Market Remarks

Morning Notes – Wednesday January 20, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day, with a good chance of sideways to down move from the pre-open level near 3810.00; watch for a break below 3788.50 for change of fortune
  • Key economic data report due during the day:
    • NAHB Housing Market Index ( 86 est.,; prev. 86) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3797.83, 3791.26, and 3780.37
  • Critical resistance levels for S&P 500 are 3804.53, 3819.42, and 3823.60
  • Key levels for E-mini futures: break above 3808.25, the high of 5:30 AM and break below 3788.50, the low of 11:30 PM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2021) closed at 3790.25 and the index closed at 3798.91 – a spread of about -8.75 points; futures closed at 3790.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +15.50; Dow by +43, and NASDAQ b0 +119.75

Markets Around The World

  • Markets in the East mostly higher – Tokyo was down
  • European markets are mostly higher – the UK and Spain are lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are mostly higher
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.092%, up 13.7 BP from two weeks ago;
    • 30-years is at 1.840%, up 13.5 BP;
    • 2-years yield is at 0.141%, up 1.6 BP;
    • The 10-Year-&-2-Year spread is at 0.951, up from 0.830
  • VIX
    • At 22.31 @ 6:45 AM; down from the last close; below 5-day SMA;
    • Recent high =  29.19 on January 4; low =  20.99 on December 29
    • Sentiment: Risk-On

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 green candle with almost no lower shadow and a small lower shadow; near all-time highs; not much up or down 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 essentially sideways to down since 10:00 PM on January 7 within an un-even down-sloping flag; near the upper bound
    • RSI-21 to around 65
  • 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; making a rounding pattern at the top  with price near the top;
    • RSI-21 is moving between 50 and 60
    • %K is below %D
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up;
  • The Bollinger Band is relatively stable
    • Stochastic (9, 1, 3): %K is above %D
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Tuesday, January 19 in lower volume. Indices continue to move sideways making small indecisive candles.

From Briefing.com:

The S&P 500 gained 0.8% on Tuesday, reclaiming its decline from last Friday, in an advance led by shares of mega-cap, semiconductor, and energy companies. The Nasdaq Composite (+1.5%) and Russell 2000 (+1.3%) outperformed the benchmark index, while the Dow Jones Industrial Average (+0.4%) posted a smaller gain. […]

The S&P 500 energy sector (+2.1%) and Philadelphia Semiconductor Index (+3.4%), which contain economically-sensitive businesses, were among the biggest gainers today. The influential information technology sector advanced 1.3%.

[…]

U.S. Treasuries recouped overnight losses and finished little changed in front of President-elect Biden’s inauguration tomorrow. The 2-yr yield was flat at 0.13%, and the 10-yr yield was flat at 1.09%. The U.S. Dollar Index decreased 0.3% to 90.50. WTI crude futures settled higher by 1.3%, or $0.66, to $52.96/bbl.

[…]
  • Russell 2000 +8.9% YTD
  • Nasdaq Composite +2.4% YTD
  • S&P 500 +1.1% YTD
  • Dow Jones Industrial Average +1.1% YTD
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