Market Remarks

Morning Notes – Monday September 20, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM
  • The odds are for a down day with elevated volatility
  • No key economic data report due during the day:

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend-Under-Pressure
  • 120-Min: Down
  • 30-Min: Dow
  • 15-Min: Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for S&P 500 are 4350.06, 4323.06, and 4262.05
  • Critical resistance levels for S&P 500 are 4367.73, 4382.99, and 4427.54
  • Key levels for E-mini futures: break above 4367.00, the high of 6:30 AM and break below 4339.75, the low of August 19

Pre-Open

  • On Friday at 4:00 PM, S&P futures (December 2021) closed at 4420.00 and the index closed at 4432.99 – a spread of about -13.00 points; futures closed at 4421.75 for the day; the fair value is -1.75
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down -78.00; Dow by -682; and NASDAQ by -267.00

Markets Around The World

  • Markets in the East closed lower – Shanghai, Tokyo, and Seoul were closed for trading
  • European markets are lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.314%, down -0.8 basis points from two weeks ago;
    • 30-years is at 1.847%, down -9.6 basis points;
    • 2-years yield is at 0.222%, up +1.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.092, down from 1.114
  • VIX
    • At 25.88 @ 8:00 AM; up from the last close; above 5-day SMA;
    • Recent high =  28.93 on May 13; low =  17.65 on September 16
    • Sentiment: Risk-Off

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

Monthly
  • Confirmed Uptrend
  • August 2021 was a green candle with small upper and lower shadows; at all-time closing and intra-month highs;
    • Stochastic (9, 1, 3): %K above %D near 100;
    • RSI-9 above 80;
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows
Weekly:
  • The week ending on September 17 was a red candle with a small upper shadow and almost no lower shadow; three-week Evening Star pattern
    • Stochastic (9,1, 3): %K is below %D; below 70
    • RSI-9 has declined to below 60
  • The week was down -25.59 or -0.6%; the 5-week ATR is 72.73
  • A down week; third in the last five weeks, and fifth in the last ten weeks
  • The weekly pivot point=4451.25, R1=4474.73, R2=4516.48; S1=4409.50, S2=4386.02; S1 pivot level was breached
  • At/below 10-week EMA; above 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A red candle in the process of breaking down; Stochastic-70 is coming off the overbought levels;  in danger of breaking higher-highs and higher-lows sequence
    • Stochastic (9, 1, 3): %K crossed below %D just below 5;
    • RSI-9 is below 40; below 8-day EMA;
  • Below 20-day EMA; at/above 50-day EMA; above 100-day and 200-day SMA
  • Uptrend-Under-Pressure
2-Hour (E-mini futures)
  • Trending down since September 6; lower highs and lower lows; breaking down below major support of 4347.75, the low of August 19
    • RSI-21 trending down to below 20
  • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving down – almost like free-fall – after breaking below an ascending triangle on Friday
    • RSI-21 is below 20
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down;
  • The Bollinger Band is expanded and relatively stable with the price walking down the lower bound
    • Stochastic (9, 1, 3): %K is crossing above %D from near 0 at 8:30 AM
  • Bias: Down

Previous Session

Major U.S. indices closed mostly lower on Friday, September 17 in higher volume. Russell 2000 closed higher. Major indices opened lower and then trade lower for the rest of the day. All S&P sectors except Healthcare closed lower.

For the week, major US indices mostly closed lower in higher volume. Russell 2000 closed higher for the week. Markets in Asia and Europe closed mostly lower. The dollar index rose, energy futures were up, metals were down and the soft commodities were mixed. The US Treasury yields were mixed.

From Briefing.com:

The S&P 500 fell 0.9% on Friday, as investors digested some negative-sounding headlines and hedged for further weakness. The Nasdaq Composite declined 0.9%, and the Dow Jones Industrial Average declined 0.5%. The Russell 2000, however, increased 0.2% amid the quadruple witching-options expiration activity into the close.

Ten of the 11 S&P 500 sectors closed lower, with the materials (-2.1%), information technology (-1.5%), utilities (-1.6%), communication services (-1.3%), and industrials (-1.1%) sectors losing more than 1.0%. The health care sector (+0.1%) was saved by Thermo Fisher (TMO 596.80, +36.36, +6.5%), which provided upbeat FY22 EPS guidance.

[…]

The 2-yr yield was unchanged at 0.23%. WTI crude futures decreased 1.0%, or $0.70, to $71.92/bbl.

[…]
  • The preliminary September reading for the University of Michigan Index of Consumer Sentiment increased to 71.0 (Briefing.com consensus 72.0) from the final reading of 70.3 for August.
[…]
  • S&P 500 +18.0% YTD
  • Nasdaq Composite +16.7% YTD
  • Dow Jones Industrial Average +16.0% YTD
  • Russell 2000 +13.3% YTD
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