Market Remarks

Morning Notes – Tuesday December 8, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day; watch for the break above 3687.50 for change of fortunes
  • Key economic data report due during the day:
    • Revised Nonfarm Productivity ( 4.9% est.; prev. 4.9%) at 8:30 AM
    • Revised Unit Labor Costs ( -8.9% est.; prev. -8.9%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3670.94, 3657.17, and 3644.84
  • Critical resistance levels for S&P 500 are 3678.88, 3693.23, and 3698.86
  • Key levels for E-mini futures: break above 3687.50, the high of 4:00 AM and break below 3667.50, the low of 8:30 AM on Friday

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2020) closed at 3691.25 and the index closed at 3691.96 – a spread of about -0.75 points; futures closed at 3690.75 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are lower – at 7:45 AM, S&P 500 futures were down by -18.25; Dow by -125, and NASDAQ by -47.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Tokyo, and Seoul closed down; Sydney, Mumbai, and Singapore closed up
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • GBP/USD
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mostly lower
  • Treasuries
    • 10-years yield closed at 0.928%, down from the last close of 0.969%;
    • 30-years is at 1.686% down from 1.730%
    • 2-years yield is at 0.149% unchanged
    • The 10-Year-&-2-Year spread is at 0.779 down from 0.820
  • VIX
    • At 21.86 @ 6:15 AM; up +0.56 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

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 December 04 was a green candle with almost no upper shadow and small lower shadow; all-time closing high but not the intraday high;
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI (9) is near 70
  • The week was up +60.77 or +1.7%; the 5-week ATR is 135.33
  • An up week; fourth in the last five weeks and seventh in the last ten weeks
  • The weekly week pivot point=3664.24, R1=3734.08, R2=3769.05; S1=3629.27, S2=3559.43; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23
Daily
  • A small  Doji Harami looking like a  Gravestone Doji; 
    • Broke above a symmetrical triangle on November 9; the 50% extension target is near 3710.00; 61.8% extension target is near 3750.00; 100% extension target is near 3900.00
    • %K is crossing below %D; above 90
    • RSI-9 moving around 70; 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-to-down since 10:00 AM on December 4; above 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 gradually from just above 75 to just below 40
  • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting down from the all-time high of 3705.00 to a support zone around 3665.00
    • RSI-21 declined to below 40 from near 70
    • %K is crisscrossing %D lower
  • Below EMA20; which is below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving down since 2:15 PM on Monday
  • The Bollinger Band was stable till 3:45 AM; expanding since
    • Stochastic (9, 1, 3): %K is crisscrossing %D near 20
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly lower on Monday, December 7 in mixed volume. NASDAQ Composite was the only major index to close higher. S&P 500 and Russell 2000 traded in higher volume. Day’s price range was relatively small and the indices mostly traded sideways.

From Briefing.com:

The S&P 500 declined 0.2% on Monday to ease back from record territory, while the Nasdaq Composite (+0.5%) closed at a fresh record high amid relative strength in growth stocks. The Dow Jones Industrial Average (-0.5%) and Russell 2000 (-0.1%) finished in negative territory after setting intraday record highs in the morning. […]

The energy sector was hit the hardest with a 2.4% decline, although it remained up 30% this quarter and no other sector declined more than 1.0% today. The information technology sector (+0.3%) provided influential support, while the communication services (+0.6%) and utilities (+0.6%) sectors outperformed.

[…]

Longer-dated Treasuries finished on a higher note to bounce back from recent losses and undo some of the recent curve-steepening action. The 2-yr yield was flat at 0.14%, and the 10-yr yield decreased four basis points to 0.93%. The U.S. Dollar Index increased 0.2% to 90.85. WTI crude futures decreased 1.0%, or $0.48, to $45.77/bbl.

[…]
  • Consumer credit increased by $7.2 billion in October (Briefing.com consensus $9.0 billion) after increasing by a downwardly revised $15.1 bln (from $16.2 billion) in September..
[…]
  • Nasdaq Composite +39.5% YTD
  • S&P 500 +14.3% YTD
  • Russell 2000 +13.4% YTD
  • Dow Jones Industrial Average +5.4% YTD
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