Market Remarks

Morning Notes – Thursday, October 14, 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 – watch for a break below 4373.00
  • Key economic data report due during the day:
    • PPI ( 0.6% est.; prev. 0.7%) at 8:30 AM
    • Core PPI (0.5% est.; prev. 0,.6%) at 8:30 AM
    • Unemployment Claims ( 315K est.; prev. 326K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4386.52, 4372.87, and 4353.83
  • Critical resistance levels for S&P 500 are 4400.16, 4415.88, and 4428.98
  • Key levels for E-mini futures: break above 4407.50, the high of 10:00 AM  on October 12 and break below 4373.00, the low of 3:15 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2021) closed at 4355.25 and the index closed at 4363.80 – a spread of about -8.50 points; futures closed at 4355.00 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 7:30 AM, S&P 500 futures were up +35.50; Dow by +252; and NASDAQ by +129.75

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai closed lower; Hong Kong was closed for trading
  • European markets are mostly higher – Switzerland is down
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.549%, up +0.8 basis points from two weeks ago;
    • 30-years is at 2.041%, down -4.9 basis points;
    • 2-years yield is at 0.366%, up +6.9 basis points;
    • The 10-Year-&-2-Year spread is at 1.183, up from 1.244
  • VIX
    • At 17.80 @ 6:30 AM; down from the last close; below 5-day SMA;
    • Recent high = 24.89 on October 1; low =  17.63 on September 24
    • Sentiment: Risk-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 small Harami Doji following a small red candle;
    • Stochastic (9, 1, 3): %K crossed above %D;
    • RSI-9 is around 45; above 8-day EMA
  • Below 20-day EMA and 50-day EMA; at/above 100-day SMA; above 200-day SMA
  • Correction
2-Hour (E-mini futures)
  • Bouncing off a Double Bottom at 10:00 AM on October 13; broke above the intermediate high and the 61.8% extension target is near 4394.00 and the 100% extension target is near 4410.00
    • RSI-21 has been rising since 10:00 PM on October 11 from below 30 to above 75; Bullish Divergence at 10:00 AM on October 13
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving up since 10:00 AM on October 13 from a support level;
    • RSI-21 has been rising since 10:00 AM on Wednesday
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Uo
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 1:15 PM on Wednesday
  • The Bollinger Band is expanding again after contracting slightly
    • Stochastic (9, 1, 3): %K is above %D since 6:30 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly higher on Wednesday, October 13, in mixed volume. Dow Jones Industrial Average and Dow Jones Transportation Average closed lower. DJIA and NASDAQ Composite traded in lower volume. S&P 500 and DJIA made Doji candles. The indices made day’s lows in the first hour of trading and then mostly traded higher for the rest of the day.

From Briefing.com:

The S&P 500 increased 0.3% on Wednesday, overcoming an early 0.5% decline in a busy news day. The Nasdaq Composite outperformed with a 0.7% gain amid relative strength in the growth stocks. The Dow Jones Industrial Average (unch) closed flat while the Russell 2000 increased 0.3%. […]

Nine of the 11 S&P 500 sectors closed higher, led by the utilities (+1.1%), materials (+0.8%), and consumer discretionary (+0.6%) sectors.

[…]

The financials (-0.6%) and energy (-0.1%) sectors were the two holdouts amid some curve-flattening activity in Treasuries and lower oil prices ($80.51/bbl, -0.11, -0.1%).

[…]

The 10-yr yield decreased three basis points to 1.55%, while the 2-yr yield increased two basis points to 0.37%. The U.S. Dollar Index fell 0.5% to 94.05. Interestingly, the 10-yr yield hit 1.60% in a knee-jerk reaction to the CPI report, then bottomed at 1.53% a few hours later.

[…]
  • Total CPI in September was up 0.4% month-over-month (Briefing.com consensus +0.3%) following a 0.3% increase in August, and core CPI, which excludes food and energy, was up 0.2% (Briefing.com consensus +0.3%) following a 0.1% increase in August.
  • […]
  • The weekly MBA Mortgage Applications Index increased 0.2% following a 6.9% decline in the prior week.
[…]
  • S&P 500 +16.2% YTD
  • Russell 2000 +13.5% YTD
  • Dow Jones Industrial Average +13.1% YTD
  • Nasdaq Composite +12.3% YTD

Overseas: 

  • Europe: DAX +0.7%, FTSE +0.2%, CAC +0.8%
  • Asia: Nikkei -0.3%, Hang Seng closed, Shanghai +0.4%

Commodities: 

  • Crude Oil -0.11 @ 80.49
  • Nat Gas +0.15 @ 5.65
  • Gold +32.10 @ 1792.30
  • Silver +0.57 @ 23.09
  • Copper +0.18 @ 4.50
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