Morning Notes – Thursday March 18, 2021

/ March 18, 2021

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down day – watch for a break above 3952.75 for a change of sentiments
  • Key economic data report due during the day:
    • Philly Fed Manufacturing PMI ( 51.8 vs. 22.5 est.; prev. 23.1) at 8:30 AM
    • Unemployment Claims ( 770K vs. 704K est.; prev. 712K) at 8:30 AM
    • CB Leading Index ( 0.3% est.; prev. 0.5%) 10 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3935.74, 3923.54, and 3915.21
  • Critical resistance levels for S&P 500 are 3953.97, 3967.15, and 3983.87
  • Key levels for E-mini futures: break above 3952.75, the high of 6:45 AM and break below 3928.50, the low of 1:45 PM on Wednesday

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2021) closed at 3964.00 and the index closed at 3974.12 – a spread of about -10.25 points; futures closed at 3963.50 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are mostly down – at 8:00 AM, S&P 500 futures were down by -22.75; Dow up by +3, and NASDAQ down by -200.75

Markets Around The World

  • Markets in the East closed mostly higher – Sydney and Mumbai were down
  • European markets are mostly higher
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are mostly higher
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.641%, up 17.1 basis points from two weeks ago;
    • 30-years is at 2.437%, up 18.5 basis points;
    • 2-years yield is at 0.149%, unchanged;
    • The 10-Year-&-2-Year spread is at 1.492, up from 1.321
  • VIX
    • At 19.53 @ 6:45 AM; up from the last close; at/below 5-day SMA;
    • Recent high =  31.90 on March 4; low =  18.95 on March 18
    • Sentiment: Risk-Off-to-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 March 12 was a large green candle with small lower and upper shadows at all-time highs
    • Stochastic (9,1, 3): %K is above %D above 90
    • RSI (9) is above 65
  • The week was up +101.40 or +2.6%; the 5-week ATR is 117.80
  • An up week; third in the last five weeks, and sixth in the last ten weeks
  • The weekly week pivot point=3907.62, R1=3955.99, R2=4048.64; S1=3854.97, S2=3766.60; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A Bullish Engulfing candle at all-time highs 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 at/below %D; above 90
    • RSI-9 above 65; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Bounced up from EMA50 to be highs but then retreated back to it; sequence of upper highs and upper lows since March 4 and a move below 3925.00 will break the sequence
    • RSI-21 below 40 from above 70
  • Below EMA20 but at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
    • Declined from the all-time high of 3978.50 at 9:30 PM to 3935, just above the lower bound of an up-sloping flag
      • RSI-21 just below 40
      • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 0:30 AM;
  • The Bollinger Band is expanding since 3:30 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D below 20
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Wednesday, March 17 in mostly higher volume. Dow Jones Transportation Average traded in lower volume. Major indices are at or near all-time highs. Indices opened lower and then mostly traded sideways till 2:00 PM when they advanced and closed near the highs for the day.

From Briefing.com:

The S&P 500 (+0.3%) and Dow Jones Industrial Average (+0.6%) closed at record highs on Wednesday, as the market reacted positively to the Fed’s dovish policy statement in the afternoon. The Nasdaq Composite (+0.4%) and Russell 2000 (+0.7%) also posted modest gains, overcoming 1.5% and 1.3% intraday declines, respectively.

[…]

The cyclically-oriented consumer discretionary (+1.4%), industrials (+1.1%), energy (+0.9%), materials (+0.9%), and financials (+0.7%) sectors provided the leadership, while buying interest evaded the utilities sector (-1.6%).

The 10-yr yield settled at 1.64%, or two basis points above yesterday’s settlement level. The 2-yr yield declined one basis point to 0.13%. WTI crude futures settled lower by 0.3%, or $0.20, to $64.61/bbl.

[…]
  • Housing starts declined 10.3% month-over-month in February to a seasonally adjusted annual rate of 1.421 million units (Briefing.com consensus 1.550 million) and building permits declined 10.8% month-over-month to a seasonally adjusted annual rate of 1.682 million (Briefing.com consensus 1.750 million).
  • […]
  • The MBA Mortgage Applications Index decreased 2.2% following a 1.3% decline in the prior week.
[…]
  • Russell 2000 +18.3% YTD
  • Dow Jones Industrial Average +7.9% YTD
  • S&P 500 +5.8% YTD
  • Nasdaq Composite +4.9% YTD
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