Market Remarks

Morning Notes – Monday March 8, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • Futures rising since 4:15 AM after declining to 3795.00 from 3866.00
  • The odds are for an up to sideways day with choppy price action – watch for a break below 3812.25 and break above 3834.75 for clarity
  • Key economic data report due during the day:
    • Final Wholesale Inventories ( 1.3% est.; prev. 1.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3821.88, 3804.30, and 3783.89
  • Critical resistance levels for S&P 500 are 3837.65, 3851.69, and 3863.10
  • Key levels for E-mini futures: break above 3834.75, the high of 1:00 AM and break below 3810.75, the low of 7:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (March 2021) closed at 3838.00 and the index closed at 3841.94 – a spread of about -4.00 points; futures closed at 3839.00 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures are mixed – at 8:00 AM, S&P 500 futures were down by -8.25; Dow up by +31, and NASDAQ down by -111.00

Markets Around The World

  • Markets in the East closed mixed
  • European markets are mostly higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • EUR/USD
    • GBP/USD
    • AUD/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 lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.554%, up 20.9 BP from two weeks ago;
    • 30-years is at 2.288%, up 14.8 BP;
    • 2-years yield is at 0.137%, up 2.0 BP;
    • The 10-Year-&-2-Year spread is at 1.417, up from 1.228
  • VIX
    • At 27.32 @ 7:30 AM; up from the last close; above 5-day SMA;
    • Recent high =  31.90 on March 4; low =  19.69 on February 10
    • 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 March 5 was a Doji Harami candle
    • Stochastic (9,1, 3): %K is below %D but turning up
    • RSI (9) is near 60
  • The week was up +30.79 or +0.8%; the 5-week ATR is 125.66
  • An up week; third in the last five weeks, and sixth in the last ten weeks
  • The weekly week pivot point=3826.59, R1=3929.85, R2=4017.75; S1=3738.69, S2=3635.43; S1/R1 pivot levels were breached
  • At/above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A relatively large green candle that opened higher and the close above previous day’s high; small upper shadow and a lower shadow almost equal to the real body;
    • 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; above 50
    • RSI-9 just below 50; turning up from below 40
  • Below 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • In Correction
2-Hour (E-mini futures)
  • Moving up since 12:00 PM on March 4; broke the sequence of lower highs and lower lows since making the all-time high on February 15; below the downtrend line from the all-time high
    • RSI-21 drifted down from above 65 to just above 50
  • Above EMA20 but below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
    • Opened up for the week but then started to drift down; moved down from 3866.25 to 3795.00 before rebounding to near 3830.00
      • RSI-21 declined from above 65 to 50
      • At/below EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 7:45 PM;
  • The Bollinger Band is relatively stable; the price is at the upper band
    • Stochastic (9, 1, 3): %K is above %D above 80
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Friday, March 5 in mostly lower volume. The indices opened higher but then immediately declined and made day’s lows in the late morning before turning up and closing near the highs for the day. All S&P sectors closed higher.

For the week, the major indices closed mixed in mixed volume. NASDAQ Composite and Russell 2000 closed down. Dow Jones Industrial Average and Dow Jones Transportation Average traded in lower volume. Markets in Asia mostly closed higher. Europe was up for the week. The dollar index was up and most commodities were down. The US Treasury yields closed higher.

From Briefing.com:

The S&P 500 advanced 2.0% on Friday in a resilient session that featured better-than-expected payrolls growth for February. The benchmark index was down as much as 1.0% intraday as investors sold into early strength, but others stepped in to buy the dip and propel the market to session highs by the close.

The Nasdaq Composite gained 1.6% after being down 2.6% intraday, the Dow Jones Industrial Average gained 1.9% after being down 0.5% intraday, and the Russell 2000 gained 2.1% after being down 2.9% intraday.

[…]

The 2-yr yield increased one basis point to 0.15%. The U.S. Dollar Index advanced 0.4% to 91.96.

[…]
  • The February Employment Situation Report was much better than expected on the payrolls front. The payrolls increase is the highlight of the report and is apt to be the lead headline when it comes to talking about the report; however, there is a soft underbelly to the report that should not go unnoticed. The labor force participation rate was unchanged at 61.4% (down from 63.3% a year ago), the U-6 unemployment rate is still high at 11.1%, and persons unemployed for 27 weeks or more accounted for 41.5% of the unemployed versus 39.5% in January. The pace of hiring might have picked up in February, yet the travails of the long-term unemployed did as well.
  • […]
  • The January trade deficit widened to -$68.2 billion (Briefing.com consensus -$67.5 billion) from a downwardly revised -$67.0 billion (from -$66.6 billion) in December. The widening in the deficit was a byproduct of exports increasing less than imports.
  • […]
  • Consumer credit decreased by $1.3 bln in January after increasing a downwardly revised $8.8 bln (from $9.7 bln) in December.
[…]
  • Russell 2000 +11.0% YTD
  • Dow Jones Industrial Average +2.9% YTD
  • S&P 500 +2.3% YTD
  • Nasdaq Composite +0.3% YTD
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