Market Remarks

Morning Notes – Tuesday September 28, 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 – watch for a break above 4408.25
  • Key economic data report due during the day:
    • HPI ( 1.5% est.; prev. 1.6% ) at 9:00 AM
    • S&P/CS Composite-20 HPI ( 20.1% est.; prev. 19.1% ) at 9:00 AM
    • CB Consumer Confidence ( 115.2 est.; prev. 113.8) at 10:00 AM
    • Richmond Manufacturing Index ( 12 est.; prev. 9) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4406.75, 4384.22, and 4353.40
  • Critical resistance levels for S&P 500 are 4430..27, 4439.96, and 4453.59
  • Key levels for E-mini futures: break above 4408.50, the high of 5:15 AM and break below 4388.00, the low of 6:15 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2021) closed at 4433.25 and the index closed at 4443.11 – a spread of about -10.00 points; futures closed at 4433.00 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down -32.50; Dow by -125; and NASDAQ by -225.00

Markets Around The World

  • Markets in the East closed mostly down – Shanghai and Hong Kong closed up;
  • European markets are lower;
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.484%, up +16.0 basis points from two weeks ago;
    • 30-years is at 1.995%, up +9.0 basis points;
    • 2-years yield is at 0.307%, up +9.0 basis points;
    • The 10-Year-&-2-Year spread is at 1.177, up from 1.107
  • VIX
    • At 20.53 @ 8:00 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-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 24 was a green candle with almost no upper shadow and a lower shadow that is twice the size of the real body
    • Stochastic (9,1, 3): %K is below %D;
    • RSI-9 is turning up just above 60
  • The week was up +22.49 or +0.5%; the 5-week ATR is 82.13
  • An up week; third in the last five weeks, and sixth in the last ten weeks
  • The weekly pivot point=4408.93, R1=4511.95, R2=4568.42; S1=4352.46, S2=4249.44; S1/S2/S3 pivot levels were breached
  • At/below 10-week EMA; above 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small red Harami candle;
    • Stochastic (9, 1, 3): %K crossed below %D from above 80;
    • RSI-9 is just below 50;
  • At/below 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • Uptrend-Under-Pressure
2-Hour (E-mini futures)
  • Moving down since 2:00 AM on September 27 from a resistance level around 4472.00 after rising from 4293.75 at 2:00 PM on September 20; an uneven Head-&-Shoulder pattern is emerging
    • RSI-21 declined to just above 30
  • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving down since 2:00 AM on September 27 in steps; near a support level around 4390.00
    • RSI-21 is between 40 and 30
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 2:15 AM on Monday
  • The Bollinger Band was expanding until 6:45 with price walking down the lower band; contracting a bit since with price bouncing up to the middle band
    • Stochastic (9, 1, 3): %K is above %D
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mixed on Monday, September 27 in mixed volume. S&P 500, NASDAQ Composite, and Wilshire 5000 Total Market Index closed lower. Dow Jones Industrial Average, Dow Jones Transportation Average, Russell 2000, and NYSE Composite closed higher. The day’s price range was small and the price-action was sideways with a down bias.

From Briefing.com:

The S&P 500 decreased 0.3% on Monday in a session that featured positive momentum in long-term interest rates and energy prices, as well as influential weakness in the growth stocks.

The Nasdaq Composite, having more exposure to growth stocks, declined 0.5%, although it was down as much as 1.2% in early action. The Dow Jones Industrial Average gained 0.2% while the Russell 2000 outperformed with a 1.5% gain.

[…]

The 10-yr yield quickly leveled off, though, and settled at 1.48%, or two basis points above Friday’s settlement.

[…]

The health care (-1.4%), real estate (-1.7%), and utilities (-1.2%) sectors underperformed with losses over 1.0%. On the upside, the cyclical energy (+3.4%), financials (+1.3%), materials (+0.8%), consumer discretionary (+0.4%), and industrials (+0.1%) sectors were the only sectors that closed higher.

[…]

The 2-yr yield increased one basis point to 0.28%. The U.S. Dollar Index increased 0.1% to 93.40.

[…]
  • The August Durable Goods Orders report was mixed. Total durable goods orders up 1.8% (Briefing.com consensus +0.6%) following an upwardly revised 0.5% increase (from -0.1%) in July. Excluding transportation, orders were up 0.2% (Briefing.com consensus +0.6%) after an upwardly revised 0.8% increase (from 0.7%) in July. On a year-over-year basis, durable goods orders were up 24.7%, while orders, excluding transportation, were up 17.7%.
[…]
  • S&P 500 +18.3% YTD
  • Nasdaq Composite +16.2% YTD
  • Russell 2000 +15.5% YTD
  • Dow Jones Industrial Average +13.9% YTD

Overseas: 

  • Europe: DAX +0.3%, FTSE +0.2%, CAC +0.2%
  • Asia: Nikkei flat, Hang Seng +0.1%, Shanghai -0.8%

Commodities: 

  • Crude Oil +1.42 @ 75.40
  • Nat Gas +0.51@ 5.71
  • Gold +0.50 @ 1752.20
  • Silver +0.27 @ 22.69
  • Copper -0.01 @ 4.28
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