Market Remarks

Morning Notes – Friday December 11, 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 3670.50 for change of fortunes
  • Key economic data report due during the day:
    • PPI ( 0.1% vs. 0.1% est.; prev. 0.3%) at 8:30 AM
    • Core PPI ( 0.1% vs. 0.2% est.; prev. 0.1%) at 8:30 AM
    • Prelim UoM Consumer Sentiment ( 76.1 est.; prev. 76.9) at 10:00 AM
    • Prelim UoM Inflation Expectations ( prev. 2.8%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3645.18, 3624.73, and 3598.59
  • Critical resistance levels for S&P 500 are 3659.34, 3674.97, and 3680.90
  • Key levels for E-mini futures: break above 3670.50, the high of 2:30 AM and break below 3628.25, the low of 6:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2020) closed at 3667.25 and the index closed at 3668.10 – a spread of about -1.00 points; futures closed at 3668.50 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -32.50; Dow by -256, and NASDAQ by -76.25

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo, Sydney, and Singapore closed down; Hong Kong, Mumbai, and Seoul closed up
  • European markets are lower
  • Currencies (from one week ago):
    Up Down
    • Dollar index
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Most soft commodities mixed
  • Treasuries
    • 10-years yield closed at 0.890%, down 3.0 BP from one week ago;
    • 30-years is at 1.611%, down 5.5 BP;
    • 2-years yield is at 0.137%, down 1.2 BP;
    • The 10-Year-&-2-Year spread is at 0.753, down from 0.771
  • VIX
    • At 24.62 @ 6:45 AM; up from the last close; 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 green Doji type candle near the close of the previous day;
    • Broke above a symmetrical triangle at 3550.00 level 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 below %D; from above 90 to below 70
    • RSI-9 turning down from near 70 to below 60; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Broke below a support level around 3660.00; broke below an uneven Head-&-Should pattern with high of 3714.00 and neck low around – the 61.8% extension target near 3636.00 is achieved and 100 % extension target is near 3605.00;
    • Broke above an ascending triangle on December 3; back below the upper bound
    • RSI-21 up to 30 after falling below 20
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Trending down since 6:00 PM on December 8 from the all-time high of 3714.75 to near 3620.00; broke below a Horizontal Channel at 1:00 PM – the 161.8% extension target is near 3626.00 is achieved and the 261.8% extension target is near 3605.00
    • RSI-21 is below 40
    • %K is rising above %D from below 20
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving sideways-to-down since 7:30 PM on Wednesday
  • The Bollinger Band is expanding since 3:00 AM with price walking down the lower band till 6:15 AM and then bouncing up to the middle band
    • Stochastic (9, 1, 3): %K is above %D above 80
  • Bias: Down

Previous Session

Major U.S. indices closed mixed on Thursday, December 10 in lower volume. Major indices have mostly moved sideways since 1:30 PM on Wednesday.

From Briefing.com:

The S&P 500 declined 0.1% on Thursday in a mixed session that saw the bulk of the demand go to small-caps, energy stocks, and Airbnb (ABNB 144.71, +76.71, +112.8%) in its IPO. The Russell 2000 closed at a record high with a 1.1% gain, the Nasdaq Composite gained 0.5%, and the Dow Jones Industrial Average declined 0.2%. […]

The top-weighted S&P 500 information technology sector increased 0.1% after being down 0.9% shortly after the open. The energy sector, though, was the top performer with another 2.9% gain amid higher oil prices ($46.91, +1.42, +3.1%). Eight sectors closed lower with industrials (-0.9%) as the underperformer with a 0.9% decline.

[…]

U.S. Treasuries finished on a higher note, more so on the longer-end of the curve. The 2-yr yield decreased one basis point to 0.14%, and the 10-yr yield decreased two basis points to 0.91%. The U.S. Dollar Index decreased 0.3% to 90.81.

[…]
  • Initial jobless claims for the week ending December 5 increased by 137,000 to 853,000 (Briefing.com consensus 720,000) while continuing claims for the week ending November 28 increased by 230,000 to 5.757 million. This was the highest level of initial jobless claims since the week of September 18.
  • […]
  • Total CPI and core CPI both increased 0.2% m/m in November. The former was above the 0.1% Briefing.com consensus while the latter was in line.
  • […] .
  • The Treasury Budget showed a $145.3 bln deficit in November, marking the 66th time over the last 67 fiscal years that November — which has no major tax due dates — has seen a deficit. The budget data is not seasonally adjusted, so the November deficit cannot be compared to the October deficit of $284.1 bln.
[…]
  • Nasdaq Composite +38.3% YTD
  • Russell 2000 +15.2% YTD
  • S&P 500 +13.5% YTD
  • Dow Jones Industrial Average +5.1% YTD
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