Market Remarks

Morning Notes – Tuesday January 12, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up to sideways day; watch for a break above 3810.50 and break below 3785.50 for clarity
  • 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: Up-Side
  • 6-Min:  Side

Key Levels:

  • Critical support levels for S&P 500 are 3794.07, 3783.60, and 3764.71
  • Critical resistance levels for S&P 500 are 3808.39, 3817.86, and 3826.69
  • Key levels for E-mini futures: break above 3810.50, the high of 12:30 AM and break below 3785.50, the low of 3:30 PM on Monday

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2021) closed at 3792.25 and the index closed at 3799.61 – a spread of about -7.50 points; futures closed at 3792.00 for the day; the fair value is +0.25
  • 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 mixed – Shanghai, Hong Kong, Tokyo, and Mumbai were up; Sydney, Seoul, and Singapore closed down
  • European markets are mixed – Germany, Spain, and STOXX 600 are up; The UK, France, Italy, and Switzerland are down
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • NZD/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 1.132%, up 19.9 BP from two weeks ago;
    • 30-years is at 1.876%, up 20.7 BP;
    • 2-years yield is at 0.149%, up 2.0 BP;
    • The 10-Year-&-2-Year spread is at 0.983, up from 0.804
  • VIX
    • At 23.23 @ 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-On-Neutral

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 small Doji with almost equal-sized 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 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 sideways since 10:00 PM on Sunday after declining from the all-time high – Friday’s high of 3824.50 – to around 3800.00 level;
    • RSI-21 is rising above 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 is moving around 50
    • %K is crisscrossing %D lower; near 60
    • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving sideways since 1:30 AM on Monday
  • The Bollinger Band is relatively stable
    • Stochastic (9, 1, 3): %K is below %D; near 20
  • Bias: Up-Side

Previous Session

Major U.S. indices closed lower on Monday, January 11 in lower volume. Most indices made small Doji like indecisive candles. Most S&P sectors closed lower. Energy, Financials, and Healthcare closed up and Materials was unchanged after declining earlier in the day.

From Briefing.com:

The S&P 500 declined 0.7% on Monday in a tech-driven decline that was more pronounced in the Nasdaq Composite (-1.3%). The Dow Jones Industrial Average (-0.3%) and Russell 2000 (-0.03%) finished closer to their flat lines amid relative strength in health care and cyclical stocks. […]

Accordingly, the communication services (-1.8%), consumer discretionary (-1.9%), and information technology (-0.9%) sectors joined the rate-sensitive real estate (-1.7%) and utilities (-0.9%) sectors at the bottom of the standings.

[…]

Outside these groups, investors continued to put faith in an economic recovery, evident by the outperformances of the cyclical energy (+1.6%), financials (+0.4%), and materials (unch) sectors. The Philadelphia Semiconductor Index advanced 1.1%.

[…]

U.S. Treasuries extended last week’s retreat, driving yields higher across the curve, amid lingering expectations for more fiscal stimulus. The 2-yr yield increased two basis points to 0.15%, and the 10-yr yield increased three basis points to 1.13%. The U.S. Dollar Index increased 0.5% to 90.51. WTI crude futures declined 0.1% to $52.19/bbl.

[…]
  • Russell 2000 +5.9% YTD
  • Dow Jones Industrial Average +1.3% YTD
  • Nasdaq Composite +1.2% YTD
  • S&P 500 +1.2% YTD
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