Market Remarks

Morning Notes – Monday May 10, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up day – watch for a break below 4222.25 for a change of fortunes
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4222.69, 4201.64, and 4180.65
  • Critical resistance levels for S&P 500 are 4246.55, 4260.49, and 4282.95
  • Key levels for E-mini futures: break above 4238.25, the high of 8:00 PM on Sunday and break below 4222.25, the low of 3:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2021) closed at 4224.50 and the index closed at 4232.60 – a spread of about -6.00 points; futures closed at 4225.25 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures are mixed – at 8:30 AM, S&P 500 futures were up by +5.25; Dow by +124, and NASDAQ by -38.75

Markets Around The World

  • Markets in the East closed mostly higher – Hing Kong and Singapore were down
  • European markets 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 higher
    • Precious metals are higher
    • Industrial metals are higher
    • Most soft commodities are higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.574%, up +0.7 basis points from two weeks ago;
    • 30-years is at 2.288%, up +3.7 basis points;
    • 2-years yield is at 0.149%, down -0.9 basis points;
    • The 10-Year-&-2-Year spread is at 1.425, up from 1.409
  • VIX
    • At 17.43 @ 6:45 AM; higher from the last close; below 5-day SMA;
    • Recent high =  21.85 on May 4; low =  15.38 on April 14
    • Sentiment: Risk-On-Neutral

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 May 7 was a green candle with a small upper shadow and a lower shadow equal to one and half the size of the real body
    • Stochastic (9,1, 3): %K has crossed above %D;
    • RSI (9) is above 75
  • The week was up +51.43 or +1.2%; the 5-week ATR is 83.05
  • An up week; fourth in the last five weeks, and eight in the last ten weeks
  • The weekly week pivot point=4199.74, R1=4270.90, R2=4309.19; S1=4161.45, S2=4090.29; R1/R2/S1/S2 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green candle that gapped up at the all-time highs; the gap was not closed
    • %K crossed above %D above 90 from near 40
    • RSI-9 is above 65; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving up since 11:30 AM on May 4; broke above a downtrend line; 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 is turning up from just above 50 at 3:30 AM
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Broke above a down-sloping flag at 3:00 PM on Thursday;
    • An ABCD pattern since 11:30 AM; 100% extension target is near 4200.00 and 161.8% extension target is near 4235.00;
    • RSI-21 is moving around 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 10:15 PM
  • The Bollinger Band is relatively small and stable
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Friday, May 7 in mixed volume. Dow Jones Transportation Average and NASDAQ Composite traded in higher volume. Dow Jones Industrial Average, S&P 500, Dow Transports, Willshire 5000 Total Market Index, and NYSE Composite made all-time closing and intraday highs.

For the week, US indices closed mostly higher in mixed volume. NASDAQ Composite closed lower. DJIA and D-Tran traded in lower volume. Markets in Asia were mixed but Europe was up. The dollar index traded down, energy and most metals and soft commodities closed higher.

From Briefing.com:

The S&P 500 (+0.7%) and Dow Jones Industrial Average (+0.7%) set intraday and closing record highs on Friday, as investors found reasons to look past the huge payrolls miss in the April employment report. The Nasdaq Composite (+0.9%) and Russell 2000 (+1.4%) outperformed. […]

Every sector in the S&P 500 closed higher, paced by the energy (+1.9%), real estate (+1.2%), industrials (+1.1%), materials (+0.9%), and information technology (+0.8%) sectors. The consumer staples sector (+0.01%) underperformed and closed a hair above its flat line.

[…]

The 2-yr yield decreased one basis point to 0.14%. The U.S. Dollar Index decreased 0.8% to 90.22. WTI crude futures increased 0.4%, or $0.25, to $64.94/bbl.

[…]
  • The April employment report was surprisingly weak, with just 266,000 jobs added to nonfarm payrolls (Briefing.com consensus 1,000,000) and downward revisions to March. April unemployment rate was 6.1% (Briefing.com consensus 5.8%), versus 6.0% in March. April average hourly earnings increased 0.7% (Briefing.com consensus -0.1%) versus a 0.1% decrease in March.
  • […]
  • Consumer credit increased by $25.8 bln in March after increasing a downwardly revised $26.2 bln (from $27.6 bln) in February.
  • […]
  • Wholesale inventories increased 1.3% m/m in March (Briefing.com consensus 1.4%) following an upwardly revised 1.0% increase (from +0.6%) in February.
[…]
  • Russell 2000 +15.0% YTD
  • Dow Jones Industrial Average +13.6% YTD
  • S&P 500 +12.7% YTD
  • Nasdaq Composite +6.7% YTD
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