50; the fair value is -0.75
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -53.25, Dow by -352; and NASDAQ by -204.00

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Singapore closed up
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CAD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.989%, up +14.9 basis points from two weeks ago;
    • The 30-year is at 3.225%, up +16.0 basis points;
    • The 2-year yield is at 3.225%, up +0.7 basis points;
    • The 10-Year-&-2-Year spread is at -0.236, up from -0.378
    • The 30-Year-&-10-Year spread is at 0.236, up from 0.225
  • VIX
    • At 23.11 @ 9:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 24.68 on August 2; low = 19.12 on August 12
    • Sentiment: Risk-Off

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

Weekly:
  • The red candle with no lower shadow and a small upper shadow;
    • Stochastic (9,1, 3): %K crossed below %D from above 90
    • RSI-9 is turning down just below 60
  • The week was down -112.41 or -2.6%; the 5-week ATR  is 167.40
  • A down week; first in the least five weeks and fourth in the previous ten weeks;
  • The weekly pivot point=4220.52, R1=4273.31, R2=4378.06; S1=4115.77, S2=4062.98; S1 pivot level was breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A red candle with small upper and lower shadows, turning down from the 200-d SMA, broke above a symmetrical triangle on July 19 – the 100% extension target near 4190.00 is achieved, and the 161.8% extension target is near 4380.00.
    • Stochastic (9, 1, 3): %K is below %D; near 0
    • RSI-9 is below 50; below 8-day EMA;
  • Above 20-day EMA, 50-day EMA, and 100-day SMA; below 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Trending down since 2:00 PM on August 16
    • RSI-21 is trending down; below 20
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Downtrend since 2:00 PM on August 16 – lower lows and lower highs
    • RSI-21 is moving below 30
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 6:00 PM on August 18
  • The Bollinger Band is contracting since 8:30 AM
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Friday, August 19, in higher volume. The major indices gapped down at the open and then mostly drifted sideways to below the lows of the first half-hour of trading.

For the week, the major indices closed lower in mostly lower volume. The markets in Asia and Europe were mostly down. The dollar index closed up, the energy futures were mixed, the metals were down, and most soft commodities were also down. The US Treasury yields closed up for the week.

From Briefing.com:

The market opened on a downbeat and never found its footing on this options expiration day. […]

The S&P 500 was down 1.2% for the week; the Dow Jones Industrial Average was down 0.2% for the week; the Nasdaq Composite was down 2.6% for the week.

[…]

The Vanguard Mega Cap Growth ETF (MGK) fell 1.9% versus a 1.3% loss in the Invesco S&P 500 Equal Weight ETF (RSP). The Russell 3000 Growth Index (-1.7%) trailed the Russell 3000 Value Index (-1.2%).

[…]

Countercyclical sectors, utilities (-0.1%), consumer staples (-0.4%), and health care (+0.3%), closed ahead of the broader market. Notably, utilities and consumer staples were two of only three sectors to close the week with gains, up 1.2% and 1.9%, respectively. The other week-to-date gainer was energy, up 1.0%.

The advance-decline line heavily favored decliners. Decliners led advancers by a nearly 6-to-1 margin at the NYSE and a 10-to-3 margin at the Nasdaq.

[…]

The 2-yr note yield rose three basis points to 3.25% and was unchanged for the week. The 10-yr note yield, flirting with the 3.00% level, rose 11 basis points on the day and 14 basis points for the week to 2.99%.

[…]

Dow Jones Industrial Average: -7.4% YTD
S&P 400: -9.2% YTD
S&P 500: -11.3% YTD
Russell 2000: -12.8% YTD
Nasdaq Composite: -18.6% YTD

 

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