Morning Notes – Tuesday, October 12, 2021

/ October 12, 2021

Directional Bias For The Day:

  • S&P Futures are little changed at 7:45 AM;
  • Prices have been moving higher since 2:45 AM after making Bullish Divergence on intraday charts
  • The daily chart bias to the downside but up momentum is building on intraday charts
  • The odds are for a volatile day with a good chance of a sideways to a down move from pre-open levels around 4365.00 – watch for a break above 4377.50 and a break below 4346.25 for more clarity
  • Key economic data report due during the day:
    • JOLTS Jobs Openings ( 10.95M est.; prev. 10.93M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4345.76, 4326.66, and 4307.49
  • Critical resistance levels for S&P 500 are 4375.26, 4386.52, and 4400.16
  • Key levels for E-mini futures: break above 4377.50, the high of 2:15 PM on Monday and break below 4346.25, the low of 6:15 PM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2021) closed at 4350.75 and the index closed at 4361.19 – a spread of about -9.50 points; futures closed at 4351.00 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are higher – at 7:45 AM, S&P 500 futures were up +1.50; Dow by +7; and NASDAQ by +36.25

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai closed higher
  • European markets are mostly lower – Spain and Switzerland are up
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • NZD/USD
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals mostly higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.614%, up +13.0 basis points from two weeks ago;
    • 30-years is at 2.166%, up +17.1 basis points;
    • 2-years yield is at 0.346%, up +6.6 basis points;
    • The 10-Year-&-2-Year spread is at 1.268, up from 1.204
  • VIX
    • At 19.62 @ 7:30 AM; down from the last close; at/below 5-day SMA;
    • Recent high = 24.89 on October 1; low =  17.63 on September 24
    • Sentiment: Risk-Neutral-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 8 was a green Harami spinning top candle
    • Stochastic (9,1, 3): %K is below %D but turning up from below 30;
    • RSI-9 bouning up from 50
  • The week was up +34.30 or +0.8%; the 5-week ATR increased to 124.46
  • An up week; second in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4366.75, R1=4454.56, R2=4517.78; S1=4303.63, S2=4215.72; No pivot levels were breached
  • Below 10-week EMA; above 39-week SMA; at/89-week SMA
  • Uptrend Under Pressure
Daily
  • A red candle with almost no lower shadow and an upper shadow bigger than the real body; finding resistance at the EMA50;
    • Stochastic (9, 1, 3): %K crossed below %D;
    • RSI-9 is turned down just below 50
  • Below 20-day EMA and 50-day EMA; at/above 100-day SMA; above 200-day SMA
  • Correction
2-Hour (E-mini futures)
  • Drifting lower since 10:00 AM on October 7; bouncing up from a low of 4317.25 at 2:00 AM
    • RSI-21 has been rising since 8:00 PM from 30 to just near 50
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Trending down since 10:00 AM on October 7; a bounce from a support level around 4360.00 stalled at 4407.00, forming a Double Top formation; the intermediate low of 4352.00 was broken to the downside at 3:30 PM – the e61.8% extension target around 4318.00 is achieved, and the 100% extension target is near 4297.00; the pice has bounced up the broken resistance level around 4352.25
    • RSI-21 has been rising since 2:30 AM after making a Bullish Divergence; above 50
    • Above EMA20 but below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 2:30 PM on Monday
  • The Bollinger Band has been expanding since 4:15 AM with price walking up the upper bound
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Monday, October 11, in mixed volume. Dow Jones Industrial Average and Dow Jones Transportation Average traded in higher volume. Indices are finding resistance at their respective 50-day EMA. Indices opened lower but then rose till mid-morning. Then they turned down and traded lower for most of the day.

From Briefing.com:

The S&P 500 declined 0.7% on Monday to close at session lows. The Dow Jones Industrial Average (-0.7%), Nasdaq Composite (-0.6%), and Russell 2000 (-0.6%) fell comparably to the benchmark index after each traded higher in early action.

[…]

Sellers maintained control as losses accelerated into the close, leaving nine of the 11 S&P 500 sectors in negative territory.

The communication services (-1.4%), utilities (-1.4%), and financials (-1.0%) sectors fell at least 1.0%, while the real estate (+0.2%) and materials (+0.03%) sectors were the only sectors that closed higher.

[…]
  • S&P 500 +16.1% YTD
  • Dow Jones Industrial Average +12.7% YTD
  • Nasdaq Composite +12.4% YTD
  • Russell 2000 +12.5% YTD
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