Market Remarks

Morning Notes – Thursday, November 4, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a bit higher at 8:30 AM; moving sideways to up since 7:00 PM on Wednesday
  • The odds are for a sideways to an up day – watch for a break above 4662.50 and a break below 4650.75 for clarity
  • Key economic data report due during the day:
    • Unemployment Claims (269K vs. 273Kest.; prev. 283K) at 8:30 AM
    • Prelim Non-Farm Productivity ( -5.0% vs. -3.2% est.; prev. 2.1%) at 8:30 AM
    • Prelim Labor Cost ( 8.3% vs. 7.1% est.; prev. 1.3%) at 8:30 AM
    • Trade Balance ( -80.9 vs. -80.1B; prev. -72.8B ) at 8:30 AM

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 4650.50, 4633.63, and 4621.19
  • Critical resistance levels for S&P 500 are 4675.62, 469068, and 4717.89
  • Key levels for E-mini futures: break above 4662.50, the high of 4:00 AM and break below 4650.75, the low of 9:45 PM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2021) closed at 4652.25 and the index closed at 4660.57 – a spread of about -8.25 points; futures closed at 4652.25 for the day; the fair value is +0.0
  • Pre-NYSE session open, futures are mixed – at 8:30 AM, S&P 500 futures were up by +6.25; Dow down by -1; and NASDAQ up by +51.50

Markets Around The World

  • Markets in the East closed higher – Mumbai and Singapore were closed for trading
  • European markets are higher
  • 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 mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.574%, down -6.2 basis points from two weeks ago;
    • 30-years is at 2.016%, down -9.5 basis points;
    • 2-years yield is at 0.473%, up +8.2 basis points;
    • The 10-Year-&-2-Year spread is at 1.104, down from 1.245
    • The 30-Year-&-10-Year spread is at 0.446, down from 0.475
  • VIX
    • At 14.88 @ 6:30 AM; down from the last close; below 5-day SMA;
    • Recent high = 24.89 on October 1; low =  14.84 on October 22
    • Sentiment: Risk-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 shadow and a small lower shadow at the all-time highs;
    • Stochastic (9, 1, 3): %K is crisscrossing %D above 90
    • RSI-9 is above 80; 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 on October 29 – nearing the 161.8% extension target around 4664.00
    • RSI-21 is above 75
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving sideways to up since 4:00 PM on Wednesday after jumping up 40 points following FOMC announcement;
    • RSI-21 is moving along 65
    • 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 up since 8:30 PM;
  • The Bollinger Band is relatively narrow
    • Stochastic (9, 1, 3): %K is below %D; below 20
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Wednesday, November 3, in mostly higher volume. Dow Jones Transportation Average closed lower. S&P 500 and Dow Jones Industrial Average traded in lower volume. The indices traded sideways till the FOMC statement at 2:00 PM and the claimed higher. S&P 500, Dow Jones Industrial Average, NASDAQ Composite, Russell 2000, and Wilshire 5000 Total Market Index made all-time closing and intraday highs. NYSE Composite made an all-time closing high.

From Briefing.com:

Each of the major indices set intraday and closing record highs on Wednesday, as the market reacted positively to the Fed’s taper announcement and Fed Chair Powell’s press conference. The Russell 2000 was the biggest winner with a 1.8% gain, followed by the Nasdaq Composite (+1.0%), S&P 500 (+0.7%), and Dow Jones Industrial Average (+0.3%).

Eight of the 11 S&P 500 sectors closed higher, led by the consumer discretionary (+1.8%) and materials (+1.1%) sectors with gains over 1.0%. The energy (-0.8%), utilities (-0.3%), and industrials (-0.2%) sectors closed lower. Small-caps were strong all day, and the larger stocks gained traction following the Fed’s policy decision.

[…]

The 2-yr yield, which is sensitive to expectations surrounding the fed funds rate, settled two basis points higher at 0.46% after hitting 0.51% during the start of Mr. Powell’s press conference. The 10-yr yield settled three basis points higher at 1.58%. The U.S. Dollar Index fell 0.2% to 93.90.

[…]
  • The ISM Non-Manufacturing Index for October increased to a record high 66.7% (Briefing.com consensus 60.0%) from 61.9% in September. The dividing line between expansion and contraction is 50.0%. The October reading marks the 17th straight month of growth for the services sector.
  • […]
  • Factory orders for manufactured goods increased 0.2% m/m in September (Briefing.com consensus -0.1%) following a downwardly revised 1.0% increase (from 1.2%) in August. Shipments of manufactured goods were up 0.6% after increasing 0.1% in August.
  • […]
  • The ADP Employment Change report estimated 571,000 jobs were added to private-sector payrolls in October (Briefing.com consensus 370,000). The increase in September was downwardly revised to 523,000 from 568,000.
  • The IHS Markit Services PMI increased to 58.7 in the final reading for October from 58.2 in the preliminary reading and 54.9 in the final reading for September.
  • The weekly MBA Mortgage Applications Index decreased 3.3% following a 0.3% increase in the prior week.
  • Weekly crude oil inventories increased by 3.29 mln barrels after increasing by 4.27 mln barrels during the previous week.
[…]
  • S&P 500 +24.1% YTD
  • Nasdaq Composite +22.7% YTD
  • Russell 2000 +21.7% YTD
  • Dow Jones Industrial Average +18.1% YTD

Overseas: 

  • Europe: DAX flat, FTSE -0.4%, CAC +0.3%
  • Asia: Nikkei closed for holiday, Hang Seng -0.3%, Shanghai -0.2%

Commodities: 

  • Crude Oil -2.77 @ 80.81
  • Nat Gas +0.18 @ 5.80
  • Gold -20.70 @ 1766.90
  • Silver -0.18 @ 23.33
  • Copper -0.06 @ 4.31
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