Morning Notes – Friday January 15, 2021

/ January 15, 2021

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day, with a good chance of sideways to up move from the pre-open level near 3780.00; watch for a break above 3784.50 and break below 3771.25 for clarity
  • Key economic data report due during the day:
    • Core Retail Sales ( -1.4% vs. -0.1% est.; prev. -1.3%) at 8:30 AM
    • Retail Sales ( -0.7% vs. 0.0% est.; prev. -1.4%) at 8:30 AM
    • PPI ( 0.3% vs.0.4% est.; prev. 0.1%) at 8:30 AM
    • Core PPI ( 0.1% vs. 0.1% est.; prev. 0.1%) at 8:30 AM
    • Empire State Manufacturing Index ( 3.5 vs. 5.7 est.; prev./ 4.9) at 8:30 AM
    • Capacity Utilization ( 73.4% est.; prev. 73.3% ) at 9:15 AM
    • Industrial Production ( 0.5% est.; prev. 0.4%) at 9:15 AM
    • Business Inventories ( 0.5% est.; prev. 0.7%) at 10:00 AM
    • Prelim UoM Consumer Sentiment ( 79.5 est.; prev 80.7) at 10:00 AM
    • Prelim UoM Inflation Expectations ( prev. 2.5%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3776.51, 3764.71, and 3742.39
  • Critical resistance levels for S&P 500 are 3792.86, 3806.63, and 3819.42
  • Key levels for E-mini futures: break above 3784.50, the high of 5:30 AM and break below 3771.25, the low of 6:15 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (March 2021) closed at 3790.25 and the index closed at 3795.54 – a spread of about -5.25 points; futures closed at 3791.25 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures are down – at 8:00 AM, S&P 500 futures were down by -14.25; Dow by -151, and NASDAQ by -5.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Sydney, and Singapore closed up; Tokyo, Mumbai, and Seoul closed down
  • European markets are mostly lower – Switzerland is higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • EUR/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.290%, up 21.2 BP from two weeks ago;
    • 30-years is at 1.874%, up 22.8 BP;
    • 2-years yield is at 0.145%, up 2.4 BP;
    • The 10-Year-&-2-Year spread is at 0.984, up from 0.796
  • VIX
    • At 23.85 @ 6:45 AM; up from the last close; above 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 small Bearish Engulfing near all-time highs; not much move since January 7;
    • 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 essential sideways to down since 10:00 PM on January 7; a Descending Triangle is emerging at the top with price moving near the lower bound
    • broke above a descending triangle at 12:00 PM on Wednesday; 61.8% extension target near 3820.00 is achieved and 100% extension target is near 3850.00;
    • RSI-21 to near 30
  • Below EMA20, which is below 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; moving near the lower bound
    • RSI-21 is moving below 40
    • %K is below %D
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) moved down from 2:45 PM to 3:45 AM; turning up since
  • The Bollinger Band was expanded; narrowing since 7:00 AM ed 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: Down-Side

Previous Session

Major U.S. indices closed mixed on Thursday, January 14 in higher volume. S&P 500, Dow Jones Industrial Average, NASDAQ Composite, and Willshire 5000 Total Market Index closed down others closed up. Indices continue to move sideways making small indecisive candles.

From Briefing.com:

The major averages finished Thursday on a modestly lower note after surrendering their opening gains. The S&P 500 fell 0.4% while the Dow (-0.2%) and Nasdaq (-0.1%) recorded slimmer losses after touching fresh intraday record highs. Small caps continued their hot start to the year as the Russell 2000 jumped 2.1%.

[…]

Seven out of eleven sectors ended in the red with technology (-1.0%), consumer discretionary (-0.7%), and communication services (-0.8%) leading the market lower after keeping it afloat in early trade.

[…]

Treasuries finished on their lows, sending the 10-yr yield higher by four basis points to 1.13%.

[…]
  • For the week ending January 9, initial claims spiked by 181,000 to 965,000 (Briefing.com consensus 780,000). That’s the highest claims number since August. Continuing claims for the week ending January 2 increased by 199,000 to 5.271 million.
  • […]
  • Import prices rose 0.9% in December while the November increase was revised up to 0.2% from 0.1%. Excluding oil, import prices rose 0.4% after decreasing a revised 0.2% (from -0.3%) in November. Export prices rose 1.1% in December while the November increase was revised up to 0.7% from 0.6%. Excluding agriculture, export prices rose 1.3% after increasing 0.3% in November.
[…]
  • Russell 2000 +9.1% YTD
  • Nasdaq Composite +1.7% YTD
  • Dow Jones Industrial Average +1.3% YTD
  • S&P 500 +1.1% YTD
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