S&P 500, DJIA Open In The Green

Posted Thursday, August 8, 2019 by
Shain Vernier • 2 min read

U.S. stocks opened higher this morning, led by first half-hour gains in the DJIA DOW (+134), S&P 500 SPX (+22), and NASDAQ (+70). The early rally is being attributed to easing trade war fears due to the People’s Bank of China pegging the yuan at 7.0039 per USD. While this value is the highest since 2008, at least a temporary end has come to the yuan’s devaluation. Equities players are liking the fresh stability, electing to test the waters to the long side.

As far as U.S. metrics go, this week has brought a relatively vacant economic calendar. Earlier, we saw the release of Continuing Jobless Claims (July 26) and Initial Jobless Claims (August 2). Both figures beat expectations and their previous release. While these are secondary metrics at best, they are good signs that the U.S. labor market remains strong.

At press time (10:15 AM EST), the DJIA and S&P 500 are on the bull, attempting to regain the losses of Monday.

S&P 500 Shows Strength Early

It appears as though the buyback in the S&P 500 is on. Prices are driving above 2900.00 and look poised for a return to 3000.00. I guess a little relief from trade war angst goes a long way.

September E-mini S&P 500 Futures (ES), Daily Chart
September E-mini S&P 500 Futures (ES), Daily Chart

Here are two resistance levels to watch for the remainder of the session:

  • Resistance(1): 62% Current Wave, 2932.50
  • Resistance(2): Bollinger MP, 2948.25

Bottom Line: In addition to these two resistance levels, Monday’s high of  2933.50 will be an area to watch for the September E-mini S&P 500. It represents the peak of post-yuan devaluation optimism ― this is an area highly likely to be revisited.

As of now, the downtrend on the daily chart remains technically valid; shorting retracement levels with the trend isn’t a bad way to play the action. Until elected, I will have sell orders in queue from 2929.25. With an initial stop at 2934.25, this trade produces 20 ticks on a standard 1:1 risk vs reward management plan.

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