Market Remarks

Morning Notes – Friday, October 15, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM;
  • The odds are for an up day – watch for a break below 4426.25 for a change of sentiments
  • Key economic data report due during the day:
    • Retail Sales ( 0.7% vs. -0.2% est.; prev. 0.9%) at 8:30 AM
    • Core Retail Sales (0.8% vs. 0.5% est.; prev. 2.0%) at 8:30 AM
    • Empire State Manufacturing Index ( 19.8 vs 24.2 est. prev. 34.3) at 8:30 AM
    • Import Prices ( 0.4% vs. 0.6% est.; prev. -0.3%) at 8:30 AM
    • Prelim UoM Consumer Sentiment (73.5 est.; prev. 72.8) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Resumed
  • 120-Min: Side-Up
  • 30-Min: Up-Side
  • 15-Min: Up-Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for S&P 500 are 4439.73, 4429.61, and 4416.89;
  • Critical resistance levels for S&P 500 are 4453.85, 4465.40, and 4472.82
  • Key levels for E-mini futures: break above 4449.00, the high of 2:00 AM  and break below 4436.25, the low of 3:45 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2021) closed at 4429.00 and the index closed at 4438.26 – a spread of about -9.25 points; futures closed at 4429.00 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up +17.50; Dow by +166; and NASDAQ by +52.00

Markets Around The World

  • Markets in the East closed higher – Mumbai was closed for trading
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.519%, down -1.0 basis points from two weeks ago;
    • 30-years is at 2.025%, down -6.7 basis points;
    • 2-years yield is at 0.363%, up +8.2 basis points;
    • The 10-Year-&-2-Year spread is at 1.156, up from 1.248
  • VIX
    • At 16.63 @ 6:30 AM; down from the last close; below 5-day SMA;
    • Recent high = 24.89 on October 1; low =  17.63 on September 24
    • 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 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 relatively large green candle that gapped up; almost no upper and lower shadows; breaking above a downtrend line from the all-time high
    • Stochastic (9, 1, 3): %K is above %D; near 100
    • RSI-9 has risen to near 60; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Moving up since bouncing off a Double Bottom at 10:00 AM on October 13; next resistance level is at 4472.00; a move above it will break the sequence of lower-highs and lower lows;
    • RSI-21 has drifted down from above 90 to just above 80
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Drifting sideways around 4445.00 since 12:00 AM after moving up from a low of 4318.75 at 10:00 AM on October 13;
    • RSI-21 declined from above 80 at 12:30 PM on Thursday to near 65; Bearish Divergence at 2:00 AM
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways since 1:00 AM
  • The Bollinger Band is relatively narrow and stable
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Thursday, October 14, in mixed volume. Dow Jones Industrial Average and NASDAQ Composite traded in higher volume.  Most made strong bullish candles and broke above their downtrend lines from all-time highs. The indices gapped up at the open and then trade higher for the rest of the day.

From Briefing.com:

The S&P 500 rallied 1.7% on Thursday, bolstered by positive earnings news, relatively encouraging economic data, and a decline in long-term interest rates. The Nasdaq Composite (+1.7%) and Dow Jones Industrial Average (+1.6%) performed comparably to the benchmark index, while the Russell 2000 increased 1.4%.

The advance was steady and broad-based: all 11 S&P 500 sectors closed higher between 1.0% (consumer discretionary) and 2.4% (materials),

[…]

The 2-yr yield decreased two basis points to 0.35%. The U.S. Dollar Index decreased 0.1% to 93.99. WTI crude futures rose 1.0%, or $0.77, to $81.28/bbl despite a sizable build in weekly crude inventories (6.09 mln barrels).

[…]
  • The Producer Price Index for September was a bit softer than expected. The index for final demand increased 0.5% month-over-month (Briefing.com consensus +0.6%) and the index for final demand, less foods and energy, increased 0.2% (Briefing.com consensus +0.5%). On a year-over-year basis, the index for final demand was up 8.6%, versus 8.3% in August. That is the largest advance since the 12-month data were first calculated in November 2010.
  • […]
  • The latest weekly initial claims report was the best since March 14, 2020. Initial claims for the week ending October 9 decreased by 36,000 to 293,000 (Briefing.com consensus 332,000). Continuing claims for the week ending October 2 decreased by 134,000 to 2.593 million, which was also the lowest since March 14, 2020.
[…]
  • S&P 500 +18.2% YTD
  • Russell 2000 +15.1% YTD
  • Nasdaq Composite +15.0% YTD
  • Dow Jones Industrial Average +14.1% YTD

Overseas: 

  • Europe: DAX +1.4%, FTSE +0.9%, CAC +1.3%
  • Asia: Nikkei +1.5%, Hang Seng closed for holiday, Shanghai -0.1%

Commodities: 

  • Crude Oil +0.93 @ 81.42
  • Nat Gas +0.01 @ 5.66
  • Gold +6.80 @ 1799.10
  • Silver +0.46 @ 23.55
  • Copper +0.11 @ 4.61
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