Market Remarks

Morning Notes – Monday, November 29, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; breaking above Horizontal Channel between 4642.75 and 4623.00
  • The odds are for an up day with elevated volatility and with a good chance of a sideways move from the pre-open levels around 4645.00 – watch for a break below 4624.75 for a change of sentiments
  • Key economic data report due during the day:
    • Pending Home Sales ( 0.8% est.; prev. -2.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4622.77, 4585.43, and 4567.59
  • Critical resistance levels for S&P 500 are 4652.66, 4664.63, and 4681.12
  • Key levels for E-mini futures: break above 4649.00, the low of 10:00 AM on November 23 and break below 4624.75, the low of 7:30 AM

Pre-Open

  • On Friday at 1:00 PM, S&P futures (December 2021) closed at 4595.50 and the index closed at 4594.62 – a spread of about +1.00 points; futures closed at 4595.75 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +46.50; Dow by +334; and NASDAQ by +190.25

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai was up
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/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 1.545%, down -3.7 basis points from two weeks ago;
    • 30-years is at 1.891%, down -6.4 basis points;
    • 2-years yield is at 0.504%, down -1.9 basis points;
    • The 10-Year-&-2-Year spread is at 1.041, down from 1.059
    • The 30-Year-&-10-Year spread is at 0.347, down from 0.373
  • VIX
    • At 24.79 @ 8:15 AM; down from the last close; above 5-day SMA;
    • Recent high = 28.99 on November 26; low =  16.03 on November 16
    • 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 November 26 was a relatively large Bearish Engulfing candle with almost no lower shadow and a small upper shadow
    • Stochastic (9,1, 3): %K is below %D; below 70
    • RSI-9 is just below 60
  • The week was down -103.34 or -2.3%; the 5-week ATR  is 96.32
  • A down week; second in the last five weeks, and third in the previous ten weeks
  • The weekly pivot point=4641.29, R1=4697.16, R2=4799.69; S1=4538.76, S2=4482.89; R1/R2/S1/S2/S3 pivot levels were breached
  • Above 10-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend
Daily
  • A relatively large red candle that gapped down at the open with almost no upper and lower shadows
    • Stochastic (9, 1, 3): %K is below %D; near 5
    • RSI-9 is just above 30; below 8-day EMA
  • Below 20-day EMA; Above 50-day EMA, 100-day SMA, and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Reentered a Horizontal Channel after breaking below it on Friday
    • RSI-21 bouncing up since 12:00 PM on Friday from near 10 to just below 50
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Moving sideways since 7:00 PM after bouncing from a  sharp decline on Friday
    • RSI-21 moving along 50
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways since 11:45 PM;
  • The Bollinger Band is stable;
    • Stochastic (9, 1, 3): %K is above %D at 8:45 AM;
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Friday, November 26, in higher volume. Trading was shortened on Friday due to Thanksgiving Holiday. Major indices gapped down at the open and then traded lower.

For the week, major indices closed lower in mostly higher volume. Dow Jones Industrial Average traded in lower volume. The Asian and the European exchanges closed lower. The dollar index was up and most commodities were down. The US Treasury yields were mixed. All but one S&P sector – Energy – closed down for the week.

From Briefing.com:

The major indices dropped more than 2.0% on Friday, as investors sold risk assets after the discovery of a highly-mutated variant of COVID-19 in South Africa. The S&P 500 fell 2.3%, the Nasdaq Composite fell 2.2%, and the Dow Jones Industrial Average fell 2.5%. The small-cap Russell 2000 underperformed with a 3.7% decline. […]

All 11 S&P 500 sectors closed in negative territory, ten of which fell between 1.4% (consumer staples) and 4.0% (energy). The 10-yr yield was down 16 basis points to 1.49% ahead of the bond market close at 2:00 p.m. ET. WTI crude futures fell 12.3% (-$9.57) to $68.80/bbl. The CBOE Volatility Index popped 54% to 28.62.

[…]

Appropriately, the fed-funds-sensitive 2-yr yield was down 12 basis points to 0.52% after rising 13 basis points over the prior three sessions. The U.S. Dollar Index fell 0.7% to 96.11.

[…]
  • S&P 500 +22.3% YTD
  • Nasdaq Composite +20.2% YTD
  • Dow Jones Industrial Average +14.0% YTD
  • Russell 2000 +13.7% YTD
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