Market Remarks

Morning Notes – Tuesday October 5, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:00 AM;
  • Futures are rising since 9:15 PM; up more than 40 points from 4269.00;
  • The odds are for an up day with elevated volatility – watch for a break below 4302.75 and a break below 4287.00 for a change of sentiments
  • Key economic data report due during the day:
    • Trade Balance ( -70.5B est.; prev. -70.1B) at 8:30 AM
    • Final Services PMI ( 54.4 est.; prev. 54.4 at 9:45 AM
    • ISM Services PMI ( 59.9 est.; prev. 61.7 ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4288.86, 4278.94, and 4262.05
  • Critical resistance levels for S&P 500 are 4323.39, 4336.20, and 4346.53
  • Key levels for E-mini futures: break above 4314.75, the high of 7:30 AM and break below 4302.75, the low of 6:45 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2021) closed at 4292.00 and the index closed at 4300.46 – a spread of about -8.50 points; futures closed at 4291.25 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 7:45 AM, S&P 500 futures were up +19.00; Dow by +161; and NASDAQ by +62.00

Markets Around The World

  • Markets in the East closed mixed- Hong Kong and Tokyo closed down; Sydney, Mumbai, and Singapore closed up; Shanghai and Seoul were closed for trading
  • European markets are mostly higher – Germany and France are lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.477%, up +10.7 basis points from two weeks ago;
    • 30-years is at 2.051%, up +14.2 basis points;
    • 2-years yield is at 0.266%, up +4.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.247, up from 1.180
  • VIX
    • At 22.14 @ 7:45 AM; down from the last close; below 5-day SMA;
    • Recent high =  28.79 on September 20; low =  17.65 on September 16
    • Sentiment: Risk-On

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

Monthly
  • September 2021 was a relatively large Bearish Engulfing with almost no upper and lower shadows; made all-time intra-month high;
    • Stochastic (9, 1, 3): %K turned below %D from near 100;
    • RSI-9 just below 70 from above 80; Bearish Divergence
    • Above the upper band of a 120-month regression channel;
  • Confirmed Uptrend: sequence of higher highs and higher lows
Weekly:
  • The week ending on October 1 was a Bearish Engulfing candle with a small upper shadow and a lower shadow that is half the size of the real body
    • Stochastic (9,1, 3): %K is below %D below 30;
    • RSI-9 is below 50
  • The week was down -98.44 or -2.2%; the 5-week ATR is 101.55
  • A down week; third in the last five weeks, and fifth in the last ten weeks
  • The weekly pivot point=4367.62, R1=4446.72, R2=4536.40; S1=4277.94, S2=4198.84; S1 pivot level was breached
  • Below 10-week EMA; above 39-week SMA, and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A relatively red candle that looks like a Bearish Engulfing; with a small upper shadow and a slightly longer lower shadow;
    • Stochastic (9, 1, 3): %K again crossed below %D;
    • RSI-9 again turned down; just above 30; below 8-day EMA
  • Below 20-day EMA and 50-day EMA; at/below 100-day SMA; above 200-day SMA
  • Correction
2-Hour (E-mini futures)
  • Moving sideways to up since 12:00 PM on Monday to a downtrend line resistance;
    • RSI-21 drifting up since 12:00 PM from just below 30 to just above 50
  • At/above EMA20 but below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Drifting sideways to up since 11:30 Am on Monday;
    • RSI-21 is moving up from just above 30 to above 50
    • Above EMA10 of EMA50, which is at/above EMA20
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting sideways to up since 3:15 PM on Monday
  • The Bollinger Band is expanding slight since 4:15 AM with price walking up the upper band
    • Stochastic (9, 1, 3): %K crossed below %D at 7:30 AM
  • Bias:  Side-Up

Previous Session

Major U.S. indices closed lower on Monday, October 4 in mostly lower volume. NASDAQ Composite traded in lower volume.

Major indices opened lower and then traded sharply down till mid-morning. After that, they mostly traded sideways.

From Briefing.com:

The S&P 500 fell 1.3% on Monday, […]

The Nasdaq Composite was disproportionally affected with a 2.1% decline while the Dow Jones Industrial Average (-0.9%) and Russell 2000 (-1.1%) declined closer to 1.0%.

[…]

Eight of the 11 S&P 500 sectors finished lower, led by the information technology (-2.4%) and communication services (-2.1%) sectors with losses over 2.0%.

[…]

The energy (+1.6%), utilities (+1.4%), and real estate (+0.1%) sectors bucked the negative trend. Energy stocks followed oil prices ($77.69/bbl, +1.82, +2.4%) higher after OPEC+ agreed to maintain its plan for gradual supply increases, which was expected.

[…]

U.S. Treasuries settled mostly lower, meaning yields rose modestly. The 10-yr yield increased two basis points to 1.48%, and the 2-yr yield increased one basis point to 0.27%. The U.S. Dollar Index decreased 0.3% to 93.78.

[…]
  • S&P 500 +14.5% YTD
  • Russell 2000 +12.4% YTD
  • Nasdaq Composite +10.6% YTD
  • Dow Jones Industrial Average +11.1% YTD

Overseas: 

  • Europe: DAX -0.8%, FTSE -0.2%, CAC -0.6%
  • Asia: Nikkei -1.1%, Hang Seng -2.2%, Shanghai closed for holiday

Commodities: 

  • Crude Oil +2.10 @ 77.98
  • Nat Gas +0.15 @ 5.76
  • Gold +8.00 @ 1766.40
  • Silver +0.07 @ 22.61
  • Copper +0.05 @ 4.24
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