Market Remarks

Morning Notes – Monday December 14, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day; watch for a break below 3667.25 for change of fortunes
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3680.90, 3665.91, and 3655.00
  • Critical resistance levels for S&P 500 are 3700.45, 3707.62, and 3712.39
  • Key levels for E-mini futures: break above 3684.50, the high of 7:30 AM and break below 3667.25, the low of 1:00 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (March 2021) closed at 3655.00 and the index closed at 3663.46 – a spread of about -8.50 points; futures closed at 3653.50 for the day; the fair value is +1.50
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +26.50; Dow by +241, and NASDAQ by +58.25

Markets Around The World

  • Markets in the East closed mostly up – Hong Kong and Seoul closed down;
  • European markets are mostly up – Switzerland is down
  • Currencies (from one week ago):
    Up Down
    • Dollar index
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Most soft commodities mixed
  • Treasuries
    • 10-years yield closed at 0.920%, down 4.9 BP from one week ago;
    • 30-years is at 1.611%, down 6.9 BP;
    • 2-years yield is at 0.125%, down 2.4 BP;
    • The 10-Year-&-2-Year spread is at 0.753, down from 0.771
  • VIX
    • At 22.42 @ 7:45 AM; down from the last close; at/above 5-day SMA;
    • Recent high =  27.27 on November 12; low =  19.51 on November 27
    • Sentiment: Risk-On

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 11 was a relatively small Harami candle, a spinning top candle with small upper and lower shadows; made an all-time intraday high;
    • Stochastic (9,1, 3): %K is crossing below %D; above 90
    • RSI (9) is turning down from near 70
  • The week was down -35.66 or -1.0%; the 5-week ATR is 99.31
  • A down week; fourth in the last five weeks and seventh in the last ten weeks
  • The weekly week pivot point=3669.75, R1=3706.10, R2=3748.74; S1=3627.11, S2=3590.76; no pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23
Daily
  • A small green candle wth almost no upper shadow and very small lower shadow
    • Broke above a symmetrical triangle at 3550.00 level on November 9; the 61.8% extension target is near 3750.00; 100% extension target is near 3900.00
    • %K is below %D; from above 90 to below 40
    • 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)
  • Bouncing up since 6:00 AM on Friday from a congestion area; gapped up at the open of the week on Sunday
    • the break below an uneven Head-&-Should pattern achieved the 61.8% extension target near 3636.00;
    • RSI-21 is near 65 after dipping below 20
  • Above EMA10 of EMA50, which is above EMA20
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving up since 6:00 AM on Friday; moving above a congestion area between 3680.00 and 3660.00; next meaningful resistance is the all-time high of 3714.75
    • RSI-21 is moving above 60 since the Sunday open
    • %K is crossing below %D from above 80
  • 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 11:30 PM on Sunday
  • The Bollinger Band is expanding slightly since 2:45 AM with price walking up the upper band
    • Stochastic (9, 1, 3): %K is below %D below 20
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly lower on Friday, December 11 in mixed volume.  Dow Jones Industrial Average closed up. S&P 500 and NASDAQ Composite traded in lower volume. Major indices have declined from all-time highs but the decline has stalled.

For the week, major US indices mostly closed lower in mostly lower volume. Russell 2000 closed up for the week and NASDAQ Composite traded in higher volume. Markets in Asia were mixed but Europe was mostly down. The dollar index rose for the week and the yen strengthened too. Energy futures were up, precious metals were mixed, industrial metals were mostly lower, and the soft commodities were mixed. The US Treasury yields fell.

From Briefing.com:

The S&P 500 decreased 0.1% on Friday to overcome a 1.0% decline in midday action. The Nasdaq Composite (-0.2%) and Russell 2000 (-0.6%) also pared intraday losses, while the Dow Jones Industrial Average (+0.2%) eked out a positive finish. […]

U.S. Treasuries finished with modest gains, pushing yields lower across the curve. The 2-yr yield decreased three basis points to 0.11%, and the 10-yr yield decreased two basis points to 0.89%. The U.S. Dollar Index increased 0.2% to 90.98. WTI crude futures decreased 0.5%, or $0.24, to $46.58/bbl.

[…]
  • Total PPI was up 0.1% m/m in November and so was core PPI, which excludes food and energy. That was below the Briefing.com consensus estimate, which called for 0.2% increases for both series.
  • […]
  • The preliminary December University of Michigan Index of Consumer Sentiment rose to 81.4 (Briefing.com consensus 75.0) from 76.9 in November.
[…]
  • Nasdaq Composite +38.0% YTD
  • Russell 2000 +14.6% YTD
  • S&P 500 +13.4% YTD
  • Dow Jones Industrial Average +5.3% YTD
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