Market Remarks

Morning Notes – Thursday, October 28, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM;
  • The odds are for an up day with  a good chance of sideways move from pre-open levels around 4560.00 – watch for a break below 4545.25 for a change of sentiments
  • Key economic data report due during the day:
    • Advanced GDP ( 2.0% vs. 2.6% est.; prev. 6.7%) at 8:30 AM
    • Advance GDP Price Index ( 5.7% vs. 5.3% est.; prev. 6.1%) at 8:30 AM
    • Unemployment Claims ( 281K vs. 290K est.; prev. 291K) at 8:30 AM
    • Pending Home Sales ( 0.4% est.; 8.1%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4551.95, 4537.36, and 4524.00
  • Critical resistance levels for S&P 500 are 4584.31, 4587.57, and 4598.53
  • Key levels for E-mini futures: break above 4562.50, the high of 8:15 AM and break below 4545.25, the low of 2:30 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2021) closed at 4544.00 and the index closed at 4551.68 – a spread of about -7.75 points; futures closed at 4544.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +13.75; Dow by +70; and NASDAQ by +84.50

Markets Around The World

  • Markets in the East closed lower
  • European markets are mostly higher – Germany and the UK are down
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.529%, down -2.0 basis points from two weeks ago;
    • 30-years is at 1.942%, down -9.9 basis points;
    • 2-years yield is at 0.504%, up +13.8 basis points;
    • The 10-Year-&-2-Year spread is at 1.025, down from 1.283
    • The 30-Year-&-10-Year spread is at 0.413, down from 0.492
  • VIX
    • At 16.69 @ 7:45 AM; down from the last close; above 5-day SMA;
    • Recent high = 24.89 on October 1; low =  14.84 on October 22
    • Sentiment: Risk-On-Neutral

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 22 was a relatively large green candle at all-time highs
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI-9 is above 60
  • The week was up +73.53 or +1.6%; the 5-week ATR increased to 147.48
  • An up week; fourth in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4517.35, R1=4587.22, R2=4629.55; S1=4475.02, S2=4405.15; R1 pivot level was breached
  • Above 0-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A relatively large red candle with almost no upper and lower shadows; three day Evening Star pattern at all-time highs;
    • Stochastic (9, 1, 3): %K is below %D from near 100
    • RSI-9 has turned down to below 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)
  • Trending up since 10:00 AM on October 13 after making a Double Bottom at 4318.75; drifting down to sideways since making the all-time high at 10:00 Am o October 26
    • RSI-21 is drifting higher since 2:00 PM from near 35 to above 50
  • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting down since 10:00 AM on October 26;
    • RSI-21 bounced up to 50 from near 35
    • At/below EMA10 of EMA50, which is above EMA20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to up since 9:15 PM;
  • The Bollinger Band is expanding since 6:30 AM with price walking up the upper band
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly lower on Wednesday, October 27, in mixed volume. NASDAQ Composite closed higher. Dow Jones Industrial Average, S&P 500, and Russell 2000 traded in higher volume. Indices opened lower but then rose a little till afternoon before tumbling down and closing near the lows. The down pressure of the prices persisted throughout the day.

From Briefing.com:

 

The S&P 500 fell 0.5% on Wednesday, pressured by growth concerns, profit-taking activity, and a flush of selling interest into the close. Microsoft (MSFT 323.17, +13.06, +4.2%) and Alphabet (GOOG 2928.55, +135.11, +4.8%) mitigated the decline with strong gains following their earnings reports.

The Nasdaq Composite (unch) was relatively unchanged, while the Dow Jones Industrial Average (-0.7%) and Russell 2000 (-1.9%) closed lower.

For a more accurate representation of the market, the Invesco S&P 500 Equal Weight ETF (RSP 156.45, -2.11) fell 1.3%, nine of the 11 S&P 500 sectors closed lower with energy (-2.9%) being the weakest link, and declining issues outpaced advancing issues by more than a 2:1 margin at the NYSE and Nasdaq.

[…]
  • Total durable goods orders declined 0.4% month-over-month in September (Briefing.com consensus -0.8%) and orders, excluding transportation, rose 0.4% (Briefing.com consensus +0.5%). On a year-over-year basis, total durable goods orders were up 23.4%. Excluding transportation, they were up 17.3%.
  • […]
  • The Advance report for International Trade in Goods for August showed a deficit of $96.3 billion, versus a revised $88.2 billion (from $87.6 billion) in August. The Advance report for Retail Inventories for September decreased 0.2%, while the Advance report for Wholesale Inventories for September increased 1.1%.
  • Weekly crude oil inventories increased by 4.27 mln barrels after decreasing by 431,000 barrels during the previous week.
[…]
  • S&P 500 +21.2% YTD
  • Nasdaq Composite +18.2% YTD
  • Dow Jones Industrial Average +16.0% YTD
  • Russell 2000 +14.1% YTD

Overseas: 

  • Europe: DAX -0.3%, FTSE -0.3%, CAC -0.2%
  • Asia: Nikkei flat, Hang Seng -1.6%, Shanghai -1.0%

Commodities: 

  • Crude Oil -2.41 @ 82.18
  • Nat Gas +0.35 @ 6.22
  • Gold +5.80 @ 1800.20
  • Silver +0.04 @ 24.24
  • Copper -0.09 @ 4.40
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