Market Remarks

Morning Notes – Tuesday, December 14, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; fresh leg down since 7:15 AM from 4655.75; sharper decline since PPI report at 8:30 AM
  • The odds are for a down day – watch for a break above 4655.75 for a change of sentiments
  • Key economic data report due during the day:
    • PPI ( 0.8% vs. 0.5% est.; prev. 0.6%) at 8:30 AM
    • Core PPI ( 0.7% vs. -.4% est.; prev. 0.4%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4631.97, 4612.60, and 4588.31
  • Critical resistance levels for S&P 500 are 4665.98, 4690.60, and 4710.30
  • Key levels for E-mini futures: break above 4655.75, the high of 7:15 AM and break below 4611.75, the high of 2:00 PM on December 6

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2022) closed at 4661.00 and the index closed at 4668.97 – a spread of about -8.00 points; futures closed at 4659.50 for the day; the fair value is +1.50
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -28.75; Dow by -76; and NASDAQ by -151.25

Markets Around The World

  • Markets in the East closed mostly lower – Singapore closed up
  • European markets are mixed – Germany, France, Switzerland, and STOXX 600 are lower; the UK, Spain, and Itlay are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.426%, down -10.4 basis points from two weeks ago;
    • 30-years is at 1.809%, down -7.1 basis points;
    • 2-years yield is at 0.633%, up +14.5 basis points;
    • The 10-Year-&-2-Year spread is at 0.973, down from 1.042
    • The 30-Year-&-10-Year spread is at 0.383, down from 0.350
  • VIX
    • At 20.99 @ 8:00 AM; up from the last close; above 5-day SMA;
    • Recent high = 35.32 on December 3; low =  16.03 on November 16
    • Sentiment: Risk-Off

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 10 was a relatively large green candle
    • Stochastic (9,1, 3): %K crossed above %D; above 90
    • RSI-9 turned up from near 50; above 65
  • The week was up +173.59 or +3.8%; the 5-week ATR  is 128.08
  • An up week; second in the last five weeks, and seventh in the previous ten weeks
  • The weekly pivot point=4655.37, R1=4770.22, R2=4828.43; S1=4597.16, S2=4482.31; R1 pivot level was breached
  • Above 10-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A red candle that looks like a Bearish Engulfing candle with almost no upper and lower shadows
    • Stochastic (9, 1, 3): %K crossed below %D from above 90
    • RSI-9 turned down from just below 60; 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)
  • Breaking below a Head-&-Shoulder pattern; the 61.8% extension target is near 4515.00 and the 100% extension target is near 4490.00
    • RSI-21 declined to 25
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Moving down since 6:00 AM on Monday; broke below a support level round 4650.00
    • RSI-21 is moving around 30
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 4:15 AM
  • The Bollinger Band is expanding since 4:30 AM with price moving walking down the lower band
    • Stochastic (9, 1, 3): %K is below %D since e7:00 AM
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Monday, December 13, in mostly the higher volume. Nasdaq Composite traded in lower volume. Most major indices made Bearish Engulfing or similar bearish candlestick formations. They opened lower and then traded down for most f the day.

From Briefing.com:

The S&P 500 fell 0.9% on Monday in a defensive session, as investors digested the latest Omicron news and waited for the Fed’s policy decision this week. The Dow Jones Industrial Average also declined 0.9%, while the Nasdaq Composite (-1.4%) and Russell 2000 (-1.4%) both declined 1.4%. […]

The cyclical S&P 500 energy (-2.8%), consumer discretionary (-2.4%), and financials (-1.2%) sectors underperformed alongside the information technology sector (-1.6%). Accordingly, investors leaned defensively into the real estate (+1.3%), utilities (+1.2%), consumer staples (+1.2%), and health care (+0.9%) sectors.

[…]

Specifying the moves in the Treasury market, the 10-yr yield declined seven basis points to 1.42% while the 2-yr yield declined two basis points to 0.64% — flattening the curve and corroborating growth concerns. The U.S. Dollar Index rose 0.3% to 96.36. WTI crude futures decreased 0.6%, or $0.46, to $71.24/bbl.

[…]

  • S&P 500 +24.3% YTD
  • Nasdaq Composite +19.6% YTD
  • Dow Jones Industrial Average +16.5% YTD
  • Russell 2000 +10.4% YTD
[…]
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