Market Remarks

Morning Notes – Monday April 26, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for a sideways to an up day – watch for a break above 4176.00  and a break below 4163.75 for clarity
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4172.50, 4161.99, and 4153.26
  • Critical resistance levels for S&P 500 are 4194.17, 4203.30, and 4226.43
  • Key levels for E-mini futures: break above 4176.00, the high of 12:00 AM and break below 4163.75, the low of 6:00 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2021) closed at 4170.50 and the index closed at 4180.17 – a spread of about -9.75 points; futures closed at 4171.50 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures are mixed – at 8:45 AM, S&P 500 futures were up by +2.25; Dow up by +56, and NASDAQ down by -5.75

Markets Around The World

  • Markets in the East closed mixed
  • European markets are mostly higher
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are higher
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.579%, down -8.7 basis points from two weeks ago;
    • 30-years is at 2.251%, down -8.8 basis points;
    • 2-years yield is at 0.158%, up +0.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.421, down from 1.513
  • VIX
    • At 18.01 @ 7:45 AM; down from the last close; at 5-day SMA;
    • Recent high =  23.55 on March 25; low =  15.38 on April 14
    • Sentiment: Risk-Neutral-to-On

The trend and patterns on various time frames for S&P 500:

Monthly
  • Confirmed Uptrend
  • March 2021 was a green candle with a small upper shadow and a lower shadow almost equal to the real body; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 75; 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 April 23 was a Dragonfly Doji at all-time highs;
    • Stochastic (9,1, 3): %K is just below %D; near 100
    • RSI (9) is above 75
  • The week was down -5.30 or -0.1%; the 5-week ATR is 92.79
  • A down week; first in the last five weeks, and fourth in the last ten weeks
  • The weekly week pivot point=4164.24, R1=4210.10, R2=4240.03; S1=4134.31, S2=4088.45; S1 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 with almost no lower shadow and a small upper shadow
    • Broke above a symmetrical triangle at 3550.00 level on November 9; the 161.8% extension target near 4140.00 levels is achieved
    • %K has crossed above %D from below 30
    • RSI-9 is turning up; just above 65; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Drifting sideways since 10:00 AM on April 15 between 4185.00 and 4110.00; bouncing up since 2:00 PM on April 22 from lower bound to near the upper bound; Uptrend since 10:00 AM on March 25;
    • Broke above a down-sloping flag on March 26; the 100% extension target near 4100.00 is achieved; the 161.8% extension target is near 4260.00
    • RSI-21 drifting down from near 75 at 12:00 PM on Friday to just above 60
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving Sideways since 12:30 PM on Friday around 4170.00;
    • RSI-21 drifting down to just around 55
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 3:00 PM on Friday
  • The Bollinger Band is relatively stable and narrow
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Friday, April 23 in mostly lower volume.  Dow Jones Industrial Average traded in higher volume. Most major indices made Bullish Engulfing or similar bullish candlestick formations.

For the week major indices closed mixed in higher volume. Russell 2000, Dow Jones Transportations Average, and NYSE Composite closed higher. Markets in Asia and Europe were mostly lower. The dollar index and precious metals down and most other commodities were up. The US Treasury yields nudged down.

From Briefing.com:

The S&P 500 advanced 1.1% on Friday, recouping all of yesterday’s tax-related decline, as investors bought the dip in most sectors of the market. The Nasdaq Composite (+1.4%) and Russell 2000 (+1.8%) outpaced the benchmark index while the Dow Jones Industrial Average trailed with a 0.7% gain. […]

Gains were spread across nine of the 11 S&P 500 sectors in a steady advance led by the financials (+1.9%), materials (+1.7%), and information technology (+1.4%) sectors. The resilient nature of the market presumably rekindled a fear of missing out on further gains and possibly short-covering activity.

[…]

The 2-yr yield increased one basis point to 0.15%, and the 10-yr yield increased one basis point to 1.57%. The U.S. Dollar Index declined 0.6% to 90.82.

WTI crude futures settled higher by 1.1%, or $0.70, to $62.15/bbl. On a related note, California Governor Newsome announced that the state will stop issuing new fracking permits by 2024.

[…]
  • New home sales surged 20.7% month-over-month in March to a seasonally adjusted annual rate of 1.021 million (Briefing.com consensus 912,000) from an upwardly revised 846,000 (from 775,000) in February. March marked the highest annual rate for new home sales since August 2006. On a yr/yr basis, new home sales were up a whopping 66.8%, having lapped a very depressed comparison period due to the pandemic.
  • […]
  • The preliminary IHS Markit Manufacturing PMI for April increased to 60.6 from 59.1 in March. The preliminary IHS Markit Services PMI for April increased to 63.1 from 60.4 in March.
[…]
  • Russell 2000 +15.0% YTD
  • S&P 500 +11.3% YTD
  • Dow Jones Industrial Average +11.2% YTD
  • Nasdaq Composite +8.8% YTD
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