Market Remarks

Morning Notes – Thursday May 13, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up day  with elevated volatility – watch for a break above 4177.25 and break below 4037.25 for clarity
  • Key economic data report due during the day:
    • PPI ( 0.3% est.; prev. 1.0% ) at 8:30 AM
    • Core PPI ( 0.4% est.; prev. 0.7%) at 8:30 AM\
    • Unemployment Claims ( 487K est.; prev. 498K ) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4056.88, 4034.44, and 4008.62;
  • Critical resistance levels for S&P 500 are 4084.67, 4094.77, and 4109.92
  • Key levels for E-mini futures: break above 4077.25, the high of 11:00 PM and break below 4037.25, the low of 6:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2021) closed at 4057.75 and the index closed at 4063.04 – a spread of about -5.75 points; futures closed at 4058.75 for the day; the fair value is -1.0
  • Pre-NYSE session open, futures are mixed – at 8:00 AM, S&P 500 futures were up by +1.25; Dow down by -80, and NASDAQ up by +59.50

Markets Around The World

  • Markets in the East closed lower – Mumbai and Singapore is closed
  • European markets are lower – Switzerland is closed
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • EUR/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.695%, up +7.5 basis points from two weeks ago;
    • 30-years is at 2.415%, up +11.5 basis points;
    • 2-years yield is at 0.157%, down -0.7 basis points;
    • The 10-Year-&-2-Year spread is at 1.538, up from 1.456
  • VIX
    • At 27.70 @ 6:45 AM; up from the last close; above 5-day SMA;
    • Recent high =  31.90 on March 4; low =  16.68 on May 7
    • Sentiment: Risk-Off

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 May 7 was a green candle with a small upper shadow and a lower shadow equal to one and half the size of the real body
    • Stochastic (9,1, 3): %K has crossed above %D;
    • RSI (9) is above 75
  • The week was up +51.43 or +1.2%; the 5-week ATR is 83.05
  • An up week; fourth in the last five weeks, and eight in the last ten weeks
  • The weekly week pivot point=4199.74, R1=4270.90, R2=4309.19; S1=4161.45, S2=4090.29; R1/R2/S1/S2 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A large red candle that gapped down at the open and did not fill the gap; small lower and upper shadows;
    • %K is below %D; below 5
    • RSI-9 is just above 30; below 8-day EMA
  • Below 20-day EMA; at/above 50-day EMA; above 100-day and 200-day SMA
  • Uptrend under Pressure
2-Hour (E-mini futures)
  • Moving down since 8:00 PM on May 4; broke below a major support level around 4110.00; achieved more than 50% Fibonacci retracement level of the up move from March 25 low – the 61.8% Fibonacci retracement level is around 3993.00
    • RSI-21 below 30
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Trending down since 8:00 PM on May 9 from the all-time high of 4238.25 to a low of 4029.25; moving sideways since 3:00 PM on Wednesday;
    • RSI-21 moved above 40 after making a Bullish Divergence at 4:30 AM
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 8:45 PM;
  • The Bollinger Band is expanded since 3:00 AM; price first moved along the lower band and is at upper band since 7:30 AM
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Wednesday, May 12 in mixed volume. Dow Jones Industrial Average and Dow Jones Transportation Average traded in lower volume. Indices gapped down at the open and then traded down for the rest of the day. All but one S&P sector – Energy – closed lower.

From Briefing.com:

The S&P 500 fell 2.1% on Wednesday in an orderly retreat, as inflation concerns were fueled by the noticeably hot Consumer Price Index (CPI) report for April. The Nasdaq Composite (-2.7%) and Russell 2000 (-3.3%) underperformed with steeper losses, while the Dow Jones Industrial Average declined 2.0%. […]

The inflation-sensitive 10-yr yield settled higher by eight basis points to 1.70% after trading flat prior to the report.

[…]

The energy sector (+0.04%) was up as much as 3.0% today, largely due to the continued rise in oil futures ($65.95/bbl, +0.70, +1.1%) and RBOB futures ($2.16/gal, +0.02, +0.9%), but barely closed higher.

[…]
  • Total CPI increased 0.8% month-over-month in April (Briefing.com consensus +0.2%) while core CPI, which excludes food and energy, surged 0.9% month-over-month (Briefing.com consensus +0.3%), driven by a 10.0% increase in used car prices. That was the largest monthly increase in core CPI since April 1982. On a year-over-year basis, total CPI was up 4.2% — the largest 12-month increase since September 2008 — and core CPI was up 3.0% versus 1.6% for the 12 months ending in March.
  • […]
  • The weekly MBA Mortgage Applications increased 2.1% following a 0.9% decline in the prior week.
[…]
  • Dow Jones Industrial Average +9.7% YTD
  • S&P 500 +8.2% YTD
  • Russell 2000 +8.1% YTD
  • Nasdaq Composite +1.1% YTD

Overseas: 

  • Europe: DAX +0.2%, FTSE +0.8%, CAC +0.2%
  • Asia: Nikkei -1.6%, Hang Seng +0.8%, Shanghai +0.6%

Commodities: 

  • Crude Oil +0.70 @ 65.95
  • Nat Gas +0.02 @ 2.97
  • Gold -11.80 @ 1823.10
  • Silver -0.40 @ 27.27
  • Copper -0.05 @ 4.74
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