Morning Notes – Monday January 11, 2021

/ January 11, 2021

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for down day; watch for a break above 3804.50 for change of fortune
  • No key economic data report due during the day

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3783.60, 3764.71, and 3742.39
  • Critical resistance levels for S&P 500 are 3800.96, 3812.99, and 3826.69
  • Key levels for E-mini futures: break above 3804.50, the high of 3:00 AM and break below 3775.00, the low of 1:30 PM on Friday

Pre-Open

  • On Friday at 4:00 PM, S&P futures (March 2021) closed at 3817.00 and the index closed at 3824.68 – a spread of about -7.75 points; futures closed at 3817.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are lower – at 8:00 AM, S&P 500 futures were down by -26.00; Dow up by -244, and NASDAQ by -78.75

Markets Around The World

  • Markets in the East closed mostly lower – Hong Kong and Mumbai were up; Tokyo was closed
  • European markets are mostly lower – Switzerland is up
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.117%, up 19.1 BP from two weeks ago;
    • 30-years is at 1.871%, up 20.9 BP;
    • 2-years yield is at 0.137%, up 1.6 BP;
    • The 10-Year-&-2-Year spread is at 0.980, up from 0.805
  • VIX
    • At 23.56 @ 8:00 AM; up from the last close; at/below 5-day SMA;
    • Recent high =  29.19 on January 4; low =  20.99 on December 29
    • Sentiment: Risk-Off

The trend and patterns on various time frames for S&P 500:

Monthly
  • Confirmed Uptrend
  • December 2020 was a green candle with a small gap and with almost no upper and lower shadows; all-time closing and intraday highs;
    • Stochastic %K above %D near 100;
    • RSI-9 above 70; broke above a downtrend line from January 2018
    • 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 January 8 was a green candle with a relatively long lower shadow that opened higher; all-time intraday highs;
    • Stochastic (9,1, 3): %K is above %D; near 100
    • RSI (9) is above 70
  • The week was up +68.61 or +1.8%; the 5-week ATR is 91.15
  • An up week; third in the last five weeks and seventh in the last ten weeks
  • The weekly week pivot point=3771.36, R1=3880.01, R2=3935.34; S1=3716.03, S2=3607.38; R1/R2/3 and S1/S2/S3 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23
Daily
  • A green candle with a small body, small upper shadow but a long lower shadow at all-time highs;
    • Broke above a symmetrical triangle at 3550.00 level on November 9; the 61.8% extension target near 3750.00 is achieved; 100% extension target is near 3900.00
    • %K  is above %D and near 100;
    • RSI-9 is near 75; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Drifting lower from the all-time high – Friday’s high of 3824.50 – to near 3790.00;
    • RSI-21 is below 50 after making a Bearish Divergence on Friday
  • At/below EMA20; above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Mostly moving sideways since 10:30 AM on January 7;
    • RSI-21 has drifted below 50 from around 65
    • %K is below %D; below 10
    • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving sideways since 1:30 AM
  • The Bollinger Band was relatively stable; expanding since 8:00 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is below %D; below 20
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly higher on Friday, January 8 in mostly higher volume. Russell 2000 closed down and DOw Jones Industrial Average traded in lower volume. Most indices closed at all-time highs and made small candles with mostly longer lower shadow.

For the week, major indices closed higher in higher volume. Europe and Asia also closed higher. The dollar index closed up. The crude oil also closed up and gold closed down. The US Treasury yields were up for the week.

From Briefing.com:

The S&P 500 (+0.6%), Nasdaq Composite (+1.0%), and Dow Jones Industrial Average (+0.2%) closed at fresh record highs on Friday despite a weak December employment report. The Russell 2000 (-0.3%) set an intraday all-time high at the open but closed lower.

[…[

In the stock market, the S&P 500 consumer discretionary (+1.8%), real estate (+1.1%), information technology (+0.8%), and utilities (+0.9%) sectors carried the market higher,

[…]

On the downside, the materials (-0.5%), financials (-0.2%), industrials (-0.2%), and energy (-0.1%) sectors finished in the red.

[…]

Longer-dated Treasuries continued to face selling pressure amid expectations for economic growth and possibly inflation. The 10-yr yield increased another three basis points to 1.11%, while the 2-yr yield decreased one basis point to 0.13%. The U.S. Dollar Index increased 0.3% to 90.06. WTI crude futures increased 2.8%, or $1.44, to $52.25/bbl.

[…]
  • The December employment report disappointed on the headline level as nonfarm payrolls declined by 140,000 (Briefing.com consensus 112,000) against expectations for an increase. However, the drop was partially offset by a large upward revision to November figures and an increase in December average hourly earnings. December private sector payrolls decreased by 95,000 (Briefing.com consensus 100,000). December unemployment rate was unchanged at 6.7% (Briefing.com consensus 6.7%)
  • […]
  • Consumer credit increased by $15.3 bln in November after increasing a revised $4.5 bln (from $7.2 bln) in October.
  • […]
  • Wholesale inventories were unchanged in November (Briefing.com consensus -0.1%) following an upwardly revised 1.3% increase (from +1.1%) in October.
[…]
  • Russell 2000 +5.9% YTD
  • Nasdaq Composite +2.4% YTD
  • S&P 500 +1.8% YTD
  • Dow Jones Industrial Average +1.6% YTD
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