Market Remarks

Morning Notes – Wednesday, October 20, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed at 8:45 AM; moving sideways to down since 4:00 PM on Tuesday
  • The odds are for a sideways to a down day – watch for a break below 4515.50 for a change of sentiments
  • Key economic data report due during the day:
    • Beige Book at 2:00 PM
    • Federal Budget ( -61.0B est.; prev. 170.6B)

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4509.84, 4496.41, and 4488.29
  • Critical resistance levels for S&P 500 are 4529.90, 4541.45, and 4545.85
  • Key levels for E-mini futures: break above 4515.50, the high of 3:30 AM  and break below 4504.25, the low of 2:15 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2021) closed at 4511.75 and the index closed at 4519.63 – a spread of about -8.00 points; futures closed at 4511.25 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are a bit lower – at 7:45 AM, S&P 500 futures were down by -3.50; Dow by -25; and NASDAQ by -4.25

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Mumbai, Seoul, and Singapore closed lower; Hong Kong, Tokyo, and Sydney closed higher
  • European markets are mostly higher – Spain is lower
  • 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 mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.635%, up +10.6 basis points from two weeks ago;
    • 30-years is at 2.088%, down -1.0 basis points;
    • 2-years yield is at 0.396%, up +11.0 basis points;
    • The 10-Year-&-2-Year spread is at 1.239, down from 1.243
  • VIX
    • At 15.66 @ 7:30 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-Neutral-Off

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 15 was a relatively large green candle rising above 10-week EMA
    • Stochastic (9,1, 3): %K crossed above %D after dipping below 30
    • RSI-9 has just risen above 60
  • The week was up +80.63 or +1.8%; the 5-week ATR increased to 138.09
  • An up week; third in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4425.70, R1=4521.49, R2=4571.60; S1=4375.59, S2=4279.80; S1 pivot level was breached
  • At/above 0-week EMA; above 39-week SMA; at/89-week SMA
  • Uptrend Under Pressure
Daily
  • A green candle that gapped up at the open and then did not close the gap; almost no upper and lower shadows;
    • Stochastic (9, 1, 3): %K is above %D; turning down near 100
    • RSI-9 is just above 70; 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)
  • In an uptrend since 10:00 AM on October 13 after making a Double Bottom at 4318.75; broke above a resistance zone between 4450.00 and 4475.00 on October 18;
    • RSI-21 is declining since 10:00 PM on October 14 from above 90; Bearish Divergence at 6:00 PM on Tuesday
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Drifting sideways since 3:30 PM on Tuesday after moving up since 10:00 AM on October 13;
    • RSI-21 is trending down from near 75 at 7:00 AM on Tuesday to near 55; Bearish Divergence
    • At/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 to down since 8:00 PM;
  • The Bollinger Band is relatively narrow and stable
  • A Descending Triangle is emerging since 3:00 AM
    • Stochastic (9, 1, 3): %K crisscrossing %D lower at 6:45 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday, October 19, in mostly lower volume. Dow Jones Transportation Average traded in higher volume. Major indices opened higher and rose for the first half before drifting sideways for rest of the day with an up bias. 

From Briefing.com:

The S&P 500 (+0.7%) and Nasdaq Composite (+0.7%) both advanced 0.7% on Tuesday and extended their winning streaks to five sessions. […]

The Dow Jones Industrial Average increased 0.6%, and the Russell 2000 increased 0.4%.

[…]

P&G’s warning pressured shares of the company and fed into the inflation concerns that have been driving oil prices ($83.01/bbl, +0.57, +0.7%) and long-term interest rates higher. The 10-yr yield rose five basis points to 1.64%, while the 2-yr yield fell three basis points to 0.39%.

[…]

Ten of the 11 S&P 500 sectors closed higher, led by utilities (+1.3%), health care (+1.3%), and energy (+1.2%) with gains over 1.0%.

[…]
  • Housing starts declined 1.6% month-over-month in September to a seasonally adjusted annual rate of 1.555 million units (Briefing.com consensus 1.620 million), but were up 7.4% year-over-year. Building permits were down 7.7% month-over-month to a seasonally adjusted annual rate of 1.589 million (Briefing.com consensus 1.670 million) and were flat year-over-year.
[…]
  • S&P 500 +20.3% YTD
  • Nasdaq Composite +17.4% YTD
  • Dow Jones Industrial Average +15.9% YTD
  • Russell 2000 +15.2% YTD

Overseas: 

  • Europe: DAX +0.3%, FTSE +0.2%, CAC -0.1%
  • Asia: Nikkei +0.7%, Hang Seng +1.5%, Shanghai +0.7%

Commodities: 

  • Crude Oil +0.57 @ 82.27
  • Nat Gas +0.07 @ 5.09
  • Gold +2.80 @ 1770.00
  • Silver +0.52 @ 23.80
  • Copper -0.01 @ 4.70
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