Market Remarks

Morning Notes – Thursday November 19, 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 move from pre-open levels around 3560.00 – watch for the break above 3573.75 and the break below 3542.50 for clarity
  • Key economic data report:
    • Philly Fed Manufacturing Index  ( 26.3 vs. 22.0 est.; prev. 32.3) at 8:30 AM
    • Unemployment Claims ( 742K vs. 707K est.; prev. 711K ) at 8:30 AM
    • CB Leading Index ( 0.7% est.; prev. 0.7% ) at 10:00 AM
    • Existing Homes Sales ( 6.45M vas. 6.54M ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3567.58, 3552.91, and 3537.78
  • Critical resistance levels for S&P 500 are 3594.89, 3604.29, and 3628.51
  • Key levels for E-mini futures: break above 3573.75, the high of 2:00 AM and break below 3542.50, the low of 5:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2020) closed at 3563.50 and the index closed at 3567.79 – a spread of about -4.25 points; futures closed at 3565.00 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -5.25; Dow by -58, and NASDAQ by -20.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Sydney, and Seoul closed down; Hong Kong, Tokyo, Mumbai, and Singapore closed up
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities:
    • Energy is down
    • Precious metals are down
    • Industrial metals are down
    • Most soft commodities are down
  • Treasuries
    • 10-years yield closed at 0.882, up the last close of 0.872%;
    • 30-years is at 1.618% down from 1.626%
    • 2-years yield is at 0.177% down from 0.185%
    • The 10-Year-&-2-Year spread is at 0.705 down from 0.687
  • VIX
    • At 23.93 @ 6:30 AM; up +0.09 from the last close; above 5-day SMA;
    • Recent high =  41.16 on October 16; low =  21.66 on November 18
    • Sentiment: Risk-Off

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 large Bearish Engulfing candle with almost no upper and shadows; 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 below %D near 50; potential Bearish Divergence
    • RSI-9 turning down below 60; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Sideways to down since 12:00 AM on Sunday; Fallen back into Horizontal Channel that broke to the upside and after reaching near its 100% extension target around 3639.00;
    • RSI-21 declining in steps from above 70 to below 40
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Near the lower bound, around 3547.50, of a Descending Triangle; breaking below it will have a 50% extension target around 3505.00 and 61.8% extension target around 3490.00
    • RSI-21 is just above 40 after making a Bullish Divergence at 3:00 AM
    • %K is above %D since 5:00 AM
  • At/below EMA20; which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving mostly sideways since 10:00 PM
  • The Bollinger Band is expanding since 3:30 AM; price bounced up to mid-band after walking-down the lower band till 5:00 AM
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Side-Down

Previous Session

Major U.S. indices closed lower on Wednesday, November 18 in higher volume. Indices opened higher and then high in the green for most of the morning session before giving up the ghost and declining in the afternoon. Most made Bearish Engfulfing or similar reversal candlestick formations. For the past five days, the major indices have been moving mostly sideways. All S&P sectors closed lower.

From Briefing.com:

The S&P 500 fell 1.2% on Wednesday for a second straight decline that tempered the recent bullishness in the market. The Nasdaq Composite declined 0.8%, the Dow Jones Industrial Average declined 1.2%, and the Russell 2000 declined 1.3% after setting an intraday record high early in the session. […]

All 11 S&P 500 sectors finished in negative territory, led lower by the energy (-2.9%), utilities (-1.9%), health care (-1.8%), and real estate (-1.7%) sectors with losses over 1.5%. The industrials sector (-0.5%) was the relative outperformer today.

[…]

U.S. Treasuries finished near their flat lines in a lackluster session for bonds. The 2-yr yield and 10-yr yield increased one basis point each to 0.17% and 0.88%, respectively. The U.S. Dollar Index finished flat at 92.40. WTI crude futures gained 0.9%, or $0.37, to $41.80/bbl following a smaller-than-expected weekly inventory build.

[…]
  • Housing starts in October increased 4.9% m/m (and 14.2% yr/yr) to a seasonally adjusted annual rate of 1.53 million units (Briefing.com consensus 1.445 mln), hitting their highest pace since February when they stood at 1.567 million. Building permits were flat at 1.545 million (Briefing.com consensus 1.55 mln), but remained ahead of the 1.536 million pace registered in January.
[…]
  • The weekly MBA Mortgage Applications Index decreased 0.3% following a 0.5% decline in the prior week.
[…]
  • Nasdaq Composite +31.5% YTD
  • S&P 500 +10.4% YTD
  • Russell 2000 +6.0% YTD
  • Dow Jones Industrial Average +3.2% YTD
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