Morning Notes – Friday March 26, 2021

/ March 26, 2021

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up day with volatility – watch for a break below 3904.00 for a change in sentiments
  • Key economic data report due during the day:
    • Core PCE Index ( 0.1% vs. 0.1% est.; prev. 0.3% ) at 8:30 AM
    • Goods Trade Balance ( -86.7B vs. -85.3B est.; prev. -83.7B) at 8:30 AM
    • Personal Income ( -7.1% vs. -7.3% est.; prev. 10.0%) at 8:30 AM
    • Personal Spending ( -1.0% vs. -0.8% est.; prev. 2.4%) at 8:30 AM
    • Prelim Wholesale Invetories ( 0.5% vs. 1.2% est.; 1.3%) at 8:30 AM
    • Revised UoM Consumer Sentiment ( 83.6 est.; prev. 83.0) at 10:00 AM
    • Revised UoM Inflation Expectations ( prev. 3.1%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3909.43, 3899.08, and 3880.74
  • Critical resistance levels for S&P 500 are 3919.54, 3928.76, and 3927.27
  • Key levels for E-mini futures: break above 3921.50, the high of 2:00 AM; and break below 3904.00, the low 8:15 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (June 2021) closed at 3900.75 and the index closed at 3909.52 – a spread of about -8.75 points; futures closed at 3900.50 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are mixed – at 8:30 AM, S&P 500 futures were up by +7.75; Dow up by +160, and NASDAQ down by -41.50

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • INR/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 1.665%, up 13.8 basis points from two weeks ago;
    • 30-years is at 2.384%, up 10.3 basis points;
    • 2-years yield is at 0.145%, down 0.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.520, up from 1.378
  • VIX
    • At 19.78 @ 8:00 AM; down/unchanged 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 Piercing candle with small upper and lower shadows; near all-time highs; bouncing up from 50-day EMA
    • 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 from below 5
    • RSI-9 turning up to 50; below 8-day EMA
  • At/below 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Bouncing off from below 3850.00, near a support zone – to above 3900.00; near the upper bound of an emerging down-sloping flag; the break below a symmetrical triangle reversed after achieving the 61.8% extension target
    • RSI-21 declined from above 70 to just above 50
  • At/above EMA10 of EMA50, which is above EMA20
  • Bias: Side-Down
30-Minute (E-mini futures)
    • Drifting down since 2:00 AM from 3921.50 to near 3900.00
      • RSI-21 above 50
      • At/above EMA10 of EMA50, which is below EMA20
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting sideways-to-down since 2:00 AM
  • The Bollinger Band is relatively stable
    • Stochastic (9, 1, 3): %K is crisscrossing %D above
  • Bias: Down-Side

Previous Session

Major U.S. indices closed higher on Thursday, March 25 in higher volume. Indices gapped down at the open and then traded lower near 3850.00. They Turned around in late morning trading and for the rest of dad moved higher. All but one S&P sectors – Technology – closed higher.

From Briefing.com:

The S&P 500 increased 0.5% on Thursday amid cyclical leadership and technical support. The benchmark index briefly slipped below its 50-day moving average (3871) with an early 0.9% decline, but investors stepped in faithfully to buy the dip. The Nasdaq Composite (+0.1%) and Dow Jones Industrial Average (+0.6%) also reclaimed early losses and some.

The Russell 2000 rose 2.3% after finding support at the 2100 level, which represented an 8% decline in just over three sessions.

[…]

A pro-cyclical trade emerged during the day, as the industrials (+1.6%), financials (+1.6%), and materials (+1.4%) sectors paced the rebound effort on no specific news catalysts.

[…]

U.S. Treasuries finished mixed and little changed. The 10-yr yield was unchanged at 1.61% after trading slightly lower amid the negative start in equities, while the 2-yr yield decreased one basis point to 0.13%. The U.S. Dollar Index increased 0.4% to 92.87.

[…]
  • Initial jobless claims for the week ending March 20 declined by 97,000 to 684,000 (Briefing.com consensus 710,000). Continuing claims for the week ending March 13 decreased by 264,000 to 3.870 million.
  • […]
  • The third estimate for Q4 GDP was revised up to 4.3% (Briefing.com consensus 4.1%) from 4.1% while the GDP Price Deflator was revised down to 2.0% (Briefing.com consensus 2.1%) from 2.1%.
[…]
  • Russell 2000 +10.6% YTD
  • Dow Jones Industrial Average +6.6% YTD
  • S&P 500 +4.1% YTD
  • Nasdaq Composite +0.7% YTD
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