Morning Notes – Friday, December 3, 2021

/ December 3, 2021

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM; breaking above a trading range between 4583.00 and 4557.00 ahead of the payroll report release at 8:30 AM
  • The odds are for an up day with elevated volatility – watch for a break below 4557.50 for a change of sentiments
  • Key economic data report due during the day:
    • Non-Farm Employment Change ( 553K est.; prev. 531K) at 8:30 AM
    • Average Hourly Earnings( 0.4% est.; prev. 0.4%) at 8:30 AM
    • Unemployment Rate (4.5% est.; prev. 4.6%) at 8:30 AM
    • Final Services PMI ( 57.0 est.; prev. 57.0) at 9:45 AM
    • ISM Services PMI ( 64.9 est.; prev. 66.7) at 10:00 AM
    • Factory Orders ( 0.5% est.; prev. 0.2%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4567.68, 4525.54, and 4504.73
  • Critical resistance levels for S&P 500 are 4595.46, 4602.82, and 4617.47
  • Key levels for E-mini futures: break above 4583.75, the high of 3:00 AM and break below 4557.50, the low of 5:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2021) closed at 4577.50 and the index closed at 4577.10 – a spread of about +0.50 points; futures closed at 4575.75 for the day; the fair value is +2.25
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +2.50; Dow by +33; and NASDAQ by +30.50

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong and Mumbai closed lower
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.448%, down -14.0 basis points from two weeks ago;
    • 30-years is at 1.769%, down -20.3 basis points;
    • 2-years yield is at 0.623%, up +11.5 basis points;
    • The 10-Year-&-2-Year spread is at 0.825, down from 1.081
    • The 30-Year-&-10-Year spread is at 0.321, down from 0.383
  • VIX
    • At 27.58 @ 7:00 AM; down from the last close; above 5-day SMA;
    • Recent high = 32.61 on December 1; low =  16.03 on November 16
    • Sentiment: Risk-On-Neutral

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

Monthly
  • November 2021 was a Shooting Star candle at all-time highs; watch for a close below November’s lows;
    • Stochastic (9, 1, 3): %K crossed below %D; from near 100; %D Bearish Divergence
    • RSI-9 is turning down from above 75; 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 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 Piercing candle that opened lower with almost no lower shadow and a small upper shadow;
    • Stochastic (9, 1, 3): %K crossed above %D from below 5
    • RSI-9 has bounced off 30 to above 40; below 8-day EMA
  • Below 20-day EMA; At/below 50-day EMA; above 100-day SMA, and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Continue the bounce from the lows of 4497.75 at 4:0 PM on Wednesday; Sequence of lower lows and lower highs since November 22
    • RSI-21 is moving above 50
  • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving sideways since 11:30 AM on Thursday after testing the lows of Wednesday
    • RSI-21 moved to above 50 since 9:30 AM on Thur
    • A/above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 16:30 PM
  • The Bollinger Band is relatively narrow
    • Stochastic (9, 1, 3): %K is crossing below %D above 90 at 7:30 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed higher on Thursday, December 2, in mostly lower volume. NASDAQ Composite traded in higher volume. Major indices opened a bit lower but then traded higher for the rest of the day. Most made Piercing or similar bullish candles.

From Briefing.com:

The S&P 500 rose 1.4% on Thursday, bouncing back from two days of sharp losses. The Dow Jones Industrial Average (+1.8%) and Russell 2000 (+2.7%) outperformed the benchmark index, while the Nasdaq Composite underperformed on a relative basis with a 0.8% gain.

[…]

All 11 S&P 500 sectors closed higher, featuring leadership positions from the cyclical industrials (+2.9%), energy (+2.9%), financials (+2.8%), and materials (+2.0%) sectors. The information technology (+0.8%), consumer staples (+0.8%), and health care (+0.4%) sectors trailed with more modest gains.

[…]
  • For the week ending November 27, initial jobless claims increased by 28,000 to 222,000 (Briefing.com consensus 255,000). Continuing claims for the week ending November 20 decreased by 107,000 to 1.956 million.
[…]
  • S&P 500 +21.9% YTD
  • Nasdaq Composite +19.3% YTD
  • Dow Jones Industrial Average +13.2% YTD
  • Russell 2000 +11.7% YTD

Overseas: 

  • Europe: DAX -1.4%, FTSE -0.6%, CAC -1.3%
  • Asia: Nikkei -0.7%, Hang Seng +0.6%, Shanghai -0.1%

Commodities: 

  • Crude Oil +0.94 @ 66.82
  • Nat Gas -0.18 @ 4.08
  • Gold -15.50 @ 1766.50
  • Silver +0.10 @ 22.41
  • Copper +0.05 @ 4.29
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