Market Remarks

Morning Notes – Thursday March 11, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • The daily bias is shifting from sideways to up
  • The odds are for an up – watch for a break below 3911.00 for change of fortunes
  • Key economic data report due during the day:
    • ECB Monetary Policy Statement at 7:45 AM
    • ECB Press Conference at 8:30 AM
    • Unemployment Claims ( 730K est.; prev. 745K ) at 8:30 AM;
    • JOLTS Jobs Openings ( 6.65M est.; prev. 6.65M) at 10:00 AM
    • 30-yr Bond Auction at 1:01 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3906.38, 3894.16, and 3885.73
  • Critical resistance levels for S&P 500 are 3928.65, 3940.88, and 3950.06
  • Key levels for E-mini futures: break above 3929.00, the high of 5:45 AM and break below 3911.00, the low of 11:00 PM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2021) closed at 3897.25 and the index closed at 3898.81 – a spread of about -1.50 points; futures closed at 3896.50 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are higher – at 7:30 AM, S&P 500 futures were up by +26.50; Dow by +108, and NASDAQ by +210.00

Markets Around The World

  • Markets in the East closed mostly higher – Sydney was down and Mumbai was closed
  • European markets are mixed – Germany, the UK, and Switzerland are down
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are lower
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.520%, up 13.1 basis points from two weeks ago;
    • 30-years is at 2.243%, up 0.1 basis points;
    • 2-years yield is at 0.161%, up 3.2 basis points;
    • The 10-Year-&-2-Year spread is at 1.359, up from 1.260
  • VIX
    • At 22.23 @ 6:45 AM; down from the last close; below 5-day SMA;
    • Recent high =  31.90 on March 4; 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 March 5 was a Doji Harami candle
    • Stochastic (9,1, 3): %K is below %D but turning up
    • RSI (9) is near 60
  • The week was up +30.79 or +0.8%; the 5-week ATR is 125.66
  • An up week; third in the last five weeks, and sixth in the last ten weeks
  • The weekly week pivot point=3826.59, R1=3929.85, R2=4017.75; S1=3738.69, S2=3635.43; S1/R1 pivot levels were breached
  • At/above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small Doji like candle with the upper shadow slightly bigger than the lower shadow; facing resistance at 3914.50, the high of March 1
    • 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 above %D moving higher;
    • RSI-9 above 50;
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Moving up since 12:00 PM on March 4; broke the sequence of lower highs and lower lows since making the all-time high on February 15; broke above the downtrend line from the all-time high;
    • RSI-21 approaching 70 from below 60
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
    • Moving up since 2:00 PM on Friday in large swings, which have reduced in magnitude;
      • RSI-21 moving above 60
      • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 3:00 AM on Wednesday;
  • The Bollinger Band is relatively narrow and stable
    • Stochastic (9, 1, 3): %K is above %D since 7:00 AM
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Wednesday, March 10 in lower volume. NASDAQ Composite closed down. Dow Jones Industrial Average made all-time highs. Indices are near all-time highs. NASDAQ Composite is showing the most weakness. All but one S&P sector – Technology – closed higher.

From Briefing.com:

The S&P 500 advanced 0.6% on Wednesday, as value and cyclical stocks reclaimed their recent leadership roles and inflation concerns were put on hold. The pro-cyclical trade disproportionally benefited the Dow Jones Industrial Average (+1.5%) and Russell 2000 (+1.8%), with the Dow setting intraday and closing record highs.

The Nasdaq Composite (-0.04%), however, closed slightly lower after being up as much as 1.6% intraday. The S&P 500 information technology sector (-0.4%) and Philadelphia Semiconductor Index (-1.8%) were other growth-stock pockets of weakness.

[…]

Ten of the 11 S&P 500 sectors closed higher, including the cyclical energy (+2.6%), financials (+1.9%), and materials (+1.6%) sectors atop the standings on the back of follow through from buyers.

[…]

The 10-yr yield decreased three basis points to 1.52%, with the market showing little reaction to the tepid $38 billion 10-yr note auction in the afternoon. The 2-yr yield decreased one basis point to 0.15%. The U.S. Dollar Index decreased 0.2% to 91.79. WTI crude futures increased 0.7%, or $0.43, to $64.45/bbl.

[…]
  • Total CPI increased 0.4% m/m, as expected, while core CPI, which excludes food and energy, rose 0.1% (Briefing.com consensus 0.2%). The monthly changes left total CPI up 1.7% yr/yr, versus 1.4% in January; however, the yr/yr increase in core CPI edged lower to 1.3% from 1.4% in January.
  • […]
  • The February Treasury Budget showed a $310.9 bln deficit, versus a $235.3 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the February deficit can’t be compared to the January deficit of $162.8 bln.
  • […]
  • The weekly MBA Mortgage Applications Index decreased 1.3% following a 0.5% increase in the prior week.
[…]
  • Russell 2000 +15.7% YTD
  • Dow Jones Industrial Average +5.5% YTD
  • S&P 500 +3.8% YTD
  • Nasdaq Composite +1.4% YTD
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