Market Remarks

Morning Notes – Wednesday, November 3, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a bit lower at 7:30 AM; moving sideways to down since 11:00 AM on Tuesday
  • The odds are for a sideways day until the FOMC statement at 2:00 PM; elevated volatility afterward – watch for a break above 4627.00 and a break below 4615.25 for clarity
  • Key economic data report due during the day:
    • ADP Non-Farm Employment Change (400K est.; prev. 568K) at 8:15 AM
    • Final Services PMI ( 58.2 est.; prev. 58.2) at 9:45 AM
    • ISM Services PMI ( 61.9 est.; prev. 61.9) at 10:00 AM
    • Factory Orders (0.1% est.; prev. 1.2%) at 10:00 AM
    • FOMC Statement at 2:00 PM
    • Fed Funs Rate ( <0.25% est.; prev. <0.25%) at 2:00 PM
    • FOMC Press Conference at 2:30 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4623.84, 4613.34, and 4595.06
  • Critical resistance levels for S&P 500 are 4635.15, 4639.42, and 4848.19
  • Key levels for E-mini futures: break above 4627.00, the high of 11:30 AM on Tuesday and break below 4615.25, the low of 12:00 PM on Tuesday

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2021) closed at 4623.75 and the index closed at 4630.65 – a spread of about -7.00 points; futures closed at 4623.50 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are mixed – at 7:45 AM, S&P 500 futures were down by -2.50; Dow down by -41; and NASDAQ up by +24.25

Markets Around The World

  • Markets in the East closed mostly lower – Sydney closed higher; Tokyo was closed for trading
  • European markets are mostly lower – France and Italy are up;
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.549%, down -8.6 basis points from two weeks ago;
    • 30-years is at 1.960%, down -12.8 basis points;
    • 2-years yield is at 0.450%, up +5.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.099, down from 1.240
    • The 30-Year-&-10-Year spread is at 0.411, down from 0.453
  • VIX
    • At 16.06 @ 6:30 AM; up from the last close; below 5-day SMA;
    • Recent high = 24.89 on October 1; low =  14.84 on October 22
    • Sentiment: Risk-Neutral-On

The trend and patterns on various time frames for S&P 500:

Monthly
  • October 2021 was a Bullish Engulfing candle with  small lower shadow and almost no upper shadow; at all-time closing and intra-month highs;
    • Stochastic (9, 1, 3): %K above %D; near 100;
    • RSI-9 is turning up; above 75
    • 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 29 was a green candle at all-time highs
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI-9 is above 70
  • The week was up +60.48 or +1.3%; the 5-week ATR  is 129.73
  • An up week; fourth in the last five weeks, and seventh in the previous ten weeks
  • The weekly pivot point=4583.61, R1=4629.85, R2=4654.33; S1=4559.13, S2=4512.89; R1 pivot level was breached
  • Above 10-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend Resumed
Daily
  • A green candle with almost no upper and lower shadows at the all-time high;
    • Stochastic (9, 1, 3): %K is crisscrossing %D above 90
    • RSI-9 is above 75; 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)
  • Broke above a Horizontal Channel – 61.8% extension target near 4618.00 is achieved; the 100% extension target is near 4635.00
    • RSI-21 is declining since 2:00 PM on Tuesday after making a Bearish Divergence; just below 60
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways to down since 10:30 AM on Tuesday;
    • RSI-21 is drifting down since 10:30 AM on Tuesday
    • At/above 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 down since 2:15 PM on Tuesday;
  • The Bollinger Band is relatively narrow
    • Stochastic (9, 1, 3): %K is crisscrossing %D lower
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday, November 2, in mostly higher volume. NYSE Composite traded in lower volume. The indices opened higher and rose higher in the first hour of trading before trading sideways for the rest of the day. S&P 500, Dow Jones Industrial Average, NASDAQ Composite, Russell 2000, Dow Jones Industrial Average, and Wilshire 5000 Total Market Index made all-time closing and intraday highs. NYSE Composite is a bit off its all-time highs.

From Briefing.com:

The S&P 500 (+0.4%), Dow Jones Industrial Average (+0.5%), Nasdaq Composite (+0.3%), and Russell 2000 (+0.2%) set intraday and closing record highs on Tuesday. […]

To be fair, the breadth of the market was more mixed in front of the FOMC policy announcement tomorrow. While nine of the 11 S&P 500 sectors closed higher, declining issues outpaced advancing issues at the NYSE and were roughly even at the Nasdaq.

[…]

The 2-yr yield fell six basis points to 0.45%, and the 10-yr yield fell three basis points to 1.55%. The U.S. Dollar Index gained 0.2% to 94.10. WTI crude futures decreased 0.2%, or $0.19, to $83.86/bbl.

[…]
  • S&P 500 +23.3% YTD
  • Nasdaq Composite +21.4% YTD
  • Russell 2000 +19.5% YTD
  • Dow Jones Industrial Average +17.8% YTD

Overseas: 

  • Europe: DAX +0.9%, FTSE -0.2%, CAC +0.5%
  • Asia: Nikkei -0.4%, Hang Seng -0.2%, Shanghai -1.1%

Commodities: 

  • Crude Oil -0.33 @ 83.58
  • Nat Gas +0.31 @ 5.62
  • Gold -7.80 @ 1787.60
  • Silver -0.62 @ 23.51
  • Copper -0.01 @ 4.37
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