Morning Notes – Friday October 1, 2021

/ October 1, 2021

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM;
  • Futures were  down during the Asian session but turned around at 2:45 AM and picked up steam at 7:00 AM; more than 50 points up from the Asian session low of 4260.00;
  • 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 4294.25 for a change of sentiments
    • Good chance of sideways to down move from the pre-open levels around 4310.00 at 8:30 AM
  • Key economic data report due during the day:
    • Core PCE ( 0.3% vs. 0.2% est.; prev. 0.3% ) at 8:30 AM
    • Personal Spending ( 0.8% est.; prev. 0.7% ; prev. 0.3%) at 8:30 AM
    • Personal Income  ( 0.2% vs. 0.% est.; prev. 1.1% ) at 8:30 AM
    • Final Manufacturing PMI ( 60.5 est.; prev 60.5) at 9:45 AM
    • ISM Manufacturing PMI ( 59.6 est.; prev. 59.9) at 10:00 AM
    • Revised UoM Consumer Sentiment ( 71.0 est.; prev. 71.0) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4306.53, 4262.05, and 4233.37
  • Critical resistance levels for S&P 500 are 4335.71, 4346.72, and 4353.32
  • Key levels for E-mini futures: break above 4343.75, the high of 2:45 PM on Thursday and break below 4283.00, the low of 7:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2021) closed at 4296.75 and the index closed at 4307.54 – a spread of about -9.75 points; futures closed at 4297.75 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up +14.00; Dow by +123; and NASDAQ by +26.00

Markets Around The World

  • Markets in the East closed lower – Shanghai and Hong Kong were closed for trading
  • European markets are mostly lower – France and Italy are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.529%, up +19.8 basis points from two weeks ago;
    • 30-years is at 2.092%, up +21.1 basis points;
    • 2-years yield is at 0.282%, up +6.1 basis points;
    • The 10-Year-&-2-Year spread is at 1.247, up from 1.110
  • VIX
    • At 22.88 @ 7:45 AM; up 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
  • September 2021 was a relatively large Bearish Engulfing with almost no upper and lower shadows; made all-time intra-month high;
    • Stochastic (9, 1, 3): %K turned below %D from near 100;
    • RSI-9 just below 70 from above 80; Bearish Divergence
    • Above the upper band of a 120-month regression channel;
  • Confirmed Uptrend: 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 relatively large Bearish Engulfing following a Harami Dragonfly Doji; near a support level at 4305.00; the support level following that is near 4230.00
    • Stochastic (9, 1, 3): %K is below %D near zero;
    • RSI-9 is below 30; below 8-day EMA
  • Below 20-day EMA, 50-day EMA, and 100-day SMA; above 200-day SMA
  • Correction
2-Hour (E-mini futures)
  • Broke below a Horizontal Channel between 4472.00 and 4321.25; the 61.8% extension target is near 4228.00 and the 100% extension target is near 4170.00; bouncing up since 2:00 AM
    • RSI-21 rising up to near 50 from below 20; Bullish Divergence at 2:00 AM
  • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Bouncing up from 4260.00 at 3:00 AM after achieving the 100% extension target of an up-sloping flag that was broken to the downside on Thursday; near a resistance level around 4320.00;
    • RSI-21 is rising since 10:00 PM from below 30 to above 50 after making Bullish Divergence at 2:30 AM
    • Above EMA20 but below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting sideways to up since 1:45 AM
  • The Bollinger Band is expanding since 7:00 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K crisscrossing %D above 80
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Thursday, September 30 in higher volume.

The major indices declined from the start of the session but recovered a bit in the late morning before giving up the ghost in the least hour of trading and closing at the low for the day. In the process, the indices broke below the past couple of days and are at the support created by the sharp decline on September 20.

Al  S&P sectors closed down for the day.

From Briefing.com:

The S&P 500 fell 1.2% on Thursday and closed at session lows in a volatile session to end the third quarter. The Dow Jones Industrial Average declined 1.6%, the Russell 2000 declined 0.9%, and the Nasdaq Composite declined just 0.4%. Each index faded a positive start.

[…]

All 11 S&P 500 sectors closed lower, as selling interest accelerated into the close on no specific news. The industrials sector (-2.1%) led the retreat with a 2% decline while the communication services sector (-0.4%) outperformed on a relative basis with a 0.4% decline.

[…]

The 10-yr yield decreased one basis point to 1.53% while the 2-yr yield was unchanged at 0.29%. The U.S. Dollar Index decreased 0.1% to 94.25. WTI crude futures increased 0.2%, or $0.16, to $75.07/bbl.

[…]
  • Initial jobless claims for the week ending September 25 increased by 11,000 to 362,000 (Briefing.com consensus 340,000). Continuing claims for the week ending September 18 decreased by 18,000 to 2.802 million.
  • […]
  • The third estimate for Q2 GDP checked in at 6.7% (Briefing.com consensus 6.7%) versus the second estimate of 6.6%. The GDP Deflator was unchanged at 6.1% (Briefing.com consensus 6.1%).
  • […]
  • The Chicago PMI decreased to 64.7 in September (Briefing.com consensus 65.0) from an unrevised reading of 66.8 in August.
[…]
  • S&P 500 +14.7% YTD
  • Nasdaq Composite +12.1% YTD
  • Russell 2000 +11.6% YTD
  • Dow Jones Industrial Average +10.6% YTD

Overseas: 

  • Europe: DAX -0.7%, FTSE -0.3%, CAC -0.6%
  • Asia: Nikkei -0.3%, Hang Seng -0.4%, Shanghai +0.9%

Commodities: 

  • Crude Oil +0.16 @ 75.07
  • Nat Gas +0.33 @ 5.84
  • Gold +34.10 @ 1756.60
  • Silver +0.56 @ 22.05
  • Copper -0.11 @ 4.08
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