Market Remarks

Morning Notes – Wednesday September 15, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM by four points
  • The odds are for a sideways to an up day – watch for a break below 4431.50 for a change of fortunes
  • Key economic data report due during the day:
    • Empire State Manufacturing Index ( 34.3 vs. 18.1 est.; prev. 18.3) at 8:30 AM
    • Import Prices ( -0.3% vs. 0.3% est.; prev. 0.3% ) at 8:30 AM
    • Industrial Production ( 0.5% est.; prev. 0.9%) at 9:15 AM
    • Capacity Utilization ( 76.3% est.; prev. 76.1%) at 9:15 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4435.71, 4432.63, and 4425.32
  • Critical resistance levels for S&P 500 are 4455.10, 4465.66, and 4485.68
  • Key levels for E-mini futures: break above 4448.50, the high of 5:30 AM and break below 4431.50, the low of 10:00 PM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2021) closed at 4435.75 and the index closed at 4443.05 – a spread of about -7.25 points; futures closed at 4434.75 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures are mixed – at 8:00 AM, S&P 500 futures were up +2.75; Dow down by -22; and NASDAQ up by +21.00

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai and Seoul closed higher
  • European markets are lower
  • Currencies (from two weeks ago):
    Up Down
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • Dollar index
    • EUR/USD
    • USD/JPY
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.277%, down -2.7 basis points from two weeks ago;
    • 30-years is at 1.8550%, down -7.7 basis points;
    • 2-years yield is at 0.217%, up +1.0 basis points;
    • The 10-Year-&-2-Year spread is at 1.060, down from 1.097
  • VIX
    • At 19.21 @ 7:00 AM; down from the last close; above 5-day SMA;
    • Recent high =  24.74 on August 19; low =  15.19 on August 13
    • Sentiment: Risk-Neutral-Off

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

Monthly
  • Confirmed Uptrend
  • August 2021 was a green candle with small upper and lower shadows; at all-time closing and intra-month highs;
    • Stochastic (9, 1, 3): %K above %D near 100;
    • RSI-9 above 80;
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows
Weekly:
  • The week ending on September 10 was a relatively large red candle small almost no upper and lower shadows; near all-time highs
    • Stochastic (9,1, 3): %K crossed below %D from near 100
    • RSI-9 has declined to near 60
  • The week was down -76.85 or -1.7%; the 5-week ATR is 68.41
  • A down week; second in the last five weeks, and fourth in the last ten weeks
  • The weekly pivot point=4483.87, R1=4510.09, R2=4561.59; S1=4432.37, S2=4406.15; S1/S2/S3 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 following a relatively small Harami Doji
    • Stochastic (9, 1, 3): %K is crossing below %D near 0;
    • RSI-9 turned below 40; 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)
  • Drifting down from 4548.00 at 8:00 AM on September 6 – lower highs and lower lows;
    • RSI-21 is around 35
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Trending down since 9:30 AM on September 6;  breaking below an up-sloping flag
    • RSI-21 is moving below 50
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up sideways since 9:45 PM;
  • The Bollinger Band is expanding since 6:15 AM with price at the lower bound
    • Stochastic (9, 1, 3): %K crisscrossing %D higher since 7:00 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Tuesday, September 14 in lower volume. Indices opened higher but then traded down for the rest of the day closing near the lows. All S&P sectors closed lower.

From Briefing.com:

The S&P 500 decreased 0.6% but found some support close to its 50-day moving average (4429). The Nasdaq Composite declined 0.5%, the Dow Jones Industrial Average declined 0.8%, and the Russell 2000 declined 1.4%. […]

All 11 S&P 500 sectors closed lower, with the cyclical energy (-1.6%), financials (-1.4%), industrials (-1.2%), and materials (-1.2%) sectors losing at least 1.0%. The information technology (-0.1%) and health care (-0.1%) sectors outperformed on a relative basis with 0.1% declines.

[…]

The 2s-10s spread in the Treasury market compressed by five basis points, which acted as a headwind for PNC and the bank stocks. The 10-yr yield settled lower by five basis points to 1.28% after touching 1.35% prior to the CPI report, while the 2-yr yield was unchanged at 0.21%. The U.S. Dollar Index was little changed at 92.66.

[…]
  • Total CPI increased 0.3% month-over-month (Briefing.com consensus +0.4%) while core CPI, which excludes food and energy, was up a tame 0.1% (Briefing.com consensus +0.3%). That left total CPI up 5.3% year-over-year, versus 5.4% in July, and core CPI up 4.0% versus 4.3% in July.
  • […]
  • The NFIB Small Business Optimism Index increased to 100.1 in August from 99.7 in July,
[…]
  • S&P 500 +18.3% YTD
  • Nasdaq Composite +16.7% YTD
  • Dow Jones Industrial Average +13.0% YTD
  • Russell 2000 +11.9% YTD

Overseas: 

  • Europe: DAX +0.1%, FTSE -0.5%, CAC -0.4%
  • Asia: Nikkei +0.7%, Hang Seng -1.2%, Shanghai -1.4%

Commodities: 

  • Crude Oil -0.01 @ 70.44
  • Nat Gas +0.08 @ 5.28
  • Gold +13.00 @ 1807.30
  • Silver -0.29 @ 23.91
  • Copper -0.05 @ 4.32
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