Market Remarks

Morning Notes – Tuesday March 23, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down-to-sideways day – watch for a break above 3924.75 and a break below 3908.25 for clarity
  • Key economic data report due during the day:
    • Current Account (-188B vs. est. -189B; prev. -181B) at 8:30 AM
    • New Home Sales ( 872K est.; prev. 923K) at 10:00 AM
    • Richmond Manufacturing Index ( 15 est.; prev. 14) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3911.67, 3899.15, and 3886.75
  • Critical resistance levels for S&P 500 are 3947.21, 3955.31, and 3969.62
  • Key levels for E-mini futures: break above 3924.75, the high of 3:15 AM and break below 3908.25, the low of 6:15 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (June 2021) closed at 3929.50 and the index closed at 3940.59 – a spread of about -11.50 points; futures closed at 3930.00 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are mixed – at 8:30 AM, S&P 500 futures were down by -12.50; Dow down by -126, and NASDAQ up by +0.25

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai and Singapore were up
  • European markets are mostly lower – Itlay and Switzerland are lower
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • USD/CAD
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Most soft commodities are lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.684%, up 8.8 basis points from two weeks ago;
    • 30-years is at 2.383%, up 7.5 basis points;
    • 2-years yield is at 0.153%, down 1.6 basis points;
    • The 10-Year-&-2-Year spread is at 1.531, up from 1.427
  • VIX
    • At 19.17 @ 8:15 AM; up from the last close; above 5-day SMA;
    • Recent high =  23.90 on March 19; low =  18.87 on March 22
    • 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 19 was a small red spinning top Harami at all-time highs
    • Stochastic (9,1, 3): %K is crossing below %D around 75
    • RSI (9) is above 60 but turning down
  • The week was down -30.24 or -0.8%; the 5-week ATR is 126.76
  • A down week; third in the last five weeks, and fifth in the last ten weeks
  • The weekly week pivot point=3927.91, R1=3969.06, R2=4025.03; S1=3871.94, S2=3830.79; No pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green candle with almost no lower shadow and small lower shadow making a three-day Morning Star albeit not after a decline
    • 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  crossed above %D; above 50
    • RSI-9 just above 55; below 8-day EMA
  • Above 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Bouncing above after breaking below a support level around 3900.00 since 10:00 AM on Friday; broke the sequence of upper highs and upper lows since March 4;
    • RSI-21 declining from near 70 to below 50
  • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
    • Moving sideways since 3:00 PM on Friday between 3923.50 and 3875.00 – briefly breached the upper bound only to fall back in the range; A congestion zone spread over many days
      • RSI-21 just below 45
      • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 3:00 PM on Monday
  • The Bollinger Band was relatively stable
    • Stochastic (9, 1, 3): %K is above %D since 8:00 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Monday, March 22 in lower volume. Dow Jones Industrial Average, S&P 500, NASDAQ Composite, and Wilshire 5000 Total Market Index closed higher. Dow Jones Transportation Average, Russell 2000, and NYSE Composite closed lower.

From Briefing.com:

The S&P 500 advanced 0.7% on Monday, as quarter-end rebalancing efforts drove the mega-caps higher and suppressed Treasury yields, although it did close off session highs (+1.1%). The Nasdaq Composite increased 1.2%, while the Dow Jones Industrial Average increased just 0.3% and the Russell 2000 (-0.9%) fell victim to rebalancing activity. […]

In terms of sector performances, the information technology sector (+1.9%) was the most influential gainer given it’s the most heavily-weighted sector in the S&P 500. A strong showing from the semiconductor stocks supported the cause. The Philadelphia Semiconductor Index advanced 2.2%.

The consumer staples (+1.2%), real estate (+1.1%), health care (+0.9%), and communication services (+0.8%) sectors followed suit, but there were still more declining issues than advancing issues at the NYSE and Nasdaq. The financials (-1.3%), energy (-1.0%), industrials (-0.1%), and utilities (-0.1%) sectors closed lower.

[…]

The 2-yr yield was unchanged at 0.15%. The U.S. Dollar Index declined 0.1% to 91.80. WTI crude futures settled little changed at $61.47/bbl.

[…]
  • Existing home sales decreased 6.6% m/m in February to a seasonally adjusted annual rate of 6.22 million (Briefing.com consensus 6.50 million) from a downwardly revised 6.66 million (from 6.69 million) in January. Total sales in February were up 9.1% from a year ago.
[…]
  • Russell 2000 +14.8% YTD
  • Dow Jones Industrial Average +6.9% YTD
  • S&P 500 +4.9% YTD
  • Nasdaq Composite +3.8% YTD
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