Morning Notes – Tuesday, October 19, 2021

/ October 19, 2021

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM; moving up since 6:45 AM on Monday
  • The odds are for an up day with a good chance of sideways to down move from the pre-open levels around 4500.00 – watch for a break below 4472.50 for a change of sentiments
  • Key economic data report due during the day:
    • Federal Budget ( -61.0B est.; prev. 170.6B)

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Resumed
  • 120-Min: Up
  • 30-Min: Up
  • 15-Min: Side-Up
  • 6-Min: Up

Key Levels:

  • Critical support levels for S&P 500 are 4488.75, 4477.83, and 4466.45
  • Critical resistance levels for S&P 500 are 4515.51, 4520.47, and 4529.90
  • Key levels for E-mini futures: break above 4504.50, the high of 7:15 AM  and break below 4472.50, the low of 9:00 PM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2021) closed at 4476.75 and the index closed at 4486.46 – a spread of about -9.75 points; futures closed at 4477.50 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +22.00; Dow by +167; and NASDAQ by +67.75

Markets Around The World

  • Markets in the East closed mostly higher – Sydney and Mumbai closed lower
  • European markets are mostly higher – Switzerland is lower
  • 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 mixed
    • Precious metals are higher
    • Industrial metals higher
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.576%, up +11.1 basis points from two weeks ago;
    • 30-years is at 2.051%, up +1.2 basis points;
    • 2-years yield is at 0.395%, up +12.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.181, up from 1.195
  • VIX
    • At 15.99 @ 6:45 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 15 was a relatively large green candle rising above 10-week EMA
    • Stochastic (9,1, 3): %K crossed above %D after dipping below 30
    • RSI-9 has just risen above 60
  • The week was up +80.63 or +1.8%; the 5-week ATR increased to 138.09
  • An up week; third in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4425.70, R1=4521.49, R2=4571.60; S1=4375.59, S2=4279.80; S1 pivot level was breached
  • At/above 0-week EMA; above 39-week SMA; at/89-week SMA
  • Uptrend Under Pressure
Daily
  • A green candle that opened lower but then close above  the previous day’s high; broke above a down sloping flag;
    • Stochastic (9, 1, 3): %K is above %D; turning down near 100
    • RSI-9 is just above 65; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA
  • Uptrend Resumed
2-Hour (E-mini futures)
  • In an uptrend since 10:00 AM on October 13 after making a Double Bottom at 4318.75; broke above a resistance zone between 4450.00 and 4475.00 on October 18;
    • RSI-21 is rising since 4:00 AM on October 18; above 80
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving up since 10:00 AM on October 13 and after a short retracement at the start of the week;
    • RSI-21 is turning down from 75
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 1:30 AM;
  • The Bollinger Band is slightly expanding since 1:30 AM with price walking up the upper band
    • Stochastic (9, 1, 3): %K crossed below %D at 7:15 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly higher on Monday, October 18, in lower volume. Dow Jones Industrial Average and NYSE Composite closed lower. Major indices opened lower and then turned around in the first hour of trading. For rest of the day, the bias was up. 

From Briefing.com:

The S&P 500 increased 0.3% on Monday, overcoming an early 0.5% decline for its fourth straight gain. The mega-caps did the heavy lifting and drove the outperformance of the Nasdaq Composite (+0.8%). The Dow Jones Industrial Average (-0.1%) and Russell 2000 (+0.1%) finished closer to their flat lines, with the Dow in the red.

Seven of the 11 S&P 500 sectors closed higher, led by the heavily-weighted consumer discretionary (+1.2%), information technology (+0.9%), and communication services (+0.7%) sectors. Conversely, the utilities (-0.7%), health care (-0.7%), consumer staples (-0.5%), and materials (-0.1%) sectors closed lower.

[…]

The 2-yr yield increased two basis points to 0.42%. The U.S. Dollar Index was little changed at 93.96.

[…]
  • Total industrial production decreased 1.3% in September (Briefing.com consensus +0.2%) following a downwardly revised 0.1% decline in August (from +0.4%). The capacity utilization rate dropped to 75.2% (Briefing.com consensus 76.5%) from a downwardly revised 76.2% in August (from 76.4%).
  • […]
  • The NAHB Housing Market Index increased to 80 in October (Briefing.com consensus 75) from 76 in September.
[…]
  • S&P 500 +19.5% YTD
  • Nasdaq Composite +16.6% YTD
  • Dow Jones Industrial Average +15.2% YTD
  • Russell 2000 +14.8% YTD
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