Market Remarks

Morning Notes – Thursday December 3, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed;
  • The odds are for a sideways day – watch for the break above 3674.50 and the break below 3642.25 for clarity
  • Key economic data report:
    • Unemployment Claims ( 712K vs. 775K est.; prev. 787K) at 8:30 AM
    • Final Services PMI (57.5 est.; prev. 57.7) at 9:45 AM
    • ISM Services PMI ( 55.9 est.; prev. 56.6) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3657.46, 3644.84, and 3624.73
  • Critical resistance levels for S&P 500 are 3670.61, 3678.45, and 3687.72
  • Key levels for E-mini futures: break above 3674.50, the high of 10:00 PM and break below 3642.25, the low of 9:30 AM on Wednesday

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2020) closed at 3668.00 and the index closed at 3669.01 – a spread of about -1.00 points; futures closed at 3667.25 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are little changed – at 8:30 AM, S&P 500 futures were up by +0.75; Dow by +27, and NASDAQ by +29.25

Markets Around The World

  • Markets in the East closed mostly up – Shanghai closed down
  • European markets are mostly lower – the U.K. and Italy are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
  • Commodities:
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Most soft commodities are mostly higher
  • Treasuries
    • 10-years yield closed at 0.948, up the last close of 0.934%;
    • 30-years is at 1.704% up from 1.676%
    • 2-years yield is at 0.172% up from 0.176%
    • The 10-Year-&-2-Year spread is at 0.776 up from 0.758
  • VIX
    • At 20.90 @ 8:00 AM; down -0.27 from the last close; at/above 5-day SMA;
    • Recent high =  27.27 on November 12; low =  19.51 on November 27
    • Sentiment: Risk-Off-to-Neutral

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 green Doji candle with small lower and upper shadows; 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 is above %D
    • RSI-9 moving sideways near 65; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Moving sideways along the upper band of an ascending triangle from November 9 high; 61.8% extension target is near 3764.00 and 100% extension target is near 3823.00
    • RSI-21 declined to below 60 from above 75 at 12:00 PM on Tuesday
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Moving sideways since 3:30 PM on Wednesday near al- time highs
    • RSI-21 moving between 50 and 60
    • %K is above %D;
  • Above EMA20; which is at/above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving sideways since 8:00 PM
  • The Bollinger Band is stable
    • Stochastic (9, 1, 3): %K is below %D since 8:00 AM
  • Bias: Side

Previous Session

Major U.S. indices closed mostly higher on Wednesday, December 2 in mostly lower volume. NASDAQ Composite closed down and Dow Jones Transportation Average traded in higher volume. Indices opened down but then mostly traded up for the rest of the day. Indices mostly moved sideways.

From Briefing.com:

The S&P 500 increased 0.2% on Wednesday to close at another record high. The Dow Jones Industrial Average (+0.2%) and Russell 2000 (+0.1%) also eked out gains after starting the day on a lower note, while the Nasdaq Composite finished lower by 0.1%. […]

Investors quickly bought the mini dip, though, and the rebound effort was paced by the red-hot energy sector (+3.2%). The financials (+1.1%), communication services (+1.0%), and health care (+0.8%) sectors followed suit, while the materials (-1.4%), real estate (-1.1%), and consumer staples (-0.8%) sectors lagged.

[…]

U.S. Treasuries finished mixed with longer-dated Treasuries extending recent losses amid stimulus hopes. The 2-yr yield decreased one basis point to 0.16%, and the 10-yr yield increased one basis point to 0.95%. The U.S. Dollar Index decreased 0.2% to 91.09. WTI crude futures rose 1.6%, or $0.72, to $45.28/bbl.

[…]
  • The ADP Employment Change report for November estimated 307,000 jobs were added to private-sector payrolls (Briefing.com consensus 360,000). The October reading was revised higher to 404,000 from 365,000.
  • The weekly MBA Mortgage Applications Index decreased 0.6% following a 3.9% increase in the prior week.
  • Weekly crude oil inventories decreased by 679,000 barrels after decreasing by 754,000 barrels during the previous week.
[…]
  • Nasdaq Composite +37.6% YTD
  • S&P 500 +13.6% YTD
  • Russell 2000 +10.2% YTD
  • Dow Jones Industrial Average +4.7% YTD
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