Market Remarks

Morning Notes – Wednesday March 24, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up day with volatility – watch for a break below 3908.50 for a change of sentiments
  • Key economic data report due during the day:
    • Durable Goods ( -0.9% vs. 0.7% est.; prev. 3.4% ) at 8:30 AM
    • Core Durable Goods ( -1.1% vs. 0.6% est.; prev. 1.3%) at 8:30 AM
    • Flash Manufacturing PMI (59.6 est.; prev. 58.6) at 10:00 AM
    • Flash Services PMI ( 60.1 est.; prev. 59.8 ) at 10:00 AM
    • Fed Chair’s Senate Testimony

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3901.57, 3886.75, and 3873.94
  • Critical resistance levels for S&P 500 are 3927.35, 3937.35, and 3947.73
  • Key levels for E-mini futures: break above 3919.00, the high of 7:15 AM and break below 3911.50, the low of 7:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (June 2021) closed at 3899.00 and the index closed at 3910.52 – a spread of about -11.50 points; futures closed at 3899.75 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures are higher – at 7:45 AM, S&P 500 futures were up by +11.00; Dow by +87, and NASDAQ by +81.75

Markets Around The World

  • Markets in the East closed mostly lower – Sydney and Singapore were up
  • European markets are lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.638%, up 9.2 basis points from two weeks ago;
    • 30-years is at 2.348%, up 8.9 basis points;
    • 2-years yield is at 0.151%, down 1.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.487, up from 1.381
  • VIX
    • At 20.19 @ 6:45 AM; down from the last close; at/below 5-day SMA;
    • Recent high =  23.90 on March 19; low =  18.87 on March 22
    • Sentiment: Risk-On-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 Bearish Engulfing candle with small upper and lower shadows; near all-time highs;
    • 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 25
    • RSI-9 at 55; below 8-day EMA
  • At/above 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving within a symmetrical triangle after declining from the all-time highs on March 17; broke the sequence of upper highs and upper lows since March 4;
    • RSI-21 above 50 from below 35
  • At/above EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
    • Moving sideways since 2:30 PM on March 18 between 3945.00 and 3875.00; in a past congestion zone
      • RSI-21 just above 50 but turning down
      • Above EMA10 of EMA50, which is above EMA20
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 4:00 AM
  • The Bollinger Band is expanding since 4:00 AM
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Tuesday, March 23 in mostly higher volume. NASDAQ Composite traded in lower volume. Indices opened lower and then briefly bounced up to green but then declined and closed near the lows of the day.

From Briefing.com:

The S&P 500 (-0.8%), Nasdaq Composite (-1.1%), and Dow Jones Industrial Average (-0.9%) declined about 1% on Tuesday in a defensive session. The small-cap Russell 2000 dropped 3.6% to close below its 50-day moving average (2217) for the first time since the end of October.

Eight of the 11 S&P 500 sectors closed lower, with the cyclical materials (-2.1%), industrials (-1.8%), financials (-1.4%), and energy (-1.4%) sectors pacing the laggards. The defensive-oriented utilities (+1.5%), consumer staples (+0.4%), and real estate (+0.4%) sectors closed higher alongside some of the mega-caps and longer-dated Treasuries.

[…]

The 10-yr yield declined five basis points to 1.64%, while the 2-yr yield remained unchanged at 0.15%. The U.S. Dollar Index advanced 0.7% to 92.38. WTI crude futures ($57.75/bbl, -3.72, -6.1%) dropped 6%, revisiting a six-week low.

[…]
  • New home sales declined 18.2% m/m in February to a seasonally adjusted annual rate of 775,000 (Briefing.com consensus 867,000) from an upwardly revised 948,000 (from 923,000) in January. On a yr/yr basis, new home sales were up 8.2%.
  • […]
  • The current account deficit for the fourth quarter totaled $188.5 billion (Briefing.com consensus -$190.0 billion). The third quarter deficit was revised to $196.1 billion from $178.5 billion.
[…]
  • Russell 2000 +10.7% YTD
  • Dow Jones Industrial Average +5.9% YTD
  • S&P 500 +4.1% YTD
  • Nasdaq Composite +2.6% YTD
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