Morning Notes – Tuesday December 1, 2020

/ December 1, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with a good chance of sideways to down move from pre-open levels around 3660.00 – watch for the break above 3664.50 and the break below 3646.00 for clarity
  • Key economic data report:
    • Final Manufacturing PMI ( 56.7 est.; prev. 56.7) at 9:45 M
    • ISM Manufacturing PMI ( 57.9 est.; prev. 59.3 ) at 10:00 AM
    • ISM Manufacturing Prices ( 65.0 est.; prev. 65.5 ) at 10:00 AM
    • Construction Spending (0.8% est.; prev. 0.3%) at 10:00 AM
    • Fed Chair Powell Testifies at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3644.31, 3624.73, and 3609.30
  • Critical resistance levels for S&P 500 are 3678.87, 3690.00, 3700.00
  • Key levels for E-mini futures: break above 3663.25, the high of 4:30 AM and break below 3646.00, the low of 3:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2020) closed at 3620.75 and the index closed at 3621.63 – a spread of about -0.50 points; futures closed at 3623.25 for the day; the fair value is -2.50
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +33.50; Dow by +289, and NASDAQ by +107.00

Markets Around The World

  • Markets in the East closed higher
  • European markets are mostly higher – Switzerland is lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    • Energy is mostly up
    • Precious metals are higher
    • Industrial metals are higher
    • Most soft commodities are mixed
  • Treasuries
    • 10-years yield closed at 0.844, up the last close of 0.842%;
    • 30-years is at 1.573% down from 1.576%
    • 2-years yield is at 0.145% down from 0.157%
    • The 10-Year-&-2-Year spread is at 0.699 down from 0.685
  • VIX
    • At 20.07 @ 6:30 AM; down -0.50 from the last close; below 5-day SMA;
    • Recent high =  27.27 on November 12; low =  19.51 on November 27
    • Sentiment: Risk-Off

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

Monthly
  • Uptrend Resumed
  • November 2020 was a large green candle with small upper and lower shadows; all-time closing and intraday highs
    • Stochastic %K crossed above %D near 100;
    • RSI-9 near 70; breaking above a downtrend line from January 2018
    • Crossing above 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 27 was a green candle that opened just above previous weeks’ close and closed above it high; small lower shadow and almost no upper shadow; all-time closing high but not the intraday high;
    • Stochastic (9,1, 3): %K crossed above %D; near 90
    • RSI (9) is near 65
  • The week was up +80.81 or +2.3%; the 5-week ATR is 160.66
  • An up week following a down week; third in the last five weeks and sixth in the last ten weeks
  • The weekly week pivot point=3611.81, R1=3670.85, R2=3703.35; S1=3579.31, S2=3520.27; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23 Resumed
Daily
  • A small red real body candle with lower shadow twice the size of the real body and no upper shadow, resembling a hammer; sideways move for the past few days near all-time high;
    • Broke above a symmetrical triangle on November 9; 50% extension target is near 3710.00; 61.8% extension target is near 3750.00; 100% extension target is near 3900.00
    • %K crossed below %D
    • RSI-9 turning down near 65; at/above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Breaking above an ascending triangle from November 9; 1.8% extension target is near 3764.00 and 100% extension target is near 3823.00
    • RSI-21 rising up since midnight on Monday and after making a Bullish Divergence at 10:00 AM on Monday
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Broke above a downtrend line at 9:00 PM;
    • RSI-21 turning down from above 65 to below 60
    • %K is below %D; below 20
  • Above EMA20; which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving sideways-to-up since 12:45 AM
  • The Bollinger Band is expanding since 3:30 AM; price coming down from the upper band to the lower band
    • Stochastic (9, 1, 3): %K is crossing above %D from below 20
  • Bias: Up-Side

Previous Session

Major U.S. indices closed lower on Monday, November 30 in higher volume, but Friday was a shortened trading day. Major indices opened lower and made day’s low in the late morning trade and then clawed back some of the loss before the close. All but two – Technology and Healthcare – S&P sectors closed down.

From Briefing.com:

The S&P 500 declined 0.5% on Monday to end a spectacular month on a soft note. An intraday recovery in technology stocks, however, helped lift the benchmark index and Nasdaq Composite (-0.1%) off session lows. The Dow Jones Industrial Average (-0.9%) and Russell 2000 (-1.9%) underperformed.

[…]

The information technology (+0.7%) and health care (+0.3%) sector did benefit, but nine of the 11 S&P 500 sectors closed lower.

[…]

U.S. Treasuries finished little changed in a muted session. The 2-yr yield declined one basis point to 0.14%, and the 10-yr yield was flat at 0.84%. The U.S. Dollar Index increased 0.2% to 92.00.

[…]
  • The Chicago PMI for November decreased to 58.2% (Briefing.com consensus 58.1%) from 61.1% in October.
  • Pending home sales decreased 1.1% in October (Briefing.com consensus +1.0%) following a revised 2.0% decline in September (-2.2%).
[…]
  • Nasdaq Composite +36.0% YTD
  • S&P 500 +12.1% YTD
  • Russell 2000 +9.1% YTD
  • Dow Jones Industrial Average +3.9% YTD
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