Market Remarks

Morning Notes – Monday October 4, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:45 AM;
  • Futures were  down more than 20 points at7:15 Am and have recovered from that low level;
  • The odds are for a down day with elevated volatility – watch for a break above 4349.75 for a change of sentiments
  • Key economic data report due during the day:
    • Factor Orders ( 1.1% est.; prev. 0.4%) 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: Down-Side

Key Levels:

  • Critical support levels for S&P 500 are 4323.39, 4298.69, and 4288.53
  • Critical resistance levels for S&P 500 are 4355.01, 4375.19, and 4384.99
  • Key levels for E-mini futures: break above 4349.75, the high of 1:00 AM and break below 4323.00, the low of 7:15 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (December 2021) closed at 4347.00 and the index closed at 4357.04 – a spread of about -10.00 points; futures closed at 4343.75 for the day; the fair value is +3.25
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down -9.00; Dow by -49; and NASDAQ by -44.25

Markets Around The World

  • Markets in the East closed mixed- Hong Kong and Tokyo closed down; Sydney, Mumbai, and Singapore closed up; Shanghai and Seoul were closed for trading
  • European markets are mostly higher – Germany and France are lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • 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 1.477%, up +10.7 basis points from two weeks ago;
    • 30-years is at 2.051%, up +14.2 basis points;
    • 2-years yield is at 0.266%, up +4.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.247, up from 1.180
  • VIX
    • At 22.80 @ 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-Off

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 October 1 was a Bearish Engulfing candle with a small upper shadow and a lower shadow that is half the size of the real body
    • Stochastic (9,1, 3): %K is below %D below 30;
    • RSI-9 is below 50
  • The week was down -98.44 or -2.2%; the 5-week ATR is 101.55
  • A down week; third in the last five weeks, and fifth in the last ten weeks
  • The weekly pivot point=4367.62, R1=4446.72, R2=4536.40; S1=4277.94, S2=4198.84; S1 pivot level was breached
  • Below 10-week EMA; above 39-week SMA, and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A relatively large green Harami candle with small upper and lower shadows;
    • Stochastic (9, 1, 3): %K crossed above %D;
    • RSI-9 is turning up; above 30; below 8-day EMA
  • Below 20-day EMA and 50-day EMA; at/below 100-day SMA; above 200-day SMA
  • Correction
2-Hour (E-mini futures)
  • Moving sideways to down at a downtrend line resistance after bouncing up from the lows of 4260.00 at 2:00 AM on Friday
    • RSI-21 declining from near 70 at 6:00 PM to just above 50
  • At/above EMA20 but below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Moving down since 2:00 AM on September 27 from 4464.00;
    • RSI-21 is moving along 50
    • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting sideways to down since 1:00 AM
  • The Bollinger Band is expanding slight since 8:15 AM with price walking up the upper band
    • Stochastic (9, 1, 3): %K crisscrossing %D above 80
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Friday, October 1 in mixed volume. Dow Jones Industrial A and Dow Jones Transportation Average traded in higher volume. All S&P sectors except one closed higher. Utilities closed unchanged. Indices opened lower and then traded down in the early morning session before turning around and then closing near the highs for the day.

For the week, major US indices closed lower in mixed volume. Russell 2000 and Dow Transports traded in lower volume. Markes in Asia and Europe mostly closed lower. The industrial metals were down for the week but most other commodities were up. The US Treasury yields were up for the week.

From Briefing.com:

The S&P 500 advanced 1.2% on Friday, ending a rough week on a high note amid dip-buying efforts […]

The Dow Jones Industrial Average (+1.4%) and Russell 2000 (+1.7%) outperformed while the Nasdaq Composite rose 0.8%.

[…]

The S&P 500 energy (+3.3%), communication services (+1.8%) and materials (+1.6%) sectors led the advance with decent gains, while the utilities sector (-0.04%) closed fractionally lower.

[…]

The 10-yr yield retraced six basis points to 1.47% while the 2-yr yield retraced three basis points to 0.26%. The U.S. Dollar Index decreased 0.2% to 94.04. WTI crude futures increased 1.1%, or $0.80, to $75.87/bbl.

[…]
  • Personal income increased 0.2% month-over-month in August (Briefing.com consensus +0.2%) and personal spending increased 0.8% (Briefing.com consensus +0.7%). The PCE Price Index was up 0.4% month-over-month, leaving it up 4.3% year-over-year (a 30-year high), and the core PCE Price Index was up 0.3% (Briefing.com consensus +0.2%), leaving it up 3.6% year-over-year (a 30-year high).
  • […]
  • The September ISM Manufacturing Index checked in at 61.1% (Briefing.com consensus 59.5%), up from 59.9% in August. A number above 50.0% is indicative of expansion. September marked the 16th straight month of expansion for the manufacturing sector.
  • […]
  • The final print for the University of Michigan’s Index of Consumer Sentiment was bumped up to 72.8 (Briefing.com consensus 71.0) from the preliminary reading of 71.0. The final reading for August was 70.3. In September 2020, the Index of Consumer Sentiment stood at 80.4.
  • […]
  • Total construction spending was flat m/m in August (Briefing.com consensus +0.4%) following an unrevised 0.3% increase in July.
  • […]
  • The final IHS Market Manufacturing PMI for September checked in at 60.7, up from 60.5 in the preliminary reading.
[…]
  • S&P 500 +16.0% YTD
  • Russell 2000 +13.5% YTD
  • Nasdaq Composite +13.0% YTD
  • Dow Jones Industrial Average +12.2% YTD
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