Market Remarks

Morning Notes – Thursday January 14, 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 3814.70 and break below 3804.50 for clarity
  • Key economic data report due during the day:
    • Unemployment Claims ( 965K vs. 785K est.; prev. 787K) at 8:30 AM
    • Import Prices ( 0.9% vs. 0.7% est.; prev. 0.1%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3791.50, 3776.51, and 3764.71
  • Critical resistance levels for S&P 500 are 3820.96, 3826.69, and 3836.89
  • Key levels for E-mini futures: break above 3814.75, the high of 4:00 AM and break below 3804.25, the low of 6:15 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2021) closed at 3802.50 and the index closed at 3809.94 – a spread of about -7.50 points; futures closed at 3803.75 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures are mixed – at 8:15 AM, S&P 500 futures were up by +4.75; Dow up by +91, and NASDAQ down by -1.50

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai closed down
  • European markets are mostly higher – Spain and Italy are lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • AUD/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 mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.088%, up 16.2 BP from two weeks ago;
    • 30-years is at 1.818%, up 15.6 BP;
    • 2-years yield is at 0.149%, up 2.4 BP;
    • The 10-Year-&-2-Year spread is at 0.939, up from 0.801
  • VIX
    • At 22.22 @ 7:45 AM; up from the last close; 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 spinning top candle 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 essentially sideways since 10:00 PM on January 7;
    • broke above a descending triangle at 12:00 PM on Wednesday; 61.8% extension target is near 3820.00 and 100% extension target is near 3850.00;
    • RSI-21 declined from near 65 to near 55
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving mostly sideways since 10:30 AM on January 7 within a horizontal channel – 61.&% extension target is near 3842.50 and 100% extension target is near 3883.00;
    • RSI-21 is moving around 50
    • %K is above %D from below 10
    • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • Moving within a descending triangle
  • Bollinger Band (20, 2.0) is moving sideways since 10:00 PM
  • The Bollinger Band narrowed slightly during the Asian session and then expanding slightly since 5:30 AM
    • Stochastic (9, 1, 3): %K is crossing below %D from above 80
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mixed on Wednesday, January 13 in mostly lower volume. S&P 500, NASDAQ Composite, and Willshire 5000 Total Market Index closed up others closed down. Dow Jones Industrial Average traded in higher volume. Indices continue to move sideways making small indecisive candles.

From Briefing.com:

The stock market finished Wednesday on a slightly higher note. The Nasdaq (+0.4%) outperformed throughout the day while the S&P 500 (+0.2%) and Dow (unch) finished closer to their flat lines. The Russell 2000 (-0.8%) underperformed after a strong start to the week. […]

Equities recorded the bulk of their gains in morning trade while afternoon action saw some backtracking from highs. The modest advance unfolded in quiet fashion as gains among influential sectors like technology (+0.7%), health care (+0.3%), and consumer discretionary (+0.2%) outweighed losses in financials (-0.2%) and industrials (-0.9%).

Smaller sectors ended at the extremes of the performance table as utilities (+1.9%) and real estate (+1.4%) claimed the top two spots while materials (-1.1%) and energy (-0.8%) finished at the bottom.

[…]

Treasuries rebounded after six days of losses in longer tenors, sending the 10-yr yield down five basis points to 1.09%. The U.S. Dollar Index rose 0.3% to 90.36.

[…]
  • Total CPI increased 0.4% m/m in December (Briefing.com consensus 0.4%) while core CPI increased 0.1% m/m (Briefing.com consensus 0.1%). The uptick in total CPI was driven largely by an 8.4% increase in the gasoline index, which accounted for more than 60% of the overall increase.
  • […]
  • The December Treasury Budget showed a $143.6 bln deficit, versus a $13.3 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the December deficit can’t be compared to the November deficit of -$145.3 bln.
  • […]
  • The weekly MBA Mortgage Index jumped 16.7% as the Refinance Index spiked 20.1% while the Purchase Index rose 8.0%.
[…]
  • Russell 2000 +6.9% YTD
  • Nasdaq Composite +1.9% YTD
  • Dow Jones Industrial Average +1.5% YTD
  • S&P 500 +1.4% YTD
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