Market Remarks

Morning Notes – Thursday September 30, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:00 AM;
  • The odds are for an up day with elevated volatility, however, the past few days’ price-action indicates a down bias – watch for a break below 4349.25 for a change of sentiments
    • Good chance of sideways to down move from the pre-open levels around 4365.00 at 8:00 AM
  • Key economic data report due during the day:
    • Final GDP ( 6.6% est.; prev. 6.6% ) at 8:30 AM
    • Unemployment Claims ( 333k est.; prev. 351K) at 8:30 AM
    • Final GDP Price Index (6.1% est.; prev 6.1%) at 8:30 AM
    • Chicago PMI (64.9 est.; prev. 66.8) at 9:45 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4355.76, 4346.33, and 4305.91
  • Critical resistance levels for S&P 500 are 4378.08, 4385.57, and 4419.54
  • Key levels for E-mini futures: break above 4371.00, the high of 7:15 AM and break below 4349.25, the low of 3:30 PM on Wednesday

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2021) closed at 4350.50 and the index closed at 4359.46 – a spread of about -9.00 points; futures closed at 4349.75 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up +16.25; Dow by +112; and NASDAQ by +67.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Sydney, Seoul, and Singapore closed up; Hong Kong, Tokyo, and Mumbai closed down;
  • European markets are mixed – Germany, France, Spain, and Italy are lower; the UK, Switzerland, and STOXX-600 are higher
  • 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 mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.541%, up +23.7 basis points from two weeks ago;
    • 30-years is at 2.090%, up +22.1 basis points;
    • 2-years yield is at 0.290%, up +8.0 basis points;
    • The 10-Year-&-2-Year spread is at 1.244, up from 1.087
  • VIX
    • At 21.83 @ 6:45 AM; down 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 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 Harami Dragonfly Doji near previous day’s lows;
    • Stochastic (9, 1, 3): %K is below %D turning up just above 30;
    • RSI-9 is around 35;
  • Below 20-day EMA and 50-day EMA; above 100-day SMA; above 200-day SMA
  • Uptrend-Under-Pressure
2-Hour (E-mini futures)
  • Bouncing up in steps from September 28 low of 4334.75 to a resistance level created by the 50-bar EMA
    • RSI-21 turned down at 2:00 AM from just above 60
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • An emerging up-sloping flag – a bearish pattern – since 1:00 PM on September 28;
    • RSI-21 is declining from above 60 to just below 45
    • Below EMA20, which is at/above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up since 3:30 PM on Tuesday
  • The Bollinger Band is expanding slightly since 5:30 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K crossed  %D at 7:15 AM from near zero
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mixed on Wednesday, September 29 in lower volume. S&P 500, Dow Jones Industrial Average, NYSE Composite, and Wilshire 5000 Total Market Index closed up. NASDAQ Composite, Dow Jones Transportation Average, and Russell 2000 closed down.

The major indices opened up but then traded sideways within a large range before closing near the lows for the day.

From Briefing.com:

The S&P 500 increased 0.2% on Wednesday amid a calmer Treasury market, although the benchmark index was up 0.8% at session highs. The Dow Jones Industrial Average increased 0.3% while the Nasdaq Composite (-0.2%) and Russell 2000 (-0.2%) coughed up gains and closed lower. […]

the 10-yr yield increased one basis point to 1.54% (below yesterday’s high of 1.56%) while the 2-yr yield decreased one basis point to 0.29%. The U.S. Dollar Index rose 0.7% to 94.41, signaling a defensive undertone.

Likewise, the defensive-oriented utilities (+1.3%), consumer staples (+0.9%), health care (+0.8%), and real estate (+0.7%) sectors were today’s leaders in the S&P 500. The materials (-0.2%), communication services (-0.2%), and information technology (-0.1%) sectors closed lower.

[…]

Elsewhere, WTI crude futures fell 0.5%, or $0.38, to $74.91/bbl amid an unexpected build in weekly crude inventories (4.58 million). Silver futures fell 4.3%, or $0.97, to $21.49/ozt amid the stronger dollar.

[…]
  • Pending home sales jumped 8.1% m/m in August (Briefing.com consensus 1.0%) following a revised 2.0% decline (from -1.8%) in July.
  • The weekly MBA Mortgage Applications Index decreased 1.1% following a 4.9% increase in the prior week.
  • Weekly crude oil inventories increased by 4.58 mln barrels after decreasing by 3.48 mln barrels during the previous week.
[…]
  • S&P 500 +16.1% YTD
  • Russell 2000 +12.7% YTD
  • Nasdaq Composite +12.6% YTD
  • Dow Jones Industrial Average +12.4% YTD

Overseas: 

  • Europe: DAX +0.8%, FTSE +1.1%, CAC +0.8%
  • Asia: Nikkei -2.1%, Hang Seng +0.7%, Shanghai -1.8%

Commodities: 

  • Crude Oil -0.12 @ 74.90
  • Nat Gas -0.32 @ 5.51
  • Gold -9.90 @ 1723.40
  • Silver -0.97 @ 21.49
  • Copper -0.07 @ 4.19
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