Market Remarks

Morning Notes – Thursday September 23, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:45 AM
  • The odds are for an up day with elevated volatility – watch for a break below 4402.25
  • Key economic data report due during the day:
    • Unemployment Claims ( 351K vs. 322K est.; prev. 335K) at 8:30 AM
    • Flash Manufacturing PMI ( 60.7 est.; pre. 61.1) at 9:45 AM
    • Flash Services PMI ( 55.1 est.; prev. 55.1) at 9:45 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4416.75, 4392.76, and 4384.22
  • Critical resistance levels for S&P 500 are 4427.93, 4438.96, and 4448.98
  • Key levels for E-mini futures: break above 4414.00, the high of 8:30 AM and break below 4402.25, the low of 8:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2021) closed at 4384.25 and the index closed at 4395.64 – a spread of about -11.50 points; futures closed at 4384.00 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up +27.50; Dow by +231; and NASDAQ by +80.50

Markets Around The World

  • Markets in the East closed mostly higher – Seoul closed down; Tokyo was 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 19.70 @ 7:45 AM; down from the last close; below 5-day SMA;
    • Recent high =  28.79 on September 20; low =  17.65 on September 16
    • Sentiment: Risk-On

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 three-day Morning Star pattern is forming; a green candle with almost no lower shadows and a small upper shadow;
    • Stochastic (9, 1, 3): %K is above %D near 40;
    • RSI-9 is turned up to near 40; above 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)
  • Bouncing up from a low of 4293.00 on September 20 to a resistance level around 4425.00; broke a sequence of lower lows and lower highs
    • RSI-21 near 65
  • Above EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving up since 3:00 PM on September 20
    • RSI-21 rising since Monday; above 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up since 10:00 PM on Tuesday
  • The Bollinger Band is contracting slightly since 7:15 AM
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Wednesday, September 22 in mostly higher volume. Dow Jones Transportation Average closed lower and Dow Jones Industrial Average traded in lower volume. US indices opened up and then mostly traded sideways to up with elevated volatility after 2:00 PM FOMC statement.

From Briefing.com:

The S&P 500 (+1.0%), Dow Jones Industrial Average (+1.0%), and Nasdaq Composite (+1.0%) each closed higher by 1.0% on Wednesday, as investors digested some less-dovish Fed news reasonably well. The Russell 2000 outperformed with a 1.5% gain.

Six of the 11 S&P 500 sectors rose at least 1.0%, including the energy sector (+3.2%) with a 3% gain and the information technology sector (+1.4%) with an influential 1.4% gain. The utilities (-0.1%) and communication services (-0.01%) sectors were the only sectors that closed lower.

[…]

The 2-yr yield increased three basis points to 0.24% while the 10-yr yield increased one basis point to 1.34%. The U.S. Dollar Index increased 0.3% to 93.43. WTI crude futures increased 2.5%, or $1.75, to $72.26/bbl.

[…]
  • Existing home sales decreased 2.0% m/m in August to a seasonally adjusted annual rate of 5.88 million (Briefing.com consensus 5.86 million) from an upwardly revised 6.00 million (from 5.99 million) in July. Total sales in August were down 1.5% from a year ago.
  • […]
  • The weekly MBA Mortgage Applications Index rose 4.9% following a 0.3% increase in the prior week.
[…]
  • S&P 500 +17.0% YTD
  • Nasdaq Composite +15.6% YTD
  • Dow Jones Industrial Average +11.9% YTD
  • Russell 2000 +12.3% YTD

Overseas: 

  • Europe: DAX +1.0%, FTSE +1.5%, CAC +1.3%
  • Asia: Nikkei -0.7%, Hang Seng closed for holiday, Shanghai +0.4%

Commodities: 

  • Crude Oil +1.34 @ 71.98
  • Nat Gas -0.05 @ 4.78
  • Gold +2.50 @ 1778.20
  • Silver +0.36 @ 22.88
  • Copper +0.13 @ 4.24
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