Market Remarks

Morning Notes – Wednesday, October 13, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a little higher at 8:30 AM;
  • Volatility has increased following the CPI report
  • The odds are for a volatile day with a good chance of a sideways to an up move from pre-open levels around 4340.00 – watch for a break above 4354.75 and break below 4333.25 for clarity
  • Key economic data report due during the day:
    • CPI ( 0.4% vs. 0.3% est.; prev. 0.3%) at 8:30 AM
    • Core CPI (0.2% vs., 0.2% est.; prev. 0,.1%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4342.09, 4326.66, and 4307.49
  • Critical resistance levels for S&P 500 are 4369.01, 4374.89, and 4386.52
  • Key levels for E-mini futures: break above 4354.75, the high of 8:30 AM and break below 4333.25, the low of 8:45 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2021) closed at 4340.25 and the index closed at 4350.65 – a spread of about -10.50 points; futures closed at 4340.75 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are mixed – at 8:45 AM, S&P 500 futures were down -5.00; Dow down by -56; and NASDAQ up by +9.25

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Mumbai, Seoul, and Singapore closed higher; Tokyo and Sydney closed lower; Hong Kong was closed for trading
  • European markets are mostly higher – The UK and Spain are down
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • INR/USD
    • EUR/USD
    • NZD/USD
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals mostly higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.580%, up +4.6 basis points from two weeks ago;
    • 30-years is at 2.106%, up +3.6 basis points;
    • 2-years yield is at 0.342%, up +3.7 basis points;
    • The 10-Year-&-2-Year spread is at 1.238, up from 1.229
  • VIX
    • At 19.77 @ 8:00 AM; down from the last close; at/below 5-day SMA;
    • Recent high = 24.89 on October 1; low =  17.63 on September 24
    • Sentiment: Risk-Neutral-On

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 8 was a green Harami spinning top candle
    • Stochastic (9,1, 3): %K is below %D but turning up from below 30;
    • RSI-9 bouning up from 50
  • The week was up +34.30 or +0.8%; the 5-week ATR increased to 124.46
  • An up week; second in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4366.75, R1=4454.56, R2=4517.78; S1=4303.63, S2=4215.72; No pivot levels were breached
  • Below 10-week EMA; above 39-week SMA; at/89-week SMA
  • Uptrend Under Pressure
Daily
  • A red candle with almost no upper shadow and small upper shadow near the close of the previous day;
    • Stochastic (9, 1, 3): %K is below %D;
    • RSI-9 is below 50
  • Below 20-day EMA and 50-day EMA; at/above 100-day SMA; above 200-day SMA
  • Correction
2-Hour (E-mini futures)
  • Drifting lower since 10:00 AM on October 7; lower highs and lower lows; bouncing up from a low of 4317.25 at 2:00 AM on Tuesday
    • RSI-21 is above 55
  • Above EMA20 but below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving sideways since 4:30 AM on October 12 after moving down from 4421.00 at 10:00 AM on October 7;
    • RSI-21 has been rising since 7:30 PM; above 50
    • Above EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 4:15 AM
  • The Bollinger Band has been expanding since 4:15 AM with price walking up the upper bound
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Tuesday, October 12, in mostly higher volume. S&P 500, Dow Jones Industrial Average, NASDAQ Composite, and Wilshire 5000 Total Market Index closed lower. Russell 2000, Dow Jones Transportation Average, and NYSE Composite closed higher. Transport traded in lower volume.

From Briefing.com:

The large-cap indices closed slightly lower on Tuesday in a tame session, as investors adopted a wait-and-see mindset for tomorrow’s key events. The S&P 500 (-0.2%), Nasdaq Composite (-0.1%), and Dow Jones Industrial Average (-0.3%) declined between 0.1-0.3%, while the Russell 2000 rose 0.6%. […]

Six of the 11 S&P 500 sectors closed lower, with the laggards being the heavily-weighted communication services (-1.1%), information technology (-0.5%), and health care (-0.5%) sectors. Five sectors closed higher, led by the real estate (+1.3%), consumer discretionary (+0.7%), and utilities (+0.7%) sectors with decent gains.

[…]

The 2-yr yield rose four basis points to 0.35%, while the 10-yr yield decreased three basis points to 1.58%. The U.S. Dollar Index increased 0.2% to 94.51.

[…]
  • Job openings decreased to 10.439 million in August from a revised 11.098 million (from 10.934 million) in July.
  • The NFIB Small Business Optimism Index for September decreased to 99.1 from 100.1 in August.
[…]
  • S&P 500 +15.8% YTD
  • Russell 2000 +13.1% YTD
  • Dow Jones Industrial Average +12.3% YTD
  • Nasdaq Composite +12.2% YTD
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