Market Remarks

Morning Notes – Thursday, October 21, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 7:45 AM; moving sideways to down since 12:30 AM
  • The odds are for a sideways to a down day – watch for a break above 4519.25 and above 4527.50 for a change of sentiments
  • Key economic data report due during the day:
    • Philly Fed Manufacturing Index (25.1 est.; prev. 30.7) at 8:30 AM
    • Unemployment Claims ( 298K est.; prev. 293K) at 8:30 AM
    • CB Leading Index (0.4% est.; prev. 0.9%) at 10:00 AM
    • Existing Home Sales ( 6.10M est.; prev. 5.88M ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4524.40, 4513.38, and 4509.84
  • Critical resistance levels for S&P 500 are 4536.61, 4541.45, and 4545.85
  • Key levels for E-mini futures: break above 4527.75, the high of 10:30 PM  and break below 4510.25, the low of 3:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2021) closed at 4529.25 and the index closed at 4536.19 – a spread of about -7.00 points; futures closed at 4528.00 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are lower – at 6:45 AM, S&P 500 futures were down by -10.50; Dow by -103; and NASDAQ by -22.50

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Sydney closed higher
  • European markets 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 higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.636%, up +11.2 basis points from two weeks ago;
    • 30-years is at 2.111%, up +3.5 basis points;
    • 2-years yield is at 0.392%, up +9.1 basis points;
    • The 10-Year-&-2-Year spread is at 1.244, up from 1.223
    • The 30-Year-&-10-Year spread is at 0.474, down from 0.552
  • VIX
    • At 15.98 @ 6:15 AM; up from the last close; below 5-day SMA;
    • Recent high = 24.89 on October 1; low =  15.29 on October 20
    • 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 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 gapped up at the open and then did not close the gap; small upper shadow and almost no lower shadow;
    • Stochastic (9, 1, 3): %K crossed below %D; near 100
    • RSI-9 is just above 70; 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; drifting lower since 10:00 AM on Wednesday
    • RSI-21 is declining since 10:00 PM on October 14 from above 90; Bearish Divergence at 10:00 AM on Wednesday
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Drifting sideways to down since 10:00 AM on Wednesday after moving up since 10:00 AM on October 13;
    • RSI-21 is trending down from near 75 at 7:00 AM on October 19 to below 50; Bearish Divergence
    • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 1:15 PM on Wednesday;
  • The Bollinger Band is narrowing since 4:30 AM
    • Stochastic (9, 1, 3): %K crisscrossing %D lower at 6:45 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Wednesday, October 20, in mostly lower volume. NASDAQ Composite closed down and Dow Jones Industrial Average traded in lower volume. The price action was subdued. Major indices opened higher and then mostly drifted sideways with an up bias. DJIA made an all-time intraday high. NYSE Composite and Wilshire 5000 Total Market Index made all-time intraday and closing highs.

From Briefing.com:

The S&P 500 (+0.4%) and Dow Jones Industrial Average (+0.4%) closed just below record highs on Wednesday, with the benchmark index rising for the sixth straight day and the Dow setting an intraday record high. The Nasdaq Composite (-0.1%) declined modestly, while the Russell 2000 rose 0.6%. […]

The Russell 1000 Value Index advanced 0.9% with a counter-cyclical bias, which was evident in the leadership positions from the S&P 500 health care (+1.5%), utilities (+1.6%), and real estate (+1.6%) sectors.

Conversely, the heavily-weighted information technology (-0.3%), consumer discretionary (-0.2%), and communication services (-0.2%) sectors were the only sectors that closed lower,

[…]

The 2-yr yield decreased one basis point to 0.38%, and the 10-yr yield was unchanged at 1.64%. The U.S. Dollar Index decreased 0.1% to 93.60. WTI crude futures rose 1.5%, or $1.24, to $84.25/bbl amid an unexpected draw in weekly crude inventories (431,000).

[…]
  • The weekly MBA Mortgage Applications Index fell 6.3% following a 0.2% increase in the prior week.
  • Weekly crude oil inventories decreased by 431,000 barrels after increasing by 6.09 mln barrels during the previous week.
[…]
  • S&P 500 +20.8% YTD
  • Nasdaq Composite +17.3% YTD
  • Dow Jones Industrial Average +16.4% YTD
  • Russell 2000 +16.0% YTD

Overseas: 

  • Europe: DAX +0.1%, FTSE +0.1%, CAC +0.5%
  • Asia: Nikkei +0.1%, Hang Seng +1.4%, Shanghai -0.2%

Commodities: 

  • Crude Oil +1.09 @ 83.36
  • Nat Gas +0.09 @ 5.18
  • Gold +17.00 @ 1787.00
  • Silver +0.65 @ 24.45
  • Copper +0.04 @ 4.74
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