Market Remarks

Morning Notes – Wednesday May 12, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down day to sideways day – watch for a break above 4147.00 for a change in sentiments
  • Key economic data report due during the day:
    • CPI ( 0.2% est.; prev. 0.6% ) at 8:30 AM
    • Core CPI ( 0.3% est.; prev. 0.3%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4137.08, 4130.85, and 4111.53;
  • Critical resistance levels for S&P 500 are 4160.01, 4167.75, and 4188.13
  • Key levels for E-mini futures: break above 4147.00, the high of 3:45 AM and break below 4125.75, the low of 7:15 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (June 2021) closed at 4146.25 and the index closed at 4152.10 – a spread of about -6.00 points; futures closed at 4146.25 for the day; the fair value is +0.0
  • Pre-NYSE session open, futures are lower – at 7:45 AM, S&P 500 futures were down by -13.75; Dow by -98, and NASDAQ by -79.75

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Hong Kong were up
  • European markets are mostly higher – France is down
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.624%, up +0.2 basis points from two weeks ago;
    • 30-years is at 2.351%, up +5.7 basis points;
    • 2-years yield is at 0.161%, down -1.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.463, up from 1.446
  • VIX
    • At 22.10 @ 6:45 AM; up from the last close; above 5-day SMA;
    • Recent high =  23.73 on May 11; low =  16.68 on May 7
    • Sentiment: Risk-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 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 Dragonfly Doji that gapped down at the open and did not fill the gap;
    • %K is below %D; near 30
    • RSI-9 is below 50; below 8-day EMA
  • Below 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving down since 8:00 PM on May 4; just above a major support level around 4110.00; Uptrend since 10:00 AM on March 25 is in danger of stoping
    • 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 bounced up from near 20 to near 40 after making Bullish Divergence;
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Trending down since 8:00 PM on May 9 from the all-time high of 4238.25 to a low of 4103.75; moving sideways since 7:30 AM;
    • RSI-21 moved up from near 20 to near 50 after making a couple of Bullish Divergences
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 1:00 PM on Tuesday;
  • The Bollinger Band is relatively large but stable
    • Stochastic (9, 1, 3): %K is above %D since 7:30 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Tuesday, May 11 in higher volume. Indices gapped down at the open and then traded down in the morning session. They bounced in the afternoon session and recovered some of the loss. All but on S$P sector – Materials – closed lower.

From Briefing.com:

The S&P 500 lost 0.9% on Tuesday in a relatively broad-based decline, although growth stocks benefited from a buy-the-dip mindset following a weak open. The Nasdaq Composite decreased 0.1% after starting with a 2.2% decline, and the Russell 2000 decreased 0.3% after starting with a 2.5% decline.

The Dow Jones Industrial Average underperformed and closed lower by 1.4% following yesterday’s record-setting session.

For a change of pace this month, selling interest was concentrated in the cyclical/non-technology stocks, including those within the energy (-2.6%), financials (-1.7%), and industrials (-1.4%) sectors. The materials sector (+0.4%) was an exception and was the only sector in the S&P 500 that closed higher today.

[…]

The 10-yr yield increased two basis points to 1.62%, and the 2-yr yield increased one basis point to 0.16%. WTI crude futures increased 0.7%, or $0.45, to $65.25/bbl. Copper futures rose 1.5%, or $0.07, to $4.79/lb. The U.S. Dollar Index was little changed at 90.18.

[…]
  • Job openings increased to 8.123 million in March from a revised 7.526 million in February (from 7.367 million).
  • The NFIB Small Business Optimism Index for April increased to 99.8 from 98.2 in March.
[…]
  • Dow Jones Industrial Average +12.0% YTD
  • Russell 2000 +11.8% YTD
  • S&P 500 +10.5% YTD
  • Nasdaq Composite +3.9% YTD

Overseas: 

  • Europe: DAX -1.8%, FTSE -2.5%, CAC -1.9%
  • Asia: Nikkei -3.1%, Hang Seng -2.2%, Shanghai +0.4%

Commodities: 

  • Crude Oil +0.45 @ 65.25
  • Nat Gas +0.02 @ 2.95
  • Gold -2.10 @ 1834.90
  • Silver +0.17 @ 27.66
  • Copper +0.07 @ 4.79
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