Market Remarks

Morning Notes – Tuesday March 2, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • The daily bias is sideways to down
  • The odds are for a sideways to down day – watch for a break above 3897.00 and break below 3866.25 for clarity
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3888.59, 3862.91, and 3842.51
  • Critical resistance levels for S&P 500 are 3901.33, 3910.28, and 3914.50
  • Key levels for E-mini futures: break above 3897.00, the high of 7:45 AM and break below 3866.25, the low of 4:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2021) closed at 3897.75 and the index closed at 3901.82 – a spread of about -4.00 points; futures closed at 3898.75 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -8.25; Dow by -58, and NASDAQ by -33.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Tokyo, and Sydney closed lower; Mumbai, Seoul, and Singapore closed higher
  • European markets are mostly higher – Italy is down
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.450%, up 15.1 BP from two weeks ago;
    • 30-years is at 2.239%, up 14.9 BP;
    • 2-years yield is at 0.121%, down 0.4 BP;
    • The 10-Year-&-2-Year spread is at 1.329, up from 1.174
  • VIX
    • At 23.04 @ 8:15 AM; down from the last close; below 5-day SMA;
    • Recent high =  31.16 on February 25; low =  19.69 on February 10
    • Sentiment: Risk-Off-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 February 26 was a red candle with mall upper and lower shadows; a three-week Evening Star pattern is emerging
    • Stochastic (9,1, 3): %K is below %D, which is turning down and forming a Bearish Divergence
    • RSI (9) is below 60; potential Bearish Divergence emerging
  • The week was down -95.56 or -2.4%; the 5-week ATR is 122.78
  • A down week; second in a row, third in the last five weeks, and fifth in the last ten weeks
  • The weekly week pivot point=3843.11, R1=3896.69, R2=3982.22; S1=3757.58, S2=3704.00; S1/S2/S3 pivot levels were breached
  • At/above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A large green candle with no lower shadow and small upper shadow;
  • Broke above a symmetrical triangle at 3550.00 level on November 9; the 100% extension target near 3900.00 is achieved; 161.8% extension target is near 4140.00 levels
    • %K  crossed above %D; just below 80
    • RSI-9 above 50; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving sideways since 2:00 PM on Monday after bouncing up from 3785.00 at 10:00 AM on Friday from a congestion area;
    • RSI-21 just above 60; Bullish Divergence on Friday
  • Above EMA10 of EMA50, which is above EMA20
  • Bias: Side-Down
30-Minute (E-mini futures)
    • Declined from Monday high of 3912.00 to 3866.25 at 4:0 AM; bounced up to 3890.00;
      • RSI-21 moving between 50 and 60
      • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 3:30 PM on Monday;
  • The Bollinger Band is expanding since 6:00 AM with price mostly walking up the upper band
    • Stochastic (9, 1, 3): %K is below %D since 7:45 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Monday, March 1 in mostly lower volume. Dow Jones Transportation Average traded in higher volume. Indices opened higher and then traded up for most of the day with a small retracement in the final hour of trading.

From Briefing.com:

The S&P 500 rallied 2.4% on Monday, as investors indiscriminately bought last week’s dip amid a host of positive-sounding developments. The Nasdaq Composite (+3.0%) and Russell 2000 (+3.4%) rose at least 3.0%, while the Dow Jones Industrial Average (+2.0%) followed behind with a 2.0% gain.

All 11 S&P 500 sectors contributed to the steady advance, eight of which advanced more than 2.0%. The information technology (+3.2%) and financials (+3.1%) sectors finished as influential leaders, while the real estate sector (+0.2%) underperformed with a modest gain after a strong start.

[…]

The 2-yr yield decreased two basis points to 0.12%, and the 10-yr yield decreased one basis point to 1.45%. The U.S. Dollar Index increased 0.2% to 91.04. WTI crude futures decreased 1.5%, or $0.91, to $60.54/bbl ahead of an OPEC+ meeting later this week.

[…]
  • The ISM Manufacturing Index for February jumped to 60.8% (Briefing.com consensus 58.8%) from 58.7% in January, matching the August 2018 reading as the highest since May 2004. The dividing line between expansion and contraction is 50.0%. February marked the ninth straight month the ISM Manufacturing Index has been above 50.0%.
  • […]
  • Total construction spending increased 1.7% m/m in January (Briefing.com consensus 0.6%) after increasing an upwardly revised 1.1% (from 1.0%) in December. Total private construction spending rose 1.7% m/m and total public construction spending increased 1.7%.
  • […]
  • The February IHS Markit Manufacturing PMI increased to 58.6 from 58.5 in January.
[…]
  • Russell 2000 +15.2% YTD
  • Nasdaq Composite +5.4% YTD
  • S&P 500 +3.9% YTD
  • Dow Jones Industrial Average +3.0% YTD
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