Market Remarks

Morning Notes – Wednesday September 29, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:00 AM;
  • The odds are for an up day with elevated volatility, however, the past few days price-action indicates a down bias – watch for a break below 4347.25 for a change of sentiments
  • Key economic data report due during the day:
    • Pending Home Sales ( 1.1% est.; prev. -1.8% ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4371.52, 4353.21, and 4346.33
  • Critical resistance levels for S&P 500 are 4382.52, 4397.09, and 4419.54
  • Key levels for E-mini futures: break above 4378.00, the high of 6:15 AM and break below 4347.25, the low of 9:30 PM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2021) closed at 4343.75 and the index closed at 4352.63 – a spread of about -9.00 points; futures closed at 4343.50 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up +25.50; Dow by +143; and NASDAQ by +106.75

Markets Around The World

  • Markets in the East closed mostly down – Shanghai and Hong Kong closed up;
  • European markets 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 higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.534%, up +25.7 basis points from two weeks ago;
    • 30-years is at 2.070%, up +22.0 basis points;
    • 2-years yield is at 0.305%, up +8.8 basis points;
    • The 10-Year-&-2-Year spread is at 1.129, up from 1.060
  • VIX
    • At 22.47 @ 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

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 large red candle that gapped at the open with almost no upper and lower shadows; at the 100-day EMA
    • Stochastic (9, 1, 3): %K is below %D below 30;
    • RSI-9 is just below 35;
  • Below 20-day EMA and 50-day EMA; at 100-day SMA; above 200-day SMA
  • Uptrend-Under-Pressure
2-Hour (E-mini futures)
  • Moving down since September 27 from a resistance level around 4472.00; bouncing off since 12:00 PM on Tuesday
    • RSI-21 rose to just below 40
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving down since 2:00 AM on September 27 in steps; bouncing off from near a support level around 4330.00
    • RSI-21 is between 40 and 50
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 3:30 PM on Tuesday
  • The Bollinger Band is stable and relatively narrow
    • Stochastic (9, 1, 3): %K is above %D since 7:00 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Tuesday, September 28 in mostly higher volume. Dow Jones Transportation Average traded in lower volume.

The major indices gapped down at the open and then mostly traded down for the rest of the day. All but one S&P sector – Energy – closed lower. The US Treasury yields rose and most commodities declined.

From Briefing.com:

The S&P 500 fell 2.0% on Tuesday, closing at session lows, as another increase in long-term interest rates disproportionately affected the growth stocks and undercut general risk sentiment. The Nasdaq Composite declined 2.8%, the Russell 2000 declined 2.3%, and the Dow Jones Industrial Average declined 1.6%.

The 10-yr yield settled higher by five basis points to 1.53% after touching 1.56% in the morning,

[…]

The 2-yr yield also closed higher, finishing up two basis points to 0.30%. The U.S. Dollar Index rose 0.3% to 93.70.

The S&P 500 information technology (-3.0%) and communication services (-2.8%) sectors, where several of the mega-cap growth stocks reside, led the retreat with 3% declines. The energy sector (+0.5%) was the only sector that closed higher, even as oil prices coughed up early gains.

WTI crude futures settled lower by 0.1%, or $0.10, to $75.29/bbl after being up 1.7% intraday. Natural gas futures settled higher by 1.4% to $5.82/MMBtu after being up 10% intraday.

[…]
  • The Conference Board’s Consumer Confidence Index dropped to 109.3 in September (Briefing.com consensus 114.4) from an upwardly revised 115.2 (from 113.8) in August. Concerns about the Delta variant were cited as a factor that continued to dampen consumer optimism.
  • […]
  • The Advance report for International Trade in Goods for August showed a deficit of $87.6 billion, versus a revised $86.8 billion (from $86.4 billion) in July. The Advance report for Retail Inventories for August increased 0.1%, while the Advance report for Wholesale Inventories for August increased 1.2%.
  • The July FHFA Housing Price Index increased 1.4% m/m following a revised 1.7% increase (from 1.6%) in June.
  • The July S&P Case-Shiller Home Price Index was up 19.9% yr/yr following a 19.1% increase in June.
[…]
  • S&P 500 +15.9% YTD
  • Russell 2000 +12.9% YTD
  • Nasdaq Composite +12.9% YTD
  • Dow Jones Industrial Average +12.1% YTD

Overseas: 

  • Europe: DAX -2.1%, FTSE -0.5%, CAC -2.2%
  • Asia: Nikkei -0.2%, Hang Seng +1.2%, Shanghai +0.5%

Commodities: 

  • Crude Oil -0.38 @ 75.02
  • Nat Gas +0.12 @ 5.83
  • Gold -18.90 @ 1733.30
  • Silver -0.23 @ 22.46
  • Copper -0.02 @ 4.26
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