Market Remarks

Morning Notes – Friday March 5, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • Futures rising since 3:15 AM from a low of 3739.00 to around 3775.00 level
  • The daily bias is down
  • The odds are for a choppy day with a good chance of an up day – watch for a break below 3759.00 for a change of fortune
  • Key economic data report due during the day:
    • Non-Farm Employment Change ( 197K est.; prev. 49K) at 8:30 AM
    • Average Hourly Earnings ( 0.2% est.; prev. 0.2%) at 8:30 AM
    • Unemployment Rate ( 6.3% est.; prev. 6.3%) at 8:30 AM
    • Trade Balance (-67.5B est.; prev. -66.6B) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3749.28, 3723.45, and 3694.12
  • Critical resistance levels for S&P 500 are 3779.28, 3790.08, and 3811.73
  • Key levels for E-mini futures: break above 3781.75, the high of 8:00 AM and break below 3759.00, the low of 5:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (March 2021) closed at 3769.50 and the index closed at 3768.47 – a spread of about +1.00 points; futures closed at 3765.50 for the day; the fair value is +4.00
  • Pre-NYSE session open, futures are higher – at 7:45 AM, S&P 500 futures were up by +8.25; Dow by +46, and NASDAQ by +26.50

Markets Around The World

  • Markets in the East closed lower
  • European markets are mixed – the U.K., Spain, and Italy are higher; Germany, France, Switzerland, and STOXX 600 are lower
  • 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 lower
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.550%, up 26.3 BP from two weeks ago;
    • 30-years is at 2.309%, up 23.3 BP;
    • 2-years yield is at 0.157%, up 5.2 BP;
    • The 10-Year-&-2-Year spread is at 1.393, up from 1.182
  • VIX
    • At 27.68 @ 6:45 AM; down from the last close; above 5-day SMA;
    • Recent high =  31.90 on March 4; low =  19.69 on February 10
    • Sentiment: Risk-On-Neutral

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 relatively large red candle with larger lower shadow than upper shadow; broken below a support level;
    • 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; just above 20
    • RSI-9 below 40; below 8-day EMA
  • Below 20-day EMA and 50-day EMA; above 100-day, and 200-day SMA
  • In Correction
2-Hour (E-mini futures)
  • Moving sideways to up since 2:00 PM on Thursday after bouncing up from 3720.00;
    • Lower highs and lower lows since making the all-time high on February 15
    • RSI-21 just below 50 from below 20 and after making a Bullish Divergence
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
    • Broke above a symmetrical triangle near the lows; broke below a Descending Triangle on Wednesday and an upsloping Flag on Thursday; bouncing up since 2:00 PM on Thursday
      • RSI-21 near 50; Bullish Engulfing at 11:00 PM
      • At/above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 10:30 PM;
  • The Bollinger Band is expanding since 6:15 PM with price walking up the upper band
    • Stochastic (9, 1, 3): %K is crisscrossing %D above 80
  • Bias: Down-Side

Previous Session

Major U.S. indices closed sharply lower on Thursday, March 4 in higher volume. The indices opened lower and then bounced up a little and briefly traded in positive territory before giving up the ghost and falling to near 37250.00. They closed higher than the lows in the end. Indices have broken below major support levels. All but one S&P sectors – Energy – closed lower

From Briefing.com:

The S&P 500 fell 1.3% on Thursday, although it was down as much as 2.5%, as long-term interest rates resumed their recent rise following some comments from Fed Chair Powell. The Nasdaq Composite (-2.1%) and Russell 2000 (-2.8%) dropped more than 2.0%, while the Dow Jones Industrial Average declined 1.1%. […]

The information technology (-2.3%), materials (-2.1%), and consumer discretionary (-2.0%) sectors declined at least 2.0%. The energy sector (+2.5%), however, was on its own path today, closing higher by 2.5%. The final standings improved in the last two hours of trading as yields stabilized.

[…]

The 2-yr yield was unchanged at 0.14%. The U.S. Dollar Index advanced 0.7% to 91.62. The CBOE Volatility Index increased 7.1% to 28.57.

[…]
  • Initial jobless claims for the week ending February 27 were up 9,000 to 745,000 (Briefing.com consensus 725,000). Continuing claims for the week ending February 20 were down 124,000 to 4.295 million.
  • […]
  • Q4 Productivity decreased from the previous quarter at an annual rate of 4.2% (Briefing.com consensus -4.8%) from the preliminary estimate of -4.8%, according to the revised estimate. Unit labor costs jumped at an annual rate of 6.0% (Briefing.com consensus 6.8%) versus the previously published annual rate of 6.8%.
  • […]
  • Factory orders for manufactured goods increased 2.6% m/m in January (Briefing.com consensus 2.0%) after increasing an upwardly revised 1.6% (from 1.1%) in December. This is the ninth consecutive monthly increase in factory orders.
[…]
  • Russell 2000 +8.7% YTD
  • Dow Jones Industrial Average +1.0% YTD
  • S&P 500 +0.3% YTD
  • Nasdaq Composite -1.3% YTD
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