Market Remarks

Morning Notes – Wednesday December 16, 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 3682.75 for change of fortunes
  • Key economic data report due during the day:
    • Retail Sales ( -0.3% est.; prev. 0.3%) at 8:30 AM
    • Core Retail Sales ( 0.1% est.; prev. 0.2%) at 8:30 AM
    • Flash Manufacturing PMI ( 55.9 est.; prev. 56.7) at 9:45 AM
    • Flash Services PMI ( 55.7 est.; prev. 58.4) at 9:45 AM
    • Business Inventories ( 0.6% est.; prev. 0.7%) at 10:00 AM
    • NAHB Housing Market Index ( 88 est.; prev. 90) at 10:00 AM
    • FOMC Statement at 2:00 PM
    • FOMC Press Conference at 2:30 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3695.29, 3686.38, and 3678.01
  • Critical resistance levels for S&P 500 are 3706.73, 3712.39, and 3718.85
  • Key levels for E-mini futures: break above 3700.75, the high of 5:30 AM and break below 3682.75, the low of 7:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2021) closed at 3687.75 and the index closed at 3694.62 – a spread of about -7.00 points; futures closed at 3687.00 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 7:30 AM, S&P 500 futures were up by +11.25; Dow by +87, and NASDAQ by +24.50

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was down
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Most soft commodities mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 0.923%, down 1.1 BP from two weeks ago;
    • 30-years is at 1.665%, down 1.1 BP;
    • 2-years yield is at 0.121%, down 5.5 BP;
    • The 10-Year-&-2-Year spread is at 0.802, up from 0.758
  • VIX
    • At 22.38 @ 6:15 AM; down from the last close; below 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 green candle with almost no upper and lower shadows near all-time highs;
    • 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 above %D; from below 20 to above 70
    • RSI-9 turning up above 60; at/above 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 from 3636.25 since 2:00 PM on Monday after declining from early Monday morning high; breaking above congestion area of past many days;
    • RSI-21 is above 70
  • Above EMA20 but at/below EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 12:00 AM on Tuesday
    • RSI-21 is moving above 60
    • %K is crisscrossing %D around 70
  • Above EMA20, which is at EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving up since 2:45 AM
  • The Bollinger Band is expanding since 2:45 AM with price mostly walking up the upper band
    • Stochastic (9, 1, 3): %K is below %D since 5:30 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Tuesday, December 15 in mostly lower volume. Dow Jones Industrial Average traded in higher volume. Indices opened higher and then a brief hesitation, continue to move higher and closed near the highs for the day. All S&P sectors closed higher. Major indices are mostly higher from one week and two weeks ago. The daily market trend si still sideways-to-down.

From Briefing.com:

The large-cap indices advanced more than 1.0% on Tuesday, predominately due to the influence of Apple (AAPL 127.88, +6.10, +5.0%) and renewed stimulus optimism. The Russell 2000 closed at a record high with a 2.4% gain, followed by the S&P 500 (+1.3%), Nasdaq Composite (+1.3%), and Dow Jones Industrial Average (+1.1%). […]

The energy (+1.9%), materials (+1.9%), and financials (+1.7%) sectors were among the biggest gainers in the S&P 500, which happened to snap a benign four-session losing streak today. The consumer staples sector (+0.2%) increased the least.

[…]

U.S. Treasuries finished on a lower note, particularly longer-dated maturities since shorter-dated maturities remained anchored by the Fed. The 2-yr yield increased one basis point to 0.12%, and the 10-yr yield increased three basis points to 0.92%. The U.S. Dollar Index declined 0.3% to 90.45. WTI crude futures rose 1.3%, or $0.59, to $47.59/bbl.

[…]
  • Industrial production increased 0.4% m/m in November (Briefing.com consensus 0.3%) following a downwardly revised 0.9% increase (from 1.1%) in October. The capacity utilization rate jumped to 73.3% (Briefing.com consensus 73.0%) from an upwardly revised 73.0% (from 72.8%) in October.
  • […]
  • Import prices increased 0.1% in November; and prices excluding oil decreased 0.3%. Export prices increased 0.6% in November; and prices excluding agriculture increased 0.3%.
[…]
  • Nasdaq Composite +40.4% YTD
  • Russell 2000 +17.5% YTD
  • S&P 500 +14.4% YTD
  • Dow Jones Industrial Average +5.8% YTD
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