Market Remarks

Morning Notes – Monday September 27, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:45 AM; futures are declining since 2:00 AM after rising more than 25 points
  • The odds are for a down day with elevated volatility – watch for a break below 4402.25
  • Key economic data report due during the day:
    • Durable Goods ( 1.8% vs. 0.7% est.; prev. 0.5% ) at 8:30 AM
    • Core Durable Goods ( 0.2% vs. 0.5% est.; prev. 0.8% ) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4430.27, 4406.75, and 4384.22
  • Critical resistance levels for S&P 500 are 4463.12, 4485.87, and 4497.78
  • Key levels for E-mini futures: break above 4443.00, the high of 7:30 AM and break below 4427.00, the low of 11:30 AM on Friday

Pre-Open

  • On Friday at 4:00 PM, S&P futures (December 2021) closed at 4445.00 and the index closed at 4455.48 – a spread of about -11.50 points; futures closed at 4445.75 for the day; the fair value is 0.0
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down -15.25; Dow by -3; and NASDAQ by -129.50

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Tokyo closed down;
  • European markets are mixed – Germany, France, Spain, and Itlay are higher; the UK, Switzerland, and STOXX-600 are lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.504%, up +16.3 basis points from two weeks ago;
    • 30-years is at 2.027%, up +9.3 basis points;
    • 2-years yield is at 0.280%, up +5.9 basis points;
    • The 10-Year-&-2-Year spread is at 1.124, up from 1.12
  • VIX
    • At 18.64 @ 7:45 AM; up from the last close; below 5-day SMA;
    • Recent high =  28.79 on September 20; low =  17.65 on September 16
    • Sentiment: Risk-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 24 was a green candle with almost no upper shadow and a lower shadow that is twice the size of the real body
    • Stochastic (9,1, 3): %K is below %D;
    • RSI-9 is turning up just above 60
  • The week was up +22.49 or +0.5%; the 5-week ATR is 82.13
  • An up week; third in the last five weeks, and sixth in the last ten weeks
  • The weekly pivot point=4408.93, R1=4511.95, R2=4568.42; S1=4352.46, S2=4249.44; S1/S2/S3 pivot levels were breached
  • At/below 10-week EMA; above 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green candle following a three-day Morning Star pattern is forming;
    • Stochastic (9, 1, 3): %K is above %D above 80;
    • RSI-9 is just above 50;
  • At/above 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • Uptrend-Under-Pressure
2-Hour (E-mini futures)
  • Moving down since 2:00 AM from a resistance level around 4472.00 after rising from 4293.75 at 2:00 PM on September 20
    • 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 in steps; higher highs and higher lows; last higher low was 4410.75
    • RSI-21 declining since 1:30 AM after making a Bearish Divergence
    • Below EMA10 of EMA50, which is at/below EMA20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 2:15 AM
  • The Bollinger Band is expanding since 2:15 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 20
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mixed on Friday, September 24 in lower volume. S&P 500, Dow Jones Industrial Average, Dow Jones Transportation Average, and Wilshire 5000 Total Market Index closed higher. NASDAQ Composite, Russell 2000, and NYSE Composite closed lower.

For the week, the major US indices closed higher in mostly higher volume. The markets in Asia mostly closed lower and those in Europe mostly higher.

From Briefing.com:

The S&P 500 (+0.2%) and Dow Jones Industrial Average (+0.1%) eked out gains while the Nasdaq Composite (-0.03%) closed fractionally lower. The Russell 2000 declined 0.5%. […]

The 10-yr yield settled higher by five basis points to 1.46% after touching 1.30% in the wee hours of Thursday morning.

The S&P 500 financials sector (+0.6%) naturally keyed off the higher rates, but it was outpaced by the energy (+0.8%) and communication services (+0.7%) sectors from a percentage standpoint. The real estate (-1.2%), health care (-0.4%), materials (-0.2%), and utilities (-0.2%) sectors closed lower.

[…]

The 2-yr yield increased one basis point to 0.27%. The U.S. Dollar Index decreased 0.2% to 93.28. WTI crude futures increased 0.9%, or $0.67, to $74.00/bbl.

[…]
  • New home sales increased 1.5% month-over-month to a seasonally adjusted annual rate of 740,000 (Briefing.com consensus 720,000) from an upwardly revised 729,000 (from 708,000) in July.
[…]
  • S&P 500 +18.6% YTD
  • Nasdaq Composite +16.8% YTD
  • Russell 2000 +13.8% YTD
  • Dow Jones Industrial Average +13.7% YTD
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