Market Remarks

Morning Notes – Wednesday December 9, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up-to-sideways day; watch for the break above 3714.75 and break below 3699.25 for clarity
  • Key economic data report due during the day:
    • JOLTS Job Openings ( 6.30M est.; prev. 6.44M) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3700.90, 3678.83, and 3657.17
  • Critical resistance levels for S&P 500 are 3708.45, 3714.19, and 3726.13
  • Key levels for E-mini futures: break above 3714.75, the high of 6:00 PM and break below 3699.25, the low of 2:00 PM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2020) closed at 3701.75 and the index closed at 3702.25 – a spread of about -0.50 points; futures closed at 3702.00 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are mixed – at 8:15 AM, S&P 500 futures were up by +5.75; Dow up by +83, and NASDAQ down by -10.25

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai closed down;
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Most soft commodities are mixed
  • Treasuries
    • 10-years yield closed at 0.913%, down from the last close of 0.928%;
    • 30-years is at 1.659% down from 1.686%;
    • 2-years yield is at 0.157% up from 0.149%;
    • The 10-Year-&-2-Year spread is at 0.756 down from 0.779
  • VIX
    • At 20.53 @ 6:30 AM; down -0.15 from the last close; below 5-day SMA;
    • Recent high =  27.27 on November 12; low =  19.51 on November 27
    • Sentiment: Risk-On / Risk-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 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  Bullish Engulfing candle with almost no upper and lower shadow at all-time highs 
    • 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 above %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 up since 8:00 AM on November 9 in steps; bouncing up from 50-bar EMA since 6:00 AM;
    • Broke above an ascending triangle on December 3; 61.8% extension target is near 3764.00 and 100% extension target is near 3823.00
    • RSI-21 declining from near 75 at 2:00 AM
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Drifting sideways-to-down since 6:00 PM from the all-time high of 3714.75
    • Broke above a Double Bottom or a Horizontal Channel – bounded between 3667.50 and 3705.00 – at 6:00 PM; the 61.8% extension target is near 3728.00 and the 100% extension target is near 3742.50
    • RSI-21 drifting down to near 50 from near 70
    • %K is crisscrossing %D lower
  • Below EMA20 but above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving sideways-to-up since 7:45 PM
  • The Bollinger Band is expanding slightly since 3:45 AM
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday, December 8 in mostly lower volume. Russell 2000 traded in higher volume. Major indices are drifting sideways -to-higher for the past few days.

From Briefing.com:

The S&P 500 (+0.3%), Nasdaq Composite (+0.5%), and Russell 2000 (+1.4%) closed at fresh record highs on Tuesday amid more encouraging vaccine news and a hopeful-sounding stimulus update. The Dow Jones Industrial Average (+0.4%) hit an intraday high, but the outperformance of the Russell 2000 deserves more recognition. […]

The energy sector reclaimed its recent outperformer status with a 1.6% gain, which was emblematic of a lingering recovery optimism. The influential information technology sector advanced 0.4%, while the real estate sector lagged with a 0.5% decline.

[…]

Longer-dated Treasuries finished with modest gains despite the vaccine/stimulus developments. The 2-yr yield was flat at 0.14%, and the 10-yr yield decreased two basis points to 0.91%. The U.S. Dollar Index increased 0.2% to 90.96. WTI crude futures declined 0.3%, or $0.13, to $45.64/bbl.

[…]
  • Productivity in the third quarter increased at a seasonally adjusted annual rate of 4.6% (Briefing.com consensus 5.0%) on today’s revision versus the preliminary estimate of 4.9%. Unit labor costs decreased at an annual rate of 6.6% (Briefing.com consensus -8.9%) versus the preliminary estimate of -8.9%.
  • […]
  • The NFIB Small Business Optimism Index decreased to 101.4 from 104.0 in October.
[…]
  • Nasdaq Composite +40.2% YTD
  • Russell 2000 +14.9% YTD
  • S&P 500 +14.6% YTD
  • Dow Jones Industrial Average +5.7% YTD
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