Market Remarks

Morning Notes – Wednesday, December 8, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM; retreating from the day’s high of 4712.00 at 6:45 AM
  • The odds are for an up day with a good chance of sideways to down move from pre-open levels around 4695.00 – watch for a break below 4681.25 for a change of sentiments
  • Key economic data report due during the day:
    • JoLTS Job Openings ( 10.45M est.; prev. 10.44M) at 10:00 AM
    • 10-Yr Bond Auction at 1:01 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4687.42, 4668.29, and 4654.69
  • Critical resistance levels for S&P 500 are 4702.87, 4722.04, and 4731.99
  • Key levels for E-mini futures: break above 4712.00, the high of 6:45 AM and break below 4681.25, the low of 6:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2021) closed at 4686.25 and the index closed at 4686.75 – a spread of about -0.50 points; futures closed at 4685.00 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are higher – at 7:45 AM, S&P 500 futures were up by +8.00; Dow by +55; and NASDAQ by +41.00

Markets Around The World

  • Markets in the East closed mostly higher – Singapore closed lower
  • European markets are mostly lower – the UK and Switzerland are down
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • INR/USD
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are mixed
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.480%, down -18.7 basis points from two weeks ago;
    • 30-years is at 1.796%, down -22.7 basis points;
    • 2-years yield is at 0.696%, up +12.2 basis points;
    • The 10-Year-&-2-Year spread is at 0.784, down from 1.093
    • The 30-Year-&-10-Year spread is at 0.316, down from 0.356
  • VIX
    • At 21.88 @ 7:45 AM; down from the last close; below 5-day SMA;
    • Recent high = 35.32 on December 3; low =  16.03 on November 16
    • Sentiment: Risk-On

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 December 3 was a red spinning top candle following a large Bearish Engulfing candle
    • Stochastic (9,1, 3): %K is below %D; near 55
    • RSI-9 is just above 50
  • The week was down -56.19 or -1.2%; the 5-week ATR  is 117.74
  • A down week; third in the last five weeks, and fourth in the previous ten weeks
  • The weekly pivot point=4568.83, R1=4642.55, R2=4746.66; S1=4464.72, S2=4391.00; S1 pivot level was breached
  • At/below 10-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A green candle that gapped up at the open within a horizontal channel that was broken to the downside n November 26; small upper shadow and almost no lower shadow;
    • Stochastic (9, 1, 3): %K is above %D; above 90
    • RSI-9 has risen near 60 from near 30; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • The sequence of lower lows and lower highs since November 22 is broken; near the upper limit of  a horizontal channel that was broken to the downside on November 26;
    • RSI-21 declined from near 85 at 10:00 PM to near 70
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 3:00 PM on December 3; moving sideways to up since 10:30 AM on Tuesday; broke above a Horizontal Channel on Monday; 100% extension target near 4690.00 is achieved; the 161.8% extension target is near 4750.00
    • RSI-21 declined from near 80 to near 60 after making a few Bearish Divergences
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 2:45 PM on Tuesday
  • The Bollinger Band is narrow and relatively stable
    • Stochastic (9, 1, 3): %K crossed below %D from near 60 at 7:00 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday, December 7, in mixed volume. Dow Jones Industrial Average and Russell 2000 traded in higher volume. Major indices gapped up at the open and then mostly traded higher for the rest of the day.

From Briefing.com:

The major averages built on their gains from Monday with the S&P 500 (+2.1%) jumping to within 60 points of its record high from two weeks ago. The Nasdaq (+3.0%) outperformed after lagging yesterday while the Dow (+1.4%) finished behind the benchmark index after showing relative strength on Monday. […]

All eleven sectors ended in the green with nine groups recording gains of 1.0% or more. Top-weighted technology (+3.5%) held the lead throughout the day while energy (+2.3%) and consumer discretionary (+2.4%) finished in the next two spots.

[…]

Treasuries retreated, sending the 10-yr yield higher by five basis points to 1.48% with its 200-day moving average (1.493%) looming just above.

[…]
  • The October Trade Balance Report showed a narrowing in the deficit to $67.1 billion (Briefing.com consensus -$66.8 billion) from a downwardly revised $81.4 billion (from $80.9 billion) in September, with exports up $16.8 billion and imports up $2.5 billion from September levels.
  • […]
  • The revised Q3 Productivity and Unit Labor Costs report showed productivity being revised down to -5.2% (Briefing.com consensus -4.9%) from the advance estimate of -5.0%. That is the largest decline in productivity since the second quarter of 1960. Unit labor costs were revised up to 9.6% (Briefing.com consensus 8.2%) from 8.3%.
  • […]
  • Consumer credit increased by $16.9 bln in October after increasing a downwardly revised $27.8 bln (from $29.9 bln) in September.
[…]
  • S&P 500 +24.8% YTD
  • Nasdaq Composite +21.7% YTD
  • Dow Jones Industrial Average +16.7% YTD
  • Russell 2000 +14.1% YTD

Overseas: 

  • Europe: DAX +2.8%, FTSE +1.5%, CAC +2.9%
  • Asia: Nikkei +1.9%, Hang Seng +2.7%, Shanghai +0.2%

Commodities: 

  • Crude Oil +2.23 @ 71.96
  • Nat Gas +0.03 @ 3.72
  • Gold +4.60 @ 1785.20
  • Silver +0.25 @ 22.55
  • Copper unch @ 4.34
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