Market Remarks

Morning Notes – Tuesday April 6, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down to sideways day – watch for a break above 4074.50 for a change of sentiments
  • Key economic data report due during the day:
    • JOLTS Jobs Opening ( 6.91M est.; prev. 6.92M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4069.30, 4052.99, and 4034.44
  • Critical resistance levels for S&P 500 are 4083.42, 4096.07, and 4114.24
  • Key levels for E-mini futures: break above 4074.50, the high of 6:45 PM on Monday and break below 4056.25, the low of 6:15 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (June 2021) closed at 4067.00 and the index closed at 4077.91 – a spread of about -11.00 points; futures closed at 4067.75 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -5.50; Dow by -39, and NASDAQ by -2.00

Markets Around The World

  • Markets in the East closed mixed – Sydney, Mumbai, and Seoul closed higher; Shanghai, Tokyo, and Singapore closed lower; Hong Kong was closed
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • USD/CHF
    • USD/CAD
  • Commodities (from two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are higher
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.720%, up +3.6 basis points from two weeks ago;
    • 30-years is at 2.363%, down -2.0 basis points;
    • 2-years yield is at 0.156%, up +0.3 basis points;
    • The 10-Year-&-2-Year spread is at 1.564, up from 1.531
  • VIX
    • At 18.00 @ 7:45 AM; up from the last close; below 5-day SMA;
    • Recent high =  23.55 on March 25; low =  17.29 on April 1
    • Sentiment: Risk-Neutral-to-On

The trend and patterns on various time frames for S&P 500:

Monthly
  • Confirmed Uptrend
  • March 2021 was a green candle with a small upper shadow and a lower shadow almost equal to the real body; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 75; 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 April 2 was a green candle with almost no upper shadow and small lower shadow; at all-time highs
    • Stochastic (9,1, 3): %K is crossing above %D
    • RSI (9) is above 65
  • The week was up +45.33 or +1.1%; the 5-week ATR is 126.27
  • An up week; fourth in the last five weeks, and sixth in the last ten weeks
  • The weekly week pivot point=3994.58, R1=4045.92, R2=4071.96; S1=3968.54, S2=3917.20; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green candle with almost no upper and lower shadow that gapped up; at all-time intraday and closing 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 90
    • RSI-9 is near 75; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Trending up since 10:00 AM on March 25; at all-time highs; moving sideways to down since 10:00 AM on Monday
    • Broke above a down-sloping flag on March 26; the  61.8% extension target near 4002.00 is achieved; the 100% extension target is near 4100.00;
    • RSI-21 below 70 after climbing above 90 on Friday; potential Bearish Divergence
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
    • Moving sideways to down since 10:30 AM on Monday
      • RSI-21 just below 60; potential Bearish Divergence on Monday
      • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 3:15 PM on Monday
  • The Bollinger Band is stable and narrow
    • Stochastic (9, 1, 3): %K is above %D above 80
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Monday, April 5, the day after Good Friday Holiday, in mixed volume.  Dow Jones Industrial Average and S&P 500 traded in higher volume. Indices gapped up at the open and then mostly traded higher closing near the highs for the day.

From Briefing.com:

The S&P 500 (+1.4%) and Dow Jones Industrial Average (+1.1%) rallied to fresh record highs on Monday, as the market keyed off strong employment and non-manufacturing data for March and positive momentum. The Nasdaq Composite performed slightly better with a 1.7% gain, while the Russell 2000 increased just 0.5%. […]

The S&P 500 information technology (+2.0%), communication services (+2.3%), and consumer discretionary (+2.3%) sectors, which contain the mega-caps, rose about 2%.

The energy sector (-2.4%), on the other hand, was a noticeable pocket of weakness and was the only sector that closed lower. Energy stocks ran into profit-taking interest amid a sharp decline in oil prices ($58.69/bbl, -2.72, -4.4%).

[…]

In the Treasury market, activity was more reserved following an abbreviated session on Friday. The 10-yr yield increased one basis point to 1.72% (up four bps from Thursday’s settlement), and the 2-yr yield was unchanged at 0.18% (up three bps from Thursday’s settlement). The U.S. Dollar Index decreased 0.5% to 92.60.

[…]
  • March nonfarm payrolls increased by 916,000 (Briefing.com consensus 627,000). March private sector payrolls increased by 780,000 (Briefing.com consensus 470,000). March unemployment rate was 6.0% (Briefing.com consensus 6.0%), versus 6.2% in February.
  • […]
  • The ISM Non-Manufacturing Index increased to 63.7% in March (Briefing.com consensus 58.5%) from 55.3% in February. The dividing line between expansion and contraction is 50.0%. The March reading marks the tenth straight month of growth for the services sector, and is the highest reading on record.
  • […]
  • Factory orders for manufactured goods decreased 0.8% m/m in February (Briefing.com consensus -0.5%) after increasing an upwardly revised 2.7% (from 2.6%) in January. This is the first time in ten months that factory orders have not increased.
  • The IHS Markit Services PMI for March was revised higher to 60.4 from 59.8 in the preliminary reading.
[…]
  • Russell 2000 +14.7% YTD
  • Dow Jones Industrial Average +9.5% YTD
  • S&P 500 +8.6% YTD
  • Nasdaq Composite +6.3% YTD
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