Market Remarks

Morning Notes – Tuesday January 19, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day, with a good chance of sideways to down move from the pre-open level near 3785.00; watch for a break above 3736.25 and break below 3782.00 for clarity
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3768.46, 3755.04, and 3742.39
  • Critical resistance levels for S&P 500 are 3792.86, 3806.63, and 3819.42
  • Key levels for E-mini futures: break above 3796.25, the high of 10:30 PM and break below 3782.00, the low of 12:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (March 2021) closed at 3761.75 and the index closed at 3768.25 – a spread of about -6.50 points; futures closed at 3762.25 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +25.50; Dow by +206, and NASDAQ by +100.50

Markets Around The World

  • Markets in the East mostly higher – Shanghai was down
  • European markets are mostly higher – Spain is lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/CHF
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are mostly higher
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.097%, up 18.0 BP from two weeks ago;
    • 30-years is at 1.853%, up 20.7 BP;
    • 2-years yield is at 0.129%, up 0.8 BP;
    • The 10-Year-&-2-Year spread is at 0.968, up from 0.796
  • VIX
    • At 22.56 @ 6:15 AM; down from the last close; below 5-day SMA;
    • Recent high =  29.19 on January 4; low =  20.99 on December 29
    • Sentiment: Risk-On

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 red candle with almost no upper shadow and a lower shadow equal to the real body; near all-time highs; not much move since January 7;
    • 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 essentially sideways to down since 10:00 PM on January 7; within an un-even down-sloping flag
    • RSI-21 to around 55
  • Above EMA20, which is below/at EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving mostly sideways since 10:30 AM on January 7; broke below a horizontal channel and then moved back up within it;
    • RSI-21 is drifting down; just below 60
    • %K is below %D
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 11:15 PM;
  • The Bollinger Band is relatively stable
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 40
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Friday, January 15 in mostly higher volume. Dow Jones Transportation Average traded in lower volume. Indices continue to move sideways making small indecisive candles.

For the week, most major US indices closed lower in lower volume. Russell 2000 and Dow Transportation Average closed higher. Asian markets were mixed but Europe was mostly down. The dollar index was up along with the energy futures and soft commodities. Precious and industrial metals were mixed. The treasuries yields fell.

From Briefing.com:

The stock market ended a shaky week on a lower note. The S&P 500 fell 0.7%, giving up 1.5% for the week while the Russell 2000 (-1.5%) underperformed, but it still gained 1.5% for the week. […]

Treasuries rebounded from yesterday’s drop with the 10-yr note erasing its entire decline from Thursday. The benchmark yield fell three basis points to 1.10%, surrendering one basis point for the week. This left the 2s10s spread at 98 bps, unchanged for the week.

[…]
  • December retail sales declined 0.7% mln (Briefing.com consensus -0.2%) and November retail sales were revised down to -1.4% from -1.1%. Excluding autos, December retail sales declined 1.4% m/m (Briefing.com consensus -0.2%) and were revised down to -1.3% from -0.9% for November.
  • […]
  • The Producer Price Index for final demand was up 0.3% m/m in December (Briefing.com consensus 0.4%) while the index for final demand, excluding food and energy, was up 0.1%, as expected. That left the yr/yr readings at just 0.8% and 1.2%, respectively.
  • […]
  • Industrial production increased 1.6% m/m in December (Briefing.com consensus 0.4%) following an upwardly revised 0.5% increase (from 0.4%) in November. The capacity utilization rate jumped to 74.5% (Briefing.com consensus 73.5%) from an upwardly revised 73.4% (from 73.3%) in November.
  • […]
  • The preliminary January reading for the University of Michigan Index of Consumer Sentiment checked in at 79.2 (Briefing.com consensus 80.0) versus the final reading of 80.7 for December.
  • […]
  • The Empire State Manufacturing Survey decreased to 3.5 in January (Briefing.com consensus 6.0) from 4.9 in December.
  • Business Inventories increased 0.5% in November (Briefing.com consensus 0.5%) after increasing a revised 0.8% (from 0.7%) in October.
[…]
  • Russell 2000 +7.5% YTD
  • Nasdaq Composite +0.9% YTD
  • Dow Jones Industrial Average +0.7% YTD
  • S&P 500 +0.3% YTD
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