Market Remarks

Morning Notes – Wednesday, October 27, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; moving up since 6:45 AM; coming up to a downtrend line resistance
  • The odds are for a sideways to a down day – watch for a break above 4576.25 for a change of sentiments
  • Key economic data report due during the day:
    • Durable Goods Orders ( -0.4% vs. -1.1% est.; prev. 1.8%) at 8:30 AM
    • Core Durable Goods Orders ( 0.4% vs. 0.4% est.; prev. 0.3%) at 8:30 AM
    • Good Trade Balance ( -96.3B vs. -88.2B est.; prev. -87.6B) at 8:30 AM
    • Prelim Wholesale Inventories ( 1.1% vs. 1.0% est.; 1.2%) at 8:30 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 4569.17, 4559.67, and 4537.36
  • Critical resistance levels for S&P 500 are 4587.57, 4598.53, and 4610.19
  • Key levels for E-mini futures: break above 4576.25, the high of 3:00 AM and break below 4557.00, the low of 6:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2021) closed at 4564.75 and the index closed at 4574.79 – a spread of about -10.00 points; futures closed at 4565.25 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +4.00; Dow by +38; and NASDAQ by +282.50

Markets Around The World

  • Markets in the East closed mostly lower – Sydney and Singapore closed higher
  • European markets 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 higher
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.619%, up +3.9 basis points from two weeks ago;
    • 30-years is at 2.051%, down -5.5 basis points;
    • 2-years yield is at 0.481%, up +13.9 basis points;
    • The 10-Year-&-2-Year spread is at 1.138, down from 1.238
    • The 30-Year-&-10-Year spread is at 0.432, down from 0.526
  • VIX
    • At 16.03 @ 7:30 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-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 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 small Shooting Star candle at all-time highs;
    • Stochastic (9, 1, 3): %K is crisscrossing %D near 100
    • RSI-9 is turning down 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 4:00 AM on October 26; Bearish Divergence
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Drifting sideways to down since 9:00 PM on October 25;
    • RSI-21 is between 40 and 50
    • At/below EMA20, which is at/below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 2:15 PM on October 26;
  • The Bollinger Band is expanding since 4:40 AM; price first walked down the lower band and then bounced up to the middle band
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Tuesday, October 26, in higher volume. Russell 2000 and NYSE Composite closed lower. S&P 500, Dow Jones Industrial Average and Wilshire 5000 Total Index made all-time intraday and closing highs. NYSE Composite made an all-time intraday high. The major indices open up and then drifted higher before starting to lose steam mid-day and closed near the lows for the day.

From Briefing.com:

The S&P 500 (+0.2%) and Dow Jones Industrial Average (+0.04%) set intraday and closing record highs on Tuesday, but the major indices closed near session lows as fatigue may have crept in. The Nasdaq Composite finished with a comparable 0.1% gain, while the Russell 2000 fell 0.4%. […]

Despite the lackluster finish, nine of the 11 S&P 500 sectors still closed higher with gains ranging from 0.2% (financials) to 0.7% (energy). The communication services (-0.5%) and industrials (-0.6%) sectors were the only sectors that closed lower.

[…]

The 2-yr yield increased two basis points to 0.45%, and the 10-yr yield decreased two points to 1.62%. The U.S. Dollar Index increased 0.1% to 93.93. WTI crude futures rose 1.1%, or $0.92, to $84.65/bbl.

[…]
  • The Conference Board’s Consumer Confidence Index increased to 113.8 in October (Briefing.com consensus 108.0) from an upwardly revised 109.8 (from 109.3) in September.
  • […]
  • New home sales increased 14.0% month-over-month in September to a seasonally adjusted annual rate of 800,000 (Briefing.com consensus 755,000) from a downwardly revised 702,000 (from 740,000) in August. Taking the downward revision into account, the two-month stack of new home sales growth was roughly in-line with estimates.
  • […]
  • The S&P Case-Shiller Home Price Index for August was up 19.7% yr/yr (Briefing.com consensus 20.0%).
  • The FHFA Housing Price Index increased 1.0% m/m in August following a 1.4% increase in July.
[…]
  • S&P 500 +21.8% YTD
  • Nasdaq Composite +18.2% YTD
  • Dow Jones Industrial Average +16.8% YTD
  • Russell 2000 +16.3% YTD

Overseas: 

  • Europe: DAX +1.0%, FTSE +0.8%, CAC +0.8%
  • Asia: Nikkei +1.8%, Hang Seng -0.4%, Shanghai -0.3%

Commodities: 

  • Crude Oil +1.08 @ 84.59
  • Nat Gas -0.01 @ 5.87
  • Gold -12.90 @ 1794.40
  • Silver -0.41 @ 24.19
  • Copper -0.03 @ 4.49
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