Market Remarks

Morning Notes – Tuesday September 21, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM
  • The odds are for an up day with elevated volatility
  • Key economic data report due during the day:
    • Building Permits (1.73M vs. 1.60M est; prev. 1.63M) at 8:30 AM
    • Housing Starts ( 1.62M vs. 1.55M est.; prev. 1.55M) at 8:30 AM
    • Current Account ( -190B vs. -193B est.; prev. -196B) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4360.75, 4324.77, and 4305.91
  • Critical resistance levels for S&P 500 are 4402.95, 4426.76, and 4448.98
  • Key levels for E-mini futures: break above 4395.75, the high of 4:30 AM and break below 4363.00, the low of 1:30 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2021) closed at 4346.50 and the index closed at 4357.73 – a spread of about -11.25 points; futures closed at 4348.25 for the day; the fair value is -1.75
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up +29.00; Dow by +227; and NASDAQ by +102.50

Markets Around The World

  • Markets in the East closed mostly higher – Tokyo closed lower; Shanghai and Seoul were closed for trading
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • 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 1.321%, down -4.9 basis points from two weeks ago;
    • 30-years is at 1.863%, down -12.1 basis points;
    • 2-years yield is at 0.222%, down -0.2 basis points;
    • The 10-Year-&-2-Year spread is at 1.099, down from 1.146
  • VIX
    • At 23.26 @ 7:45 AM; up from the last close; above 5-day SMA;
    • Recent high =  28.79 on September 20; low =  17.65 on September 16
    • Sentiment: Risk-On-Neutral

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 that gapped down at the open and bounced off 100-day EMA; almost no upper shadow and a lower shadow almost equal to the real body; broke the sequence of higher-highs and higher-lows sequence
    • Stochastic (9, 1, 3): %K crossed above %D from below 5;
    • RSI-9 is near 25; below 8-day EMA;
  • Below 20-day EMA and 50-day EMA; at/above 100-day; above 200-day SMA
  • Uptrend-Under-Pressure
2-Hour (E-mini futures)
  • Trending down since September 6; lower highs and lower lows; broke below major support of 4347.75, the low of August 19; bounced off from near 4293.00 at 2:00 PM on September 20 to near 4395.00 at 4:00 AM and the EMA20 resistance
    • RSI-21 bouncing off from near 10 to near 50 after making a Bullish Divergence at 2:00 PM on September 20
  • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Bouncing up since 3:00 PM from 4293.75 to 4395.75 at 4:30 AM;
    • RSI-21 is above 50 after making a Bullish Divergence at 2:30 Pm on Monday
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 4:30 PM;
  • The Bollinger Band is contracting slightly since 7:15 AM
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 20
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Monday, September 20 in mixed volume. Dow Jones Industrial Average and Dow Jones Transportation Average traded in lower volume. Major indices gapped down at the open and then traded lower for most of the day before recovering a third of the decline in the last hour of the trading.

From Briefing.com:

[…]

The S&P 500 (-1.7%) and Dow Jones Industrial Average (-1.8%) lost a little more than 1.5%, while the Nasdaq Composite (-2.2%) and Russell 2000 (-2.4%) still declined more than 2.0%. Each index closed below its 50-day moving average, with the Russell 2000 also closing below its 200-day moving average (2203).

[…]

There was a dearth of buying interest for most of the session, which left all 11 S&P 500 sectors in the red on a closing basis with losses ranging from 0.2% (utilities) to 3.0% (energy). At one point, declining issues had a 9:1 advantage over advancing issues at the NYSE. That margin, however, decreased to 5:1 by the close on no specific news.

[…]

the 10-yr yield fell six basis points to 1.31% while the CBOE Volatility Index (25.71, +4.90, +23.6%) closed above 25.00.

[…]

The 2-yr yield decreased one basis point to 0.22%. The U.S. Dollar Index was little changed at 93.23. WTI crude futures declined 2.2%, or $1.57, to $70.35/bbl.

[…]
  • S&P 500 +16.0% YTD
  • Nasdaq Composite +14.2% YTD
  • Dow Jones Industrial Average +11.0% YTD
  • Russell 2000 +10.5% YTD

Overseas: 

  • Europe: DAX -2.3%, FTSE -0.9%, CAC -1.7%
  • Asia: Nikkei closed for holiday, Hang Seng -3.3%, Shanghai closed for holiday

Commodities: 

  • Crude Oil -1.84 @ 70.24
  • Nat Gas -0.08 @ 4.97
  • Gold +11.70 @ 1764.00
  • Silver -0.17 @ 22.22
  • Copper -0.12 @ 4.12
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