Market Remarks

Morning Notes – Monday March 1, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher; the daily bias is sideways to down
  • The odds are for an up day with a good chance of sideways to down move from the pre-open levels around 3850.00 – watch for a break above 3858.50 and break below 3843.25 for clarity
  • Key economic data report due during the day:
    • Final Manufacturing PMI (58.5 est.; prev. 58.5) at 9:45 AM
    • ISM Manufacturing PMI ( 58.7 est.; prev. 58.7) at 10:00 AM
    • Construction Spending ( 0.7% est.; prev. 1.0%) at 10:00 AM
    • ISM Manufacturing Prices ( 80.0 est.; prev. 82.1) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3902.92, 3895.95, and 3859.60
  • Critical resistance levels for S&P 500 are 3916.74, 3928.65, and 3933.61
  • Key levels for E-mini futures: break above 3924.75, the high of 6:00 AM and break below 3896.50, the high of 7:45 AM on Wednesday

Pre-Open

  • On Friday at 4:00 PM, S&P futures (March 2021) closed at 3805.50 and the index closed at 3811.15 – a spread of about -5.75 points; futures closed at 3809.25 for the day; the fair value is -3.75
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +44.00; Dow by +360, and NASDAQ by +165.50

Markets Around The World

  • Markets in the East closed higher – Seoul was closed
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.348%, up 22.9 BP from two weeks ago;
    • 30-years is at 2.217%, up 21.4 BP;
    • 2-years yield is at 0.1390%, up 3.0 BP;
    • The 10-Year-&-2-Year spread is at 1.300, up from 1.091
  • VIX
    • At 24.83 @ 8:15 AM; down from the last close; below 5-day SMA;
    • Recent high =  31.16 on February 25; low =  19.69 on February 10
    • 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 February 26 was a red candle with mall upper and lower shadows; a three-week Evening Star pattern is emerging
    • Stochastic (9,1, 3): %K is below %D, which is turning down and forming a Bearish Divergence
    • RSI (9) is below 60; potential Bearish Divergence emerging
  • The week was down -95.56 or -2.4%; the 5-week ATR is 122.78
  • A down week; second in a row, third in the last five weeks, and fifth in the last ten weeks
  • The weekly week pivot point=3843.11, R1=3896.69, R2=3982.22; S1=3757.58, S2=3704.00; S1/S2/S3 pivot levels were breached
  • At/above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A red spinning top with small upper and 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; below 20
    • RSI-9 near 40; below 8-day EMA
  • Below 20-day EMA; at/above 50-day EMA; above 100-day, and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Bouncing up from 3785.00 at 10:00 AM on Friday from a congestion area;
    • RSI-21 rising to just above 50; Bullish Divergence
  • At/below EMA20, which below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
    • Moving sideways within a congested area since 12:30 PM on Friday; near the upper range
      • RSI-21 trending up in a zig-zag manner; just above 50 from below 25
      • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 9:00 PM on February 25;
  • The Bollinger Band is narrowing
    • Stochastic (9, 1, 3): %K is crisscrossing %D; around 80;
  • Bias: Side

Previous Session

Major U.S. indices closed mostly lower on Friday, February 26 in mostly lower volume. NASDAQ Composite and Russell 2000 closed up. Dow Jones Industrial Average and S&P 500  traded in lower volume. Indices opened lower and then traded down for the day with a small bounce in the afternoon, which did not last. All S&P sectors closed lower.

For the week, major indices closed mostly own in higher volume. Dow Jones Transportation Average was up. Markets in Asia and Europe were mostly down. The dollar index was up and commodities were mixed. The US Treasury yields closed higher and all but one – Energy – S&P sectors closed down for the week.

From Briefing.com:

The S&P 500 decreased 0.5% on Friday in a mostly negative session. A modest bounce in the growth stocks lifted the Nasdaq Composite (+0.6%) to a positive close, while the Dow Jones Industrial Average fell 1.5% amid weakness in many of its value-oriented components. The Russell 2000 (+0.04%) finished little changed. […]

The 10-yr yield decreased six basis points to 1.46%. The 2-yr yield decreased three basis points to 0.13%. The U.S. Dollar Index rose 0.9% to 90.92.

[…]
  • Personal income, bolstered by government social benefits, soared 10.0% m/m in January (Briefing.com consensus 9.7%). Personal spending increased 2.4% m/m (Briefing.com consensus +2.3%). The PCE Price Index and Core PCE Price Index, which excludes food and energy, were both up 0.3%. That left yr/yr price changes at 1.5% (from 1.3% in December) and 1.5% (from 1.4% in December), respectively.
  • […]
  • The final reading for the February University of Michigan Index of Consumer Sentiment was revised up to 76.8 (Briefing.com consensus 76.4) from the preliminary reading of 76.2. The final February reading was below the final reading of 79.0 for January.
  • […]
  • The Chicago PMI for February decreased to 59.5 (Briefing.com consensus 60.0) from an unrevised 63.8 in December.
  • The Advance report for International Trade in Goods for January showed a deficit of $83.7 billion versus $83.2 billion in December. The Advance report for Retail Inventories for January decreased 0.6%, while the Advance report for Wholesale Inventories for January increased 1.3%.
[…]
  • Russell 2000 +11.5% YTD
  • Nasdaq Composite +2.4% YTD
  • S&P 500 +1.5% YTD
  • Dow Jones Industrial Average +1.1% YTD
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