Market Remarks

Morning Notes – Wednesday September 22, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM
  • The odds are for an up day with elevated volatility – watch for a break below 4355.50
  • Key economic data report due during the day:
    • Existing Home Sales ( 5.87M est; prev. 5.99M) at 10:00 AM
    • FOMC Statement, Funds Rate, and Economic Projections at 2:00 PM
    • Fed Press Conference at 2:30 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4353.40, 4347.96, and 4324.77
  • Critical resistance levels for S&P 500 are 4385.92, 4394.87, and 4402.95
  • Key levels for E-mini futures: break above 4371.25, the high of 6:30 AM and break below 4360.50, the low of 5:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2021) closed at 4342.75 and the index closed at 4354.19 – a spread of about -11.50 points; futures closed at 4343.25 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up +22.00; Dow by +192; and NASDAQ by +42.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai and Sydney closed higher; Tokyo, Mumbai, and Seoul closed lower; Hong Kong and Seoul were closed for trading
  • European markets are higher
  • 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 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 1.324%, down -4.6 basis points from two weeks ago;
    • 30-years is at 1.857%, down -12.7 basis points;
    • 2-years yield is at 0.217%, down -1.0 basis points;
    • The 10-Year-&-2-Year spread is at 1.110, down from 1.146
  • VIX
    • At 22.85 @ 7:45 AM; down from the last close; above 5-day SMA;
    • Recent high =  28.79 on September 20; low =  17.65 on September 16
    • Sentiment: Risk-On-Neutral

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 17 was a red candle with a small upper shadow and almost no lower shadow; three-week Evening Star pattern
    • Stochastic (9,1, 3): %K is below %D; below 70
    • RSI-9 has declined to below 60
  • The week was down -25.59 or -0.6%; the 5-week ATR is 72.73
  • A down week; third in the last five weeks, and fifth in the last ten weeks
  • The weekly pivot point=4451.25, R1=4474.73, R2=4516.48; S1=4409.50, S2=4386.02; S1 pivot level was breached
  • At/below 10-week EMA; above 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A relatively small red candle with a slightly longer upper shadow than the lower shadow;
    • Stochastic (9, 1, 3): %K is above %D just above 20 but turning down;
    • RSI-9 is near 25; below 8-day EMA;
  • Below 20-day EMA and 50-day EMA; at/above 100-day; above 200-day SMA
  • Uptrend-Under-Pressure
2-Hour (E-mini futures)
  • Trending down since September 6; lower highs and lower lows; bouncing off from near 4293.00 on September 20; near EMA-20 resistance
    • RSI-21 bouncing off from near 10 to near 50 after making a Bullish Divergence at 2:00 PM on September 20
  • At/above EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving sideways-to-down within a large range since 10:00 PM on Monday
    • RSI-21 is above 50
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up since 10:00 PM;
  • The Bollinger Band is contracting slightly since 5:30 AM
    • Stochastic (9, 1, 3): %K is crisscrossing %D lower
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Tuesday, September 21 in lower volume. S&P 500, Dow Jones Industrial Average, and Dow Jones Transportation Average closed lower. NASDAQ Composite, Russell 2000, NYSE Composite, and Wilshire 5000 Total Market Index closed higher..

From Briefing.com:

The S&P 500 decreased 0.1% on Tuesday in an uneven session, which saw the benchmark index up as much as 0.9% in early action and down as much as 0.2% shortly afterwards. The Dow Jones Industrial Average (-0.2%) also closed slightly lower, while the Nasdaq Composite (+0.2%) and Russell 2000 (+0.2%) closed slightly higher.

Sector performances were equally underwhelming with no sector gaining or losing more than 1.0%. The energy sector outperformed with a 0.4% gain, while the industrials sector underperformed with a 0.7% decline. The communication services sector (-0.3%) was pressured by Walt Disney (DIS 171.17, -7.44, -4.2%), which provided cautious-sounding business commentary.

[…]

The 10-yr yield increased two basis point to 1.32% while the 2-yr yield decreased one basis point to 0.21%. The U.S. Dollar Index decreased 0.1% to 93.22. WTI crude futures increased 0.2%, or $0.16, to $70.51/bbl.

[…]
  • Total housing starts increased 3.9% month-over-month in August to a seasonally adjusted annual rate of 1.615 million (Briefing.com consensus 1.560 million) while permits rose 6.0% to a seasonally adjusted annual rate of 1.728 million (Briefing.com consensus 1.600 million).
  • […]
  • The current account deficit for the second quarter totaled $190.3 billion. The first quarter deficit was downwardly revised to $189.4 billion from $195.7 billion.
[…]
  • S&P 500 +15.9% YTD
  • Nasdaq Composite +14.4% YTD
  • Dow Jones Industrial Average +10.8% YTD
  • Russell 2000 +10.7% YTD

Overseas: 

  • Europe: DAX +1.4%, FTSE +1.1%, CAC +1.5%
  • Asia: Nikkei -2.2%, Hang Seng +0.5%, Shanghai closed for holiday

Commodities: 

  • Crude Oil +0.40 @ 70.64
  • Nat Gas -0.15 @ 4.83
  • Gold +11.70 @ 1775.70
  • Silver +0.30 @ 22.52
  • Copper -0.01 @ 4.11
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