Morning Notes – Wednesday January 13, 2021

/ January 13, 2021

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down to sideways day; watch for a break above 3810.50 and break below 3768.00 for clarity
  • Key economic data report due during the day:
    • CPI ( 0.4% vs. 0.4% est.; prev. 0.2%) at 8:30 AM
    • Core CPI ( 0.1% vs. 0.1% est.; prev. 0.2%) at 8:30 AM
    • Beige Book at 2:00 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3794.43, 3776.51, and 3764.71
  • Critical resistance levels for S&P 500 are 3810.78, 3817.86, and 3826.69
  • Key levels for E-mini futures: break above 3802.25, the high of 4:00 AM and break below 3768.00, the low of 12:00 PM on Tuesday

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2021) closed at 3792.75 and the index closed at 3801.19 – a spread of about -8.50 points; futures closed at 3794.50 for the day; the fair value is -1.75
  • Pre-NYSE session open, futures are lower – at 8:00 AM, S&P 500 futures were down by -14.00; Dow up by -67, and NASDAQ by -48.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, and Mumbai were down; Tokyo, Sydney, Seoul, and Singapore closed up
  • European markets are mixed – Germany, the UK, Spain, and Switzerland are down; France, Italy, and STOXX 600 are up
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.133%, up 19.8 BP from two weeks ago;
    • 30-years is at 1.868%, up 19.4 BP;
    • 2-years yield is at 0.145%, up 1.2 BP;
    • The 10-Year-&-2-Year spread is at 0.988, up from 0.802
  • VIX
    • At 23.58 @ 6:45 AM; up from the last close; above 5-day SMA;
    • Recent high =  29.19 on January 4; low =  20.99 on December 29
    • Sentiment: Risk-Off-Neutral

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

Monthly
  • Confirmed Uptrend
  • December 2020 was a green candle with a small gap and with almost no upper and lower shadows; all-time closing and intraday highs;
    • Stochastic %K above %D near 100;
    • RSI-9 above 70; broke above a downtrend line from January 2018
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows is resumed
Weekly:
  • The week ending on January 8 was a green candle with a relatively long lower shadow that opened higher; all-time intraday highs;
    • Stochastic (9,1, 3): %K is above %D; near 100
    • RSI (9) is above 70
  • The week was up +68.61 or +1.8%; the 5-week ATR is 91.15
  • An up week; third in the last five weeks and seventh in the last ten weeks
  • The weekly week pivot point=3771.36, R1=3880.01, R2=3935.34; S1=3716.03, S2=3607.38; R1/R2/3 and S1/S2/S3 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23
Daily
  • A small Doji with very small upper shadow and long lower shadows near all-time highs;
    • Broke above a symmetrical triangle at 3550.00 level on November 9; the 61.8% extension target near 3750.00 is achieved; 100% extension target is near 3900.00
    • %K  is above %D and near 100;
    • RSI-9 is near 75; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Drifting sideways to down from the all-time high – Friday’s high of 3824.50;
    • RSI-21 is declined to below 30
  • Below EMA10 of EMA50, which is below EMA20
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving mostly sideways since 10:30 AM on January 7 within a range between 3810.00 and 3775.00;
    • RSI-21 has declined to near 30 from near 60
    • %K is crisscrossing %D lower; below 20
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving sideways since 1:30 AM on Monday
  • The Bollinger Band is expanding since 5:15 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D; near 40
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Tuesday, January 12 in mostly higher volume. Dow Jones Industrial Average and NASDAQ Composite traded in lower volume. Indices are mostly moving sideways and making small indecisive candles.

From Briefing.com:

The S&P 500 finished little changed on Tuesday, as gains in cyclical stocks helped offset losses in growth stocks and health care names. The Russell 2000 (+1.7%) extended its hot start to the year and closed at a fresh record high, while the Dow Jones Industrial Average (+0.2%) and Nasdaq Composite (+0.3%) posted smaller gains.

[…]

The energy sector (+3.5%) set the winning pace with a 3.5% gain in a continuation of its recent outperformance. The materials (+1.4%), consumer discretionary (+1.3%), financials (+1.1%), and industrials (+1.0%) sectors advanced at least 1.0%. In addition, advancing issues outpaced declining issues by healthy margins at the NYSE and Nasdaq.

[…]

The 10-yr yield peaked at 1.18% amid increased selling interest, but it finished one basis point higher at 1.14% after a $38 billion 10-yr note government auction was met with strong demand.

[…]

The 2-yr yield decreased one basis point to 0.14%. The U.S. Dollar Index fell 0.5% to 90.04 amid relative strength in the euro and British pound.

[…]
  • Job openings decreased slightly to 6.527 million in November from 6.652 million in October.
  • The NFIB Small Business Optimism Index decreased to 95.9 in December from 101.4 in November.
[…]
  • Russell 2000 +7.8% YTD
  • Dow Jones Industrial Average +1.5% YTD
  • Nasdaq Composite +1.4% YTD
  • S&P 500 +1.2% YTD

 

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