Market Remarks

Morning Notes – Wednesday February 24, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed;
  • Futures are declining since 7:45 from a high of 3896.50, a resistance zone; gave up all pre-open gains
  • The odds are for a sideways day within a large range – watch for a break above 3896.50 and break below 3851.75 for clarity
  • Key economic data report due during the day:
    • New Home Sales ( 853K vs. 1.0% est.; prev. 842K) at 10:00 AM
    • Fed Chair Powell’s Testimony

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3854.79, 3832.56, and 3805.59
  • Critical resistance levels for S&P 500 are 3895.95, 3902.92, and 3916.23
  • Key levels for E-mini futures: break above 3896.50, the high of 7:00 AM and break below 3851.75, the low of 1:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2021) closed at 3878.00 and the index closed at 3881.37 – a spread of about -3.50 points; futures closed at 3878.00 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are mixed – at 8:45 AM, S&P 500 futures were up by 1.00; Dow down by -24, and NASDAQ down by -27.50

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai and Singapore closed up
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.396%, up 23.9 BP from two weeks ago;
    • 30-years is at 2.262%, up 31.5 BP;
    • 2-years yield is at 0.1276%, up 0.228 BP;
    • The 10-Year-&-2-Year spread is at 1.276, up from 1.048
  • VIX
    • At 23.26 @ 6:45 AM; up from the last close; above 5-day SMA;
    • Recent high =  27.01 on February 23; 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 19 was a Dark Cloud Cover candle from the all-time highs with small upper and lower shadows;
    • Stochastic (9,1, 3): %K is turning below %D from near 100
    • RSI (9) is turning down from near 70
  • The week was down -28.12 or -0.7%; the 5-week ATR is 113.60
  • A down week; second in the last five weeks and fourth in the last ten weeks
  • The weekly week pivot point=3914.06, R1=3943.08, R2=3979.46; S1=3877.68, S2=3848.66; S1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green candle like a Hammer pattern with small upper shadow and  long-legged lower shadow
  • 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  crossing above %D; potential Bullish Divergence
    • RSI-9 turning up from below 50; below 8-day EMA
  • At 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Broke below the neckline of an uneven Head-&-Shoulder pattern and turned back up from near  the 100% extension target; approaching the downtrend line from the all-time high
    • RSI-21 rising since 6:00 AM on Tuesday from below 25; made a knee above 50; above 55
  • Above EMA20, below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
    • Trending lower since 11:00 PM on February 15; bouncing up since 9:30 AM on Tuesday; approaching a downtrend line from the all-time high
      • RSI-21 rising from below 30 in a zig-zag pattern; near 60
      • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up  since 4:00 AM;
  • The Bollinger Band is stable but relatively large; price declined after walking up the upper band to the lower band
    • Stochastic (9, 1, 3): %K is below %D around 20;
  • Bias: Side

Previous Session

Major U.S. indices closed mixed on Tuesday, February 23 in mostly higher volume. S&P 500, Dow Jones Industrial Average, Dow Jones Transportation Average, and NYSE Composite closed higher. DTRAN traded in lower volume. Indices are near all-time highs. Indices opened lower and then traded down in early morning trading making the day’s lows in the first hour. Then they turned around and mostly closed traded higher for the rest of the day, closing in the upper half of the day’s range.

From Briefing.com:

The S&P 500 increased 0.1% on Tuesday, overcoming an early 1.8% decline in one of its more resilient sessions of the year. The Dow Jones Industrial Average increased 0.1% after being down 1.2% intraday, while the Nasdaq Composite (-0.5%) and Russell 2000 (-0.9%) decreased modestly after both were down more than 3.5% intraday. […]

The U.S. Treasury market was a little more stable today, which might have supported risk sentiment. The 2-yr yield decreased one basis point to 0.10%, and the 10-yr yield decreased one basis point to 1.36%. The U.S. Dollar Index increased 0.2% to 90.14. WTI crude futures were little changed at $61.68/bbl.

[…]
  • The Conference Board’s Consumer Confidence Index increased to 91.3 in February (Briefing.com consensus 91.0) from a downwardly revised 88.9 (from 89.3) in January.
  • […]
  • The FHFA Housing Price Index increased 1.1% in February following a 1.0% increase in January.
  • The S&P Case-Shiller Home Price Index increased 10.1% in December (Briefing.com consensus 9.8%) following an upwardly revised 9.2% reading in November (from +9.1%).
[…]
  • Russell 2000 +13.0% YTD
  • Nasdaq Composite +4.5% YTD
  • S&P 500 +3.3% YTD
  • Dow Jones Industrial Average +3.0% YTD
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