Market Remarks

Morning Notes – Tuesday November 17, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day with a good chance to sideways to up move from pre-open levels around 3600.00 – watch for the break above 3616.50 and the break below 3596.75 for clarity
  • Key economic data report:
    • Retail Sales ( 0.3% vs. 0.5% est.; prev. 1.9%) at 8:30 AM
    • Core Retail Sales ( 0.2% vs. 0.6% est.; prev. 1.5% ) at 8:30 AM
    • Import Prices ( -0.1% vs. 0.2% est.; prev. 0.3% ) at 8:30 AM
    • Capacity Utilization ( 72.3% est.; prev. 71.5%) at 9:15 AM
    • Industrial Production (1.1% est.; prev. -0.6%) at 9:15 AM
    • Business Inventories ( 0.5% est.; prev. 0.3%) at 10:00 AM
    • NAHB Housing Market Index (85 est.; prev. 85) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3612.94, 3602.27, and 3593.66
  • Critical resistance levels for S&P 500 are 3628.51, 3645.99, and 3665.24
  • Key levels for E-mini futures: break above 3616.50, the high of 3:30 AM and break below 3596.75, the low of 9:30 AM on Monday

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2020) closed at 3626.25 and the index closed at 3626.91 – a spread of about -0.50 points; futures closed at 3623.00 for the day; the fair value is +3.25
  • Pre-NYSE session open, futures are mixed – at 7:30 AM, S&P 500 futures were down by -20.25; Dow down by -216, and NASDAQ up by +31.75

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Seoul were down
  • European markets are mostly lower – Italy is higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/CAD
    • INR/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities:
    • Energy is mixed – Crude is up
    • Precious metals are down
    • Industrial metals are mostly down
    • Most soft commodities are up
  • Treasuries
    • 10-years yield closed at 0.906, up from November 13 close of 0.893%;
    • 30-years is at 1.660% up from 1.648%
    • 2-years yield is at 0.189% up from 0.181%
    • The 10-Year-&-2-Year spread is at 0.717 down from 0.712
  • VIX
    • At 23.18 @ 7:00 AM; up +0.73 from the last close; below 5-day SMA;
    • Recent high =  41.16 on October 16; low =  22.41 on November 9
    • Sentiment: Risk-Off-Neutral

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

Monthly
  • Uptrend under pressure
  • October 2020 was a red candle with long upper shadow and smaller lower shadows;
    • Stochastic %K is below %D from above 90; potential %D Bearish Divergence
    • RSI-9 below 60 from near 70; below a downtrend line that it broke above briefly in August
    • Retreating from the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows is resumed
Weekly:
  • The week ending on November 13 was a Doji candle with almost equal-sized upper and lower shadows; at the upper bound of a Broadening pattern; made all-time closing and intraday high for the week
    • Stochastic (9,1, 3): %K is above %D; above 80
    • RSI (9) is near 65
  • The week was up +75.71 or +2.2%; the 5-week ATR is 164.63
  • An up week; third in the last five weeks and fifth in the last ten weeks
  • The weekly week pivot point=3581.02, R1=3659.12, R2=3715.10; S1=3516.04, S2=3446.94; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23 Resumed
Daily
  • A relatively small green candle with almost no upper and lower shadows; continues the move above a recently broken symmetrical triangle – 50% extension target is near 3710.00; 61.8% extension target is near 3750.00; 100% extension target is near 3900.00
    • %K is above %D above 80; potential Bearish Divergence
    • RSI-9 turning up above 65
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Broke above a Horizontal Channel, between 3576.00 and 3513.00, at 2:00 PM on Friday; reached a high of 3637.00, near 100% extension target around 3639.00; 161.8% extension target is near 3678.00
    • RSI-21 has declined to just above 50 from above 80
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways since 6:30 PM near the November 9 high;
    • RSI-21 declined to below 50 from above 75
    • %K is crisscrossing %D around 30
  • At/above EMA20; which is at/above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving mostly sideways since 10:45 PM on Sunday
  • The Bollinger Band was relatively narrower since 1:45 AM though expanding slightly
    • Stochastic (9, 1, 3): %K is crossing below %D around 20
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Monday, November 16 in higher volume. For the past five days, the major indices have been moving mostly sideways to higher. All S&P sectors except Healthcare closed higher. The major US indices closed at or near all-time highs.

From Briefing.com:

The S&P 500 (+1.2%), Dow Jones Industrial Average (+1.6%), and Russell 2000 (+2.4%) closed at fresh record highs on Monday after Moderna (MRNA 97.95, +8.56, +9.6%) said its COVID-19 vaccine was 94.5% effective. The Nasdaq Composite was the relative underperformer with a 0.8% gain.

Ten of the 11 S&P 500 sectors contributed to the advance, led once again by the cyclical energy (+6.5%), industrials (+2.5%), financials (+2.3%), and materials (+2.0%) sectors. The health care sector (-0.2%) bucked the positive trend amid influential weakness in Pfizer (PFE 37.36, -1.26, -3.3%), which announced comparably effective vaccine data last week.

[…]

U.S. Treasuries had more reserved reactions to the positive vaccine news from Moderna, with yields closing slightly higher. The 2-yr yield increased one basis point to 0.18%, and the 10-yr yield increased one basis point to 0.90%. The U.S. Dollar Index decreased 0.2% to 92.59. WTI crude futures rose 3.0%, or $1.22, to $41.34/bbl.

Monday’s economic data was limited to the Empire State Manufacturing Survey, which decreased to 6.3 in November (Briefing.com consensus 14.0) from 10.5 in October.

[…]
  • Nasdaq Composite +32.9% YTD
  • S&P 500 +12.3% YTD
  • Russell 2000 +7.0% YTD
  • Dow Jones Industrial Average +5.0% YTD
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