Morning Notes – Thursday January 21, 2021

/ January 21, 2021

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 3850.00; watch for a break below 3840.00 for change of fortune
  • Key economic data report due during the day:
    • Philly Fed Manufacturing Index ( 11.2 est.; prev. 11.1) at 8:30 AM
    • Unemployment Claims ( 930K Est.; prev. 965K) at 8:30 AM
    • Building Permits ( 1.60M est.; prev. 1.64M) at 8:30 AM
    • Housing Starts ( 1.56M est.; prev. 1.55M) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3851.55, 3834.45 and 3816.22
  • Critical resistance levels for S&P 500 are 3859.75, 3868.99, and 3886.14
  • Key levels for E-mini futures: break above 3859.75, the high of 11:30 PM and break below 3847.75, the low of 3:15 AM and 3840.00, the low 4:30 PM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2021) closed at 3842.50 and the index closed at 3851.85 – a spread of about -9.50 points; futures closed at 3845.00 for the day; the fair value is -2.50
  • Pre-NYSE session open, futures are higher – at 7:45 AM, S&P 500 futures were up by +7.75; Dow by +56, and NASDAQ by +56.50

Markets Around The World

  • Markets in the East mostly higher – Hong Kong and Mumbai were down
  • European markets are mostly higher – France and Itlay are lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • EUR/USD
    • USD/JPY
    • USD/CAD
    • NZD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are higher
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.090%, up 4.8 BP from two weeks ago;
    • 30-years is at 1.842%, up 2.1 BP;
    • 2-years yield is at 0.145%, unchanged;
    • The 10-Year-&-2-Year spread is at 0.945, up from 0.897
  • VIX
    • At 21.35 @ 6:30 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 relatively large green candle that gapped up at the open with almost no upper and lower shadows; breaking above a trading range 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)
  • Broke above an un-even down-sloping flag;
    • RSI-21 declined from near 85 to below 80
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving up since 7:00 PM on Sunday; near the all-time high
  • RSI-21 declined from above 80 to near 60
    • %K is crossing below %D
    • At/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 down since 11:45 PM;
  • The Bollinger Band is narrowing
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Wednesday, January 20 in mostly higher volume. Dow Jones Transportation Average traded in lower volume. Indices are trying to break above a small trading range that was in effect since January 7. Major indices closed at all-time highs. Most also made all-time intraday highs except Dow Jones Transportation Average and NYSE Composite.

From Briefing.com:

Each of the major indices closed at fresh record highs on Wednesday in a session that featured the mega-caps as leaders and Joe Biden inaugurated as the 46th president. The Nasdaq Composite (+2.0%) outperformed with a 2% gain, followed by gains in the S&P 500 (+1.4%), Dow Jones Industrial Average (+0.8%) and Russell 2000 (+0.4%).

[…]

In turn, the S&P 500 communication services (+3.6%), information technology (+2.0%), and consumer discretionary (+2.3%) sectors claimed today’s top spots.

Every other sector, except financials (-0.5%), as well as small-cap and mid-cap stocks contributed to the steady advance, albeit to a lesser extent.

[…]

U.S. Treasuries finished little changed in a tight-ranged session. The 2-yr yield decreased one basis point to 0.12%, and the 10-yr yield remained unchanged at 1.09%. The U.S. Dollar Index finished little changed at 90.46. WTI crude futures increased 0.6%, or $0.30, to $53.28/bbl.

[…]
  • The NAHB Housing Market Index decreased to 83 in January (Briefing.com consensus 88) from 86 in December.
  • The weekly MBA Mortgage Applications Index decreased 1.9% following a 16.7% spike in the prior week.
[…]
  • Russell 2000 +9.4% YTD
  • Nasdaq Composite +4.4% YTD
  • S&P 500 +2.6% YTD
  • Dow Jones Industrial Average +1.9% YTD
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