Market Remarks

Morning Notes – Friday February 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 move from pre-open levels – watch for a break below 3903.50 for change of fortunes
  • Key economic data report due during the day:
    • Flash Manufacturing PMI ( 58.4 est.; prev. 59.2) at 9:45 AM
    • Flash Services PMI ( 57.9 est.; prev. 58.3) at 9:45 AM
    • Existing Home Sales ( 6.59M est.; prev. 6.76M ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3911.78, 3895.77, and 3885.38
  • Critical resistance levels for S&P 500 are 3927.60, 3940.88, and 3950.06
  • Key levels for E-mini futures: break above 3936.00, the high of 7:30 PM on February 17 and break below 3903.50, the low of 3:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (March 2021) closed at 3911.00 and the index closed at 3913.97 – a spread of about -3.00 points; futures closed at 3909.50 for the day; the fair value is +1.50
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +15.25; Dow by +87, and NASDAQ by +77.00

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, and Seoul closed up; Tokyo, Sydney, Mumbai, and Singapore closed down;
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • EUR/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are higher
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.287%, up 14.8 BP from two weeks ago;
    • 30-years is at 2.076%, up 14.3 BP;
    • 2-years yield is at 0.105%, down 2.0 BP;
    • The 10-Year-&-2-Year spread is at 1.182, up from 1.014
  • VIX
    • At 22.12 @ 7:30 AM; down from the last close; above 5-day SMA;
    • Recent high =  37.51 on January 29; low =  19.69 on February 10
    • Sentiment: Risk-Off

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 February 12 was a relatively small green candle at the all-time highs with almost no upper and lower shadows;
    • Stochastic (9,1, 3): %K is above %D; near 100
    • RSI (9) is near 70
  • The week was up +48.00 or +1.2%; the 5-week ATR is 115.53
  • An up week; third in the last five weeks and sixth in the last ten weeks
  • The weekly week pivot point=3919.00, R1=3953.06, R2=3971.29; S1=3900.77, S2=3866.71; No pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A relatively small Doji with small upper shadow and long-legged lower shadows
  • Broke above a symmetrical triangle at 3550.00 level on November 9; the 100% extension target near 3900.00 is achieved; 161.8% extension target is near 4140.00 levels
    • %K  is below %D; near 50;
    • RSI-9 is just above 60; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Bouncing up from a support level near 3878.50, the low of 10:00 AM on February 10; broke above a downtrend line from  the all-time high; trending up since 6:00 PM on January 31;
    • RSI-21 around 40 after making a Bullish Divergence at 10:00 AM on Thursday
  • At/above EMA10 of EMA50, which is above EMA20
  • Bias: Up-Side
30-Minute (E-mini futures)
    • Breaking above a downtrend line from the all-time high; essentially moving sideways to down since 11:00 PM on February 16
      • RSI-21 rising above 60 after making a Bullish Divergence at 10:00 PM
      • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 12:45 AM;
  • The Bollinger Band is stable but slightly expanded with price moving between middle and upper bands
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 80;
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Thursday, February 18 in mixed volume. Dow Jones Industrial Average, Dow Jones Transportation Average, and Russell 2000 traded in lower volume. Indices are near all-time highs and made candlestick formations. Indices opened lower and then traded down in the early trading before turning around late morning. For the rest of the day, they traded higher and closed near the highs for the day.

From Briefing.com:

The S&P 500 declined 0.4% on Thursday, although it was down as much as 1.2% in the morning. The Nasdaq Composite (-0.7%) and Dow Jones Industrial Average (-0.4%) also closed well off session lows, while the Russell 2000 (-1.7%) struggled throughout the session. […]

The information technology sector, for example, declined 0.5% after being down 1.7% intraday, and the consumer discretionary sector (+0.1%) overcame a 1.1% intraday decline.

[…]

The 2-yr yield was unchanged at 0.10%. The U.S. Dollar Index decreased 0.4% to 90.56. WTI crude futures decreased 1.2%, or $0.70, to $60.42/bbl.

[…]
  • Initial jobless claims for the week ending February 13 increased by 13,000 to 861,000 (Briefing.com consensus 775,000). Continuing claims for the week ending February 6 decreased by 64,000 to 4.494 million.
  • […]
  • Housing starts declined 6.0% m/m in January to a seasonally adjusted annual rate of 1.580 million units (Briefing.com consensus 1.670 million). Building permits increased 10.4% m/m to 1.881 million (Briefing.com consensus 1.670 million).
  • […]
  • The Philadelphia Fed Index decreased to 23.1 in February (Briefing.com consensus 15.0) from an unrevised 26.5 in January.
  • Import prices increased 1.4% in January while import prices excluding oil increased 0.8%. Export prices increased 2.5% in January while export prices excluding agriculture increased 2.2%.
[…]
  • Russell 2000 +12.3% YTD
  • Nasdaq Composite +7.6% YTD
  • S&P 500 +4.2% YTD
  • Dow Jones Industrial Average +2.9% YTD
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