Market Remarks

Morning Notes – Friday April 23, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for a sideways to an up day – watch for a break above 4141.50  and a break below 4127.50 for clarity
  • Key economic data report due during the day:
    • Flash Manufacturing PMI ( 60.9 est.; prev. 59.1 ) at 9:45 AM
    • Flash Services PMI ( 61.6 est.; prev. 60.4 ) at 9:45 AM
    • New Home Sales ( 885K est.; prev. 775K) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4123.69, 4118.38, and 4108.62
  • Critical resistance levels for S&P 500 are 4145.98, 4157.51, and 4179.57
  • Key levels for E-mini futures: break above 4141.50, the high of 3:45 AM and break below 4127.50, the low of 2:15 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (June 2021) closed at 4127.25 and the index closed at 4134.98 – a spread of about -7.75 points; futures closed at 4127.75 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +9.00; Dow by +12, and NASDAQ by +24.00

Markets Around The World

  • Markets in the East closed mostly higher – Sydney and Mumbai were down
  • European markets are lower
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • INR/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are higher
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.554%, down -7.8 basis points from two weeks ago;
    • 30-years is at 2.239%, down -8.3 basis points;
    • 2-years yield is at 0.145%, down -0.8 basis points;
    • The 10-Year-&-2-Year spread is at 1.409, down from 1.479
  • VIX
    • At 18.42 @ 7:30 AM; down from the last close; above 5-day SMA;
    • Recent high =  23.55 on March 25; low =  15.38 on April 14
    • Sentiment: Risk-Neutral-to-Off

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 9 was a green candle with almost no upper and lower shadows; at all-time highs
    • Stochastic (9,1, 3): %K is crossing below %D; near 100
    • RSI (9) is above 75
  • The week was up +56.67 or +1.4%; the 5-week ATR is 97.06
  • An up week; fourth in the last five weeks, and seventh in the last ten weeks
  • The weekly week pivot point=4163.87, R1=4212.91, R2=4240.91; S1=4136.42, S2=4087.93; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A Dark Cloud Cover candle near all-time intraday and closing highs; small upper and lower shadows
    • Broke above a symmetrical triangle at 3550.00 level on November 9; the 161.8% extension target near 4140.00 levels is achieved
    • %K has crossed below %D below 30
    • RSI-9 is turning down; just below 60; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Drifting sideways to down since 4:00 PM on April 16; bouncing up since 2:00 PM on Thursday from a support level; Uptrend since 10:00 AM on March 25;
    • Broke above a down-sloping flag on March 26; the 100% extension target near 4100.00 is achieved; the 161.8% extension target is near 4260.00
    • RSI-21 rising from near 30 to near 45
  • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Bouncing up since 2:00 PM on Thursday from a support level around 4115.00 to near 4135.00;
    • RSI-21 up moving around 45
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 8:00 PM
  • The Bollinger Band is relatively stable and narrow
    • Stochastic (9, 1, 3): %K is below %D since 7:00 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Thursday, April 22 in higher volume. Most major indices made Dark Cloud Cover candlestick formations. Major indices opened lower but then got into the green before suddenly turning around at 1:00 PM and closed near the lows of the day. All S&P sectors closed lower.

From Briefing.com:

The S&P 500 declined 0.9% on Thursday, ostensibly due to reports that President Biden will propose increasing the capital gains tax rate for wealthy Americans. The Nasdaq Composite (-0.9%) and Dow Jones Industrial Average (-0.9%) declined in-line with the benchmark index. The Russell 2000 declined just 0.3%. […]

Every sector in the S&P 500 closed in negative territory, led lower by the materials (-1.8%), energy (-1.4%), information technology (-1.2%), and consumer discretionary (-1.2%) sectors with losses over 1.0%.

[…]

In other developments, weekly initial claims fell to a new post-pandemic low at 547,000 (Briefing.com consensus 600,000), existing home sales decreased 3.7% m/m in March to a seasonally adjusted annual rate of 6.01 million (Briefing.com consensus 6.15 million) amid historically low supply, and the ECB kept interest rates/asset purchases unchanged.

U.S. Treasuries finished little changed in a relatively muted session. The 2-yr yield was unchanged at 0.14%, and the 10-yr yield decreased one basis point to 1.55%. The U.S. Dollar Index increased 0.1% to 91.26. WTI crude futures increased 1.2%, or $0.10, to $61.45/bbl.

[…]
  • Russell 2000 +13.1% YTD
  • Dow Jones Industrial Average +10.5% YTD
  • S&P 500 +10.1% YTD
  • Nasdaq Composite +7.2% YTD

Overseas: 

  • Europe: DAX +0.8%, FTSE +0.6%, CAC +0.9%
  • Asia: Nikkei +2.4%, Hang Seng +0.2%, Shanghai -0.2%

Commodities: 

  • Crude Oil +0.24 @ 61.43
  • Nat Gas +0.06 @ 2.75
  • Gold -12.80 @ 1780.60
  • Silver -0.38 @ 26.18
  • Copper -0.01 @ 4.26
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