Market Remarks

Morning Notes – Friday, October 22, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changes at 8:45 AM; drifting down since 7:30 Am after making the all-time high of 4547.75
  • The odds are for a sideways to a down day, however, the daily bias is up –  – watch for a break above 4547.25 for a change of sentiments
  • Key economic data report due during the day:
    • Flash Manufacturing PMI ( 60.5 est.; prev. 60.7) at 9:45 AM
    • Flash Services PMI ( 55.3 est.; prev. 54.9) at 9:45 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4538.14, 4527.38, and 4520.21
  • Critical resistance levels for S&P 500 are 4558.52, 4567.25, and 4583.07
  • Key levels for E-mini futures: break above 4547.75, the high of 7:30 AM and break below 4532.00, the low of 3:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2021) closed at 4541.00 and the index closed at 4549.78 – a spread of about -8.75 points; futures closed at 4541.75 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures are mixed – at 8:30 AM, S&P 500 futures were up by +2.00; Dow up by +47; and NASDAQ down by -34.50

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai, Mumbai, and Seoul closed lower
  • European markets mostly higher – Spain 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 1.676%, up +10.5 basis points from two weeks ago;
    • 30-years is at 2.128%, down -0.4 basis points;
    • 2-years yield is at 0.460%, up +14.7 basis points;
    • The 10-Year-&-2-Year spread is at 1.216, down from 1.258
    • The 30-Year-&-10-Year spread is at 0.452, down from 0.561
  • VIX
    • At 14.99 @ 6:30 AM; little changed from the last close; below 5-day SMA;
    • Recent high = 24.89 on October 1; low =  15.01 on October 21
    • 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 with almost no upper and lower shadows at all-time highs;
    • Stochastic (9, 1, 3): %K is crisscrossing %D near 100
    • RSI-9 is near 75; 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)
  • Trending up 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 declining since 10:00 PM on October 14 from above 90 in steps; made a series of Bearish Divergences
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving up since 10:00 AM on October 13; gradually drifting up after small sideways moves
    • RSI-21 turned down from 65 at 6:30 AM; BEarish Divergence
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting higher since 8:45 AM on Thursday;
  • The Bollinger Band is expanding slightly since 6:00 AM; price declining to the middle band since 7:15 AM after walking up the upper band
    • Stochastic (9, 1, 3): %K is below %D since 7:30 from above 90
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Thursday, October 21, in mixed volume. Dow Jones Industrial Average and NYSE Composite closed higher. S&P 500, NASDAQ Composite, and Russell 2000 traded in lower volume. The price action was subdued. Major indices traded sideways in the morning and the early afternoon before advancing late. S&P 500 and Wilshire 5000 Total Market Index made all-time intraday and closing highs.

From Briefing.com:

There was no quit in the stock market on Thursday, as the S&P 500 (+0.3%) eked out intraday and closing record highs and extended its win streak to seven straight sessions. The Nasdaq Composite gained 0.6%, and the Russell 2000 gained 0.3%. The Dow Jones Industrial Average (-0.02%), however, closed flat. […]

Tesla overcame an initial negative reaction and led the S&P 500 consumer discretionary sector (+1.4%) to a first-place finish. Every other sector, except energy (-1.8%), finished closer to their flat lines. Energy stocks followed oil prices ($82.49/bbl, -1.76, -2.1%) lower.

[…]

The 2-yr yield rose five basis points to 0.43% amid increased expectations for the Fed to hike rates sooner than forecasted. The 10-yr yield rose four basis points to 1.68% amid expectations for improved economic growth. The U.S. Dollar Index increased 0.2% to 93.78.

[…]
  • Initial claims for the week ending October 16 decreased by 6,000 to 290,000 (Briefing.com consensus 303,000). That is the second straight week they have been below 300,000 and it is the lowest level of initial claims since March 14, 2020. Continuing claims for the week ending October 9 decreased by 122,000 to 2.481 million, and that, too, was the lowest level for continuing claims since March 14, 2020.
  • […]
  • Existing home sales increased 7.0% m/m in September to a seasonally adjusted annual rate of 6.29 million (Briefing.com consensus 6.05 million). Total sales in September were down 2.3% from a year ago.
  • […]
  • The Conference Board’s Leading Economic Index (LEI) increased 0.2% in September (Briefing.com consensus +0.5%) after increasing a downwardly revised 0.8% (from 0.9%) in August.
  • The Philadelphia Fed Index for October decreased to 23.8 (Briefing.com consensus 24.5) from 30.7 in September.
[…]
  • S&P 500 +21.1% YTD
  • Nasdaq Composite +18.1% YTD
  • Dow Jones Industrial Average +16.3% YTD
  • Russell 2000 +16.3% YTD

Overseas: 

  • Europe: DAX -0.3%, FTSE -0.5%, CAC -0.3%
  • Asia: Nikkei -1.9%, Hang Seng -0.5%, Shanghai +0.2%

Commodities: 

  • Crude Oil -0.71 @ 82.65
  • Nat Gas -0.03 @ 5.15
  • Gold -5.80 @ 1781.20
  • Silver -0.31 @ 24.14
  • Copper -0.19 @ 4.55
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