Market Remarks

Morning Notes – Friday, October 29, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM;
  • The odds are for a down day with  a good chance of sideways  to an up move from pre-open levels around 4570.00 – watch for a break above 4574.00 and a break below 4559.25 for clarity
  • Key economic data report due during the day:
    • Core PCE ( 0.2% vs. 0.2% est.; prev. 0.3%) at 8:30 AM
    • Employment Cost Index ( 1.3% vs. 0.9% est.; prev. 0.7%) at 8:30 AM
    • Personal Income ( -1.0% vs. -0.2% est.; prev. -0.2%) at 8:30 AM
    • Personal Spending ( 0.6% vs.. 0.6% est.; prev. 0.8%) at 8:30 AM
    • Chicago PMI ( 63.6 est.; prev. 64.7) at 10:00 AM
    • Revised UoM Consumer Sentiment ( 71.4 est.; prev. 71.4) at 10:00 AM
    • Revised UoM Inflation Expectations (prev. 4.8%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4578.55, 4562.84, and 4551.95
  • Critical resistance levels for S&P 500 are 4584.74, 4597.55, and 4608.37
  • Key levels for E-mini futures: break above 4574.00, the high of 9:30 PM and break below 4559.25, the low of 6:15 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2021) closed at 4587.75 and the index closed at 4596.42 – a spread of about -8.75 points; futures closed at 4587.50 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -19.25; Dow by -32; and NASDAQ by -122.75

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Tokoyo closed higher
  • European markets are mostly lower – Spain is up
  • 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 lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.568%, up +4.9 basis points from two weeks ago;
    • 30-years is at 1.963%, down -6.2 basis points;
    • 2-years yield is at 0.485%, up +12.3 basis points;
    • The 10-Year-&-2-Year spread is at 1.083, down from 1.157
    • The 30-Year-&-10-Year spread is at 0.395, down from 0.506
  • VIX
    • At 17.85 @ 8:45 AM; up from the last close; above 5-day SMA;
    • Recent high = 24.89 on October 1; low =  14.84 on October 22
    • Sentiment: Risk-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 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 green candle with almost no upper and lower shadows closing at the all-time high;
    • Stochastic (9, 1, 3): %K crossed above %D; near 100
    • RSI-9 has turned up 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)
  • Made a Double Top at 4:00 PM on October 28; a break below 4543.75 will complete the pattern; declined about 25 points from the Double Top;
  • RSI-21 is drifting lower since 2:00 PM on Thursday from above 70 to e just above 50
  • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting down since 14:00 PM on October 28;
    • RSI-21 declining from above 65 at 10:30 AM on Thursday to below 50; Bearish Divergence
    • At/below EMA10 of EMA50, which is at/above EMA20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 4:00 PM;
  • The Bollinger Band is relatively stable
    • Stochastic (9, 1, 3): %K is above %D since 6:15 AM
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Thursday, October 28, in lower volume. The major indices opened up and then drifted higher for the rest of the day. NASDAQ Composite made all-time closing and intraday highs. S&P 500 and Wilshire 5000 Total Market Index made all-time closing highs.

From Briefing.com:

The S&P 500 (+1.0%) and Nasdaq Composite (+1.4%) rallied to record closes on Thursday, bolstered by better-than-expected earnings reports, mega-cap strength, and infrastructure optimism. The Dow Jones Industrial Average gained 0.7% while the Russell 2000 rose 2.0%. The Nasdaq also set an intraday record high. […]

All 11 S&P 500 sectors closed higher with gains ranging from 0.3% (communication services) to 1.5% (real estate).

[…]

The 2-yr yield increased two basis points to 0.50% after peaking at 1.56% overnight, and the 10-yr yield increased four basis points to 1.57%. The U.S. Dollar Index fell 0.5% to 93.37. WTI crude futures ($82.79/bbl, +0.11, +0.1%) settled little changed.

[…]
  • The Advance Q3 GDP report indicated real GDP increased at an annual rate of 2.0% (Briefing.com consensus 2.4%), down noticeably from the 6.7% growth rate reported for the second quarter, as personal spending growth decelerated to just 1.6% from 12.0% in the second quarter. The GDP Price Deflator was up 5.7% (Briefing.com consensus 5.5%) after increasing 6.1% in the second quarter.
  • […]
  • For the week ending October 23, initial claims declined by 10,000 to 281,000 (Briefing.com consensus 291,000), marking the lowest level for initial claims since March 14, 2020. Continuing claims for the week ending October 16 decreased by 237,000 to 2.243 million, which was also the lowest level since March 14, 2020.
  • […]
  • Pending home sales decreased 2.3% m/m in September (Briefing.com consensus 1.0%) following an unrevised 8.1% increase in August.
[…]
  • S&P 500 +22.4% YTD
  • Nasdaq Composite +19.9% YTD
  • Dow Jones Industrial Average +16.7% YTD
  • Russell 2000 +16.4% YTD

Overseas: 

  • Europe: DAX -0.1%, FTSE -0.1%, CAC +0.8%
  • Asia: Nikkei -1.0%, Hang Seng -0.3%, Shanghai -1.2%

Commodities: 

  • Crude Oil +0.50@ 82.68
  • Nat Gas -0.39 @ 5.83
  • Gold +2.10 @ 1802.30
  • Silver -0.09 @ 24.15
  • Copper +0.03 @ 4.44
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