Market Remarks

Morning Notes – Friday March 12, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower
  • The daily bias has shifted to sideways to up
  • The odds are for a down day with a good chance of sideways move from pre-open levels around 3925.00 – watch for a break above 3933.75 for change of sentiments
  • Key economic data report due during the day:
    • PPI ( 0.4% est.; prev. 1.3%) at 8:30 AM
    • Core PPI ( 0.2% est.; prev. 1.2% ) at 8:30 AM;
    • Prelim UoM Consumer Sentiment ( 78.4 est.; prev. 76.8) at 10:00 AM
    • Prelim UoM Inflation Expectations ( prev. 3.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3924.33, 3915.54, and 3897.36
  • Critical resistance levels for S&P 500 are 3937.05, 3946.40, and 3960.27
  • Key levels for E-mini futures: break above 3933.75, the low of 9:45 PM and break below 3910.25, the low of 5:15 PM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (March 2021) closed at 3936.50 and the index closed at 3939.34 – a spread of about -2.75 points; futures closed at 3936.75 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are lower – at 8:00 AM, S&P 500 futures were down by -17.00; Dow by -28, and NASDAQ by -169.50

Markets Around The World

  • Markets in the East closed mixed
  • European markets are mostly lower – the UK and Spain are higher
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.527%, up 0.9 basis points from two weeks ago;
    • 30-years is at 2.281%, down 2.7 basis points;
    • 2-years yield is at 0.149%, down 2.7 basis points;
    • The 10-Year-&-2-Year spread is at 1.378, up from 1.342
  • VIX
    • At 22.68 @ 7:45 AM; up from the last close; below 5-day SMA;
    • Recent high =  31.90 on March 4; low =  21.45 on March 11
    • 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 small green candle with almost no lower shadow and small upper shadow; at all-time highs
    • 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  is above %D; above 80
    • RSI-9 above 60;
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Drifted down from 3858.50, near the all-time high, at 12:00 PM on Thursday to near 3900.00; bouncing since 4:00 AM; sequence of upper highs and upper lows since March 4
    • RSI-21 declined from near 80 to 40; near 50
  • Below EMA20 but above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
    • Drifting down since 1:00 PM on Thursday; rising since 5:00 AM
      • RSI-21 just above 45 from near 30
      • At/above EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 2:15 PM on Thursday;
  • The Bollinger Band is relatively expanded; price is at the upper band from the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Thursday, March 11 in mostly lower volume. Dow Jones Transportation Average traded in higher volume. Most indices made all-time highs. NASDAQ Composite and Wilshire 5000 Total Market Index did not. NASDAQ Composite is showing the most weakness. All but three S&P sectors – Consumer Staples, Financials, and Utilities – closed higher.

From Briefing.com:

The S&P 500 (+1.0%), Dow Jones Industrial Average (+0.6%), and Russell 2000 (+2.3%) set intraday and closing record highs on Thursday. The Nasdaq Composite (+2.5%) played catch-up with a 2.5% gain, as the mega-cap/growth stocks found renewed buying interest. […]

The information technology (+2.1%), communication services (+1.8%), and consumer discretionary (+1.6%) sectors, which contain many of the recently-battered mega-caps and growth stocks, did the heavy lifting. The bullish bias, however, did lose steam in the afternoon, with selling interest leaking into the financials (-0.3%), utilities (-0.3%), and consumer staples (-0.2%) sectors.

[…]

The 10-yr yield increased one basis point to 1.53% after touching 1.48% at its low and 1.55% at its high, while the 2-yr yield decreased two basis points to 0.13%. The U.S. Dollar Index decreased 0.5% to 91.37. WTI crude futures rose 2.4%, or $1.57, to $66.02/bbl.

[…]
  • Initial jobless claims for the week ending March 6 decreased by 42,000 to 712,000 (Briefing.com consensus 725,000), which is the lowest level of claims since the first week of last November. Continuing claims for the week ending February 27 decreased by 193,000 to 4.144 million.
  • […]
  • Job openings increased to 6.917 million in January from a revised 6.752 million in December (from 6.646 million).
[…]
  • Russell 2000 +18.4% YTD
  • Dow Jones Industrial Average +6.1% YTD
  • S&P 500 +4.9% YTD
  • Nasdaq Composite +4.0% YTD
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