Morning Notes – Monday, August 8, 2022

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM
  • The odds are for an up day with elevated volatility – watch for a break below 4153.25 for a change of sentiments
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4146.80, 4124.93, and 4111.49
  • Critical resistance levels for S&P 500 are 4177.51, 4195.15, and 4227.62
  • Key levels for E-mini futures: break above 4189.00, the high at 6:30 PM on June 2 and a break below 4153.25, the low at 5:15 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2022) closed at 4146.00,  and the index closed at 4145.19 – a spread of about +0.75 points; the futures closed at 4146.75; the fair value is -0.75
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +24.25, Dow by +156; and NASDAQ by +95.75

Markets Around The World

  • Markets in the East closed mostly up – Hong Kong was down
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • Dollar index
  • EUR/USD
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.801%, up +1.8 basis points from two weeks ago;
    • The 30-year is at 3.033%, up  +3.5 basis points;
    • The 2-year yield is at 3.217%, up +22.6 basis points;
    • The 10-Year-&-2-Year spread is at -0.416, down from -0208
    • The 30-Year-&-10-Year spread is at 0.232, up from 0.215
  • VIX
    • At 21.60 @ 6:45 AM; up from the last close; below the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 21.21 on July 29
    • Sentiment: Risk-On

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

Weekly:
  • The small Spinning Top week at/above the previous week’s close.
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI-9 is above 50 after making a Bullish Divergence on June 13
  • The week was up +14.90 or +0.4%; the 5-week ATR  is 173.07
  • An up week; fourth in the least five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4130.89, R1=4181.96, R2=4218.74; S1=4094.11, S2=4043.04; No pivot levels were breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A green candle following a gap down and close at the June 2 high resistance; broke above a symmetrical triangle  on July 19 – the 61.8% extension target near 4070.00 is achieved, the 100% extension target is near 4190.00, and the 161.8% extension target is near 4380.00;  the 100% extension target for the ABCD pattern near 4025.00 is achieved, and the 161.8% extension target is near 4216.00
    • Stochastic (9, 1, 3): %K crossed below %D; above 90
    • RSI-9 dipped below 70 above 8-day EMA;
  • Above 20-day EMA, 50-day EMA, and 100-day SMA; below 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving up since 12:00 PM on August 5 from EMA50; the uptrend since 10:00 AM on July 14; broke above a Descending Triangle on July 19 – the 100% extension target near 4105.00 is achieved, and the 161.8% extension target is near 4235.00
    • RSI-21 is above 65 from near 20;
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 6:30 PM on Sunday; at the upper end of a trading range between 4173.25 and 4103.75
    • RSI-21 is above 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up since 10:30 PM
  • The Bollinger Band is expanding a bit since 7:30 AM, with price walking up the upper band.
  • Bias: Up

Previous Session

Major U.S. indices closed mixed on Friday, August 5, in mixed volume. S&P 500, NASDAQ Composite, and Wilshire 5000 Total Market Index closed higher. Dow Jones Industrial Average and Dow Jones Transportation Average traded in lower volume. The major indices gapped down at the open following the non-farm payroll report. They turned around in later afternoon after volatile moves and then mostly drifted higher for the rest of the day.

For the week, the major indices closed mixed in lower volume. Markets in Asia and Europe closed mostly higher. The dollar index closed up, the energy futures closed lower, gold was down, and industrial metals and soft commodities were mostly down. The US Treasury Yields closed up.

From Briefing.com:

[…]

There was a selloff around midday before the main indices climbed off their lows and moved sideways to the close.

The S&P 500 was up 0.4% week-to-date; the Nasdaq was up 2.2% week-to-date; the Dow Jones Industrial Average was down 0.1% week-to-date.

[…]

The Vanguard Mega Cap Growth ETF (MGK) closed down 0.8% versus a 0.1% gain in the Invesco S&P 500 Equal Weight ETF (RSP). The Russell 3000 Growth Index closed with a 0.2% loss versus a 0.2% gain in the Russell 3000 Value Index.

[…]
  • July Nonfarm Payrolls 528K (Briefing.com consensus 250K); Prior was revised to 398K from 372K; July Nonfarm Private Payrolls 471K (Briefing.com consensus 200K); Prior was revised to 404K from 381K; July Avg. Hourly Earnings 0.5% (Briefing.com consensus 0.3%); Prior was revised to 0.4% from 0.3%; July Unemployment Rate 3.5% (Briefing.com consensus 3.6%); Prior 3.6%; July Average Workweek 34.6 (Briefing.com consensus 34.5); Prior was revised to 34.6 from 34.5
  • […]
  • Consumer credit increased by $40.1 bln in June after increasing by a revised $23.8 bln (from $22.4 bln) in May.

Dow Jones Industrial Average: -9.7% YTD
S&P 400: -11.9% YTD
S&P 500: -13.0% YTD
Russell 2000: -14.4% YTD
Nasdaq Composite: -19.1% YTD

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