Market Remarks

Morning Notes – Thursday, December 2, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM; futures have declined from 4552.00 a 2:00 PM to around 4530.00
  • The odds are for an up day with elevated volatility – watch for a break below 4508.00 for a change of sentiments
  • Key economic data report due during the day:
    • Challenger Job Cuts ( -77.0%; prev. -71.7%) at 7:30 AM
    • Unemployment Claims ( 238K est.; prev. 199K) at 8:30 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Under Pressure
  • 120-Min: Down
  • 30-Min: Down
  • 15-Min: Down-Side
  • 6-Min: Down-Side

Key Levels:

  • Critical support levels for S&P 500 are 4510.27, 4496.41, and 4477.83
  • Critical resistance levels for S&P 500 are 4559.70, 4575.42, and 4599.05
  • Key levels for E-mini futures: break above 4552.00, the high of 2:00 AM and break below 4508.00, the low of 6:15 PM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2021) closed at 4508.50 and the index closed at 4513.04 – a spread of about -4.50 points; futures closed at 4508.50 for the day; the fair value is 0.0
  • Pre-NYSE session open, futures are mixed – at 7:30 AM, S&P 500 futures were up by +17.00; Dow up by +227; and NASDAQ down by -14.00

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo, Sydney, and Singapore closed lower; Hong Kong, Mumbai, and Seoul closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.434%, down -17.0 basis points from two weeks ago;
    • 30-years is at 1.778%, down -21.8 basis points;
    • 2-years yield is at 0.555%, up +5.5 basis points;
    • The 10-Year-&-2-Year spread is at 0.879, down from 1.104
    • The 30-Year-&-10-Year spread is at 0.344, down from 0.392
  • VIX
    • At 28.28 @ 6:15 AM; up from the last close; above 5-day SMA;
    • Recent high = 32.61 on December 1 26; low =  16.03 on November 16
    • Sentiment: Risk-Off

The trend and patterns on various time frames for S&P 500:

Monthly
  • November 2021 was a Shooting Star candle at all-time highs; watch for a close below November’s lows;
    • Stochastic (9, 1, 3): %K crossed below %D; from near 100; %D Bearish Divergence
    • RSI-9 is turning down from above 75; 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 November 26 was a relatively large Bearish Engulfing candle with almost no lower shadow and a small upper shadow
    • Stochastic (9,1, 3): %K is below %D; below 70
    • RSI-9 is just below 60
  • The week was down -103.34 or -2.3%; the 5-week ATR  is 967.32
  • A down week; second in the last five weeks, and third in the previous ten weeks
  • The weekly pivot point=4641.29, R1=4697.16, R2=4799.69; S1=4538.76, S2=4482.89; R1/R2/S1/S2/S3 pivot levels were breached
  • Above 10-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend
Daily
  • A relatively large red candle that opened lower with almost no upper and lower shadows;
    • Stochastic (9, 1, 3): %K crossed below %D; below 5
    • RSI-9 is dropped to near 35; below 8-day EMA
  • Below 20-day EMA; At/above 50-day EMA; above 100-day SMA, and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Bouncing off the lows at 4497.75 at 4:0 PM on Wednesday; broke below a Horizontal Channel between 4711.75 and 4625.25; the 100 % extension target near 4538.00 is achieved; the 161.8% extension target is near 4485.00
    • RSI-21 bounced up to 40 from near 25; Bullish Divergence
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving down since 2:00 AM on November 25 in steps from 4717.00 to near 4530.00
    • RSI-21 moved to between 40 and 50 after declining to near 25
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 10:15 PM
  • The Bollinger Band is relatively narrow
    • Stochastic (9, 1, 3): %K is crisscrossing %D lower at 7:00 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Wednesday, December 1, in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in higher volume. Major indices opened higher and traded higher in the morning session. They all turned around at about 11:00 AM and sharply declined in the afternoon trading, closing below Tuesday’s lows. The sentiments have decidedly turned negative.

From Briefing.com:

The S&P 500 fell 1.2% on Wednesday after being up 1.9% intraday, as momentum faded and news of the first reported case of the Omicron variant in the U.S. weighed on sentiment. […]

The Dow Jones Industrial Average fell 1.3%, the Nasdaq Composite fell 1.8%, and the Russell 2000 lost 2.3%.

[…]

All 11 S&P 500 sectors were trading higher, but only one escaped with a gain. The consumer discretionary (-1.9%) and communication services (-2.0%) sectors led the retreat with roughly 2% declines, while the utilities sector (+0.2%) managed to close higher.

[…]

The 10-yr yield declined one basis point to 1.43% after hitting 1.50% overnight.

[…]

The 2-yr yield rose four basis points to 0.56% as the market continued to signal expectations for the Fed to tighten policy more quickly. The U.S. Dollar Index increased 0.1% to 96.08. WTI crude futures fell 0.8%, or $0.53, to $65.61/bbl after being up more than 4.0% early in the session.

[…]
  • The November ISM Manufacturing Index checked in at 61.1% (Briefing.com consensus 61.0%), up slightly from 60.8% in October. A number above 50.0% is indicative of expansion. November marked the 18th straight month of expansion for the manufacturing sector.
  • […]
  • Total construction spending increased 0.2% month-over-month in October (Briefing.com consensus +0.4%) following a downwardly revised 0.1% decline (from 0.0%) in September. Total private construction declined 0.2% month-over-month while total public construction spending increased 1.8%.
  • […]
  • The ADP Employment Change report estimated 534,000 jobs were added to private-sector payrolls in November (Briefing.com consensus 515,000). The increase in October was downwardly revised to 570,000 from 571,000.
  • The final IHS Market Manufacturing PMI for November checked in at 58.3, down from 59.1 in the preliminary reading.
  • The weekly MBA Mortgage Applications Index fell 7.2% following a 1.8% increase in the prior week.
[…]
  • S&P 500 +20.2% YTD
  • Nasdaq Composite +18.4% YTD
  • Dow Jones Industrial Average +11.2% YTD
  • Russell 2000 +8.7% YTD

Overseas: 

  • Europe: DAX +2.5%, FTSE +1.6%, CAC +2.4%
  • Asia: Nikkei +0.4%, Hang Seng +0.8%, Shanghai +0.4%

Commodities: 

  • Crude Oil -0.58 @ 65.88
  • Nat Gas -0.34 @ 4.26
  • Gold +5.60 @ 1782.00
  • Silver -0.55 @ 22.31
  • Copper -0.06 @ 4.24
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