Market Remarks

Morning Notes – Monday, October 25, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM; drifting sideways to up 11:30 PM
  • The odds are for a sideways to an up day; the daily bias is up – watch for a break below 4538.25 for more insights
  • No ley economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4538.76, 4524.00, and 4509.84
  • Critical resistance levels for S&P 500 are 4558.52, 4567.25, and 4583.07
  • Key levels for E-mini futures: break above 4546.25, the high of 4:00 AM and break below 4538.50, the low of 3:15 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (December 2021) closed at 4536.25 and the index closed at 4544.90 – a spread of about -8.75 points; futures closed at 4536.50 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +5.75; Dow by +19; and NASDAQ by +41.50

Markets Around The World

  • Markets in the East closed mostly higher – Tokyo and Singapore closed lower
  • European markets mostly higher – France and STOXX 600 are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mixed
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.655%, up +5.9 basis points from two weeks ago;
    • 30-years is at 2.091%, down -7.1 basis points;
    • 2-years yield is at 0.458%, up +14.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.197, down from 1.291
    • The 30-Year-&-10-Year spread is at 0.436, down from 0.557
  • VIX
    • At 15.88 @ 6:30 AM; up from the last close; above 5-day SMA;
    • Recent high = 24.89 on October 1; low =  14.84 on October 22
    • 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 22 was a relatively large green candle at all-time highs
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI-9 is above 60
  • The week was up +73.53 or +1.6%; the 5-week ATR increased to 147.48
  • An up week; fourth in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4517.35, R1=4587.22, R2=4629.55; S1=4475.02, S2=4405.15; R1 pivot level was breached
  • Above 0-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A Harami Doji at all-time intraday high;
    • Stochastic (9, 1, 3): %K is crisscrossing %D near 100
    • RSI-9 is turning down below 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; few Bearish Divergences over the past few days
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting sideways since 2:45 AM;
  • The Bollinger Band is narrow and stable since 4:00 AM;
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mixed on Friday, October 22, in mixed volume. Dow Jones Industrial Average, Dow Jones Transportation Average, and NYSE Composite closed higher. Dow Transports and Russell 2000 traded in lower volume.

For the week, major US indices closed higher in lower volume. Markets in Asia and Europe were mixed. The dollar index closed down for the week. Energy futures were mixed, precious metals were up, industrial metals were down, and the soft commodities were most down for the week. The US Treasury yields were up and all S&P sectors were up too.

From Briefing.com:

The S&P 500 eked out an intraday record high on Friday, but it closed lower by 0.1% and snapped a seven-session winning streak. The Dow Jones Industrial Average (+0.2%) set intraday and closing record highs with a modest gain, while the Nasdaq Composite (-0.8%) and Russell 2000 (-0.2%) closed lower. […]

The 2-yr yield rose four basis points to 0.47% amid increased expectations for the Fed to hike rates sooner than expected due to inflation. The 10-yr yield decreased two basis points to 1.66%. The U.S. Dollar Index decreased 0.2% to 93.62. WTI crude futures rose 1.6%, or $1.28, to $83.77/bbl.

[…]
  • The preliminary IHS Markit Manufacturing PMI decreased to 59.2 in October from 60.7 in September. The preliminary IHS Markit Services PMI increased to 58.2 in October from 54.9 in September.
[…]
  • S&P 500 +21.0% YTD
  • Nasdaq Composite +17.1% YTD
  • Dow Jones Industrial Average +16.6% YTD
  • Russell 2000 +16.0% YTD
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