Market Remarks

Morning Notes – Tuesday, December 7, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM; moving higher since 7:15 PM after moving sideways for a few hours
  • The odds are for an up day with a good chance of sideways move from pre-open levels around 4650.00 – watch for a break below 4619.75 for a change of sentiments
  • Key economic data report due during the day:
    • Revised Non-Farm productivity ( -4.9% est.; prev. -5.0%) at 8:30 AM
    • Revised Unit Labor Costs ( 8.3% est.; prev. 8.3%) at 8:30 AM
    • Trade Balance (-66.9B est.; prev. -80.9B) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4612.60, 4588.31, and 4571.15
  • Critical resistance levels for S&P 500 are 4652.94,4672.95, and 4702.87
  • Key levels for E-mini futures: break above 4656.75, the high of 5:45 AM and break below 4636.50, the low of 4:30 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2021) closed at 4591.25 and the index closed at 4591.67 – a spread of about -0.50 points; futures closed at 4590.00 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +59.25; Dow by +337; and NASDAQ by +281.00

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • USD/CAD
    • INR/USD
    • Dollar index
    • 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 -19.1 basis points from two weeks ago;
    • 30-years is at 1.757%, down -22.1 basis points;
    • 2-years yield is at 0.595%, up +7.8 basis points;
    • The 10-Year-&-2-Year spread is at 0.847, down from 1.108
    • The 30-Year-&-10-Year spread is at 0.323, down from 0.353
  • VIX
    • At 23.79 @ 7:00 AM; down from the last close; below 5-day SMA;
    • Recent high = 35.32 on December 3; low =  16.03 on November 16
    • Sentiment: Risk-On

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 December 3 was a red spinning top candle following a large Bearish Engulfing candle
    • Stochastic (9,1, 3): %K is below %D; near 55
    • RSI-9 is just above 50
  • The week was down -56.19 or -1.2%; the 5-week ATR  is 117.74
  • A down week; third in the last five weeks, and fourth in the previous ten weeks
  • The weekly pivot point=4568.83, R1=4642.55, R2=4746.66; S1=4464.72, S2=4391.00; S1 pivot level was breached
  • At/below 10-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A green spinning top candle near the previous day’s high;
    • Stochastic (9, 1, 3): %K crossed above %D
    • RSI-9 turned up from near 30 to above 45; above 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)
  • The sequence of lower lows and lower highs since November 22 is broken; broke above a downtrend line from the all-time highs;
    • RSI-21 is trending higher; above 75
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Broke above a Horizontal Channel on Monday; 61.8% extension target near 4653.00is achieved; 100% extension target is near 4690.00 and the 161.8% extension target is near 4750.00
    • RSI-21 trending up; above 70
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 9:30 AM on Monday
  • The Bollinger Band is contracting slightly since 7:30 AM
    • Stochastic (9, 1, 3): %K crossed above %D from around 20 at 7:30 AM
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Monday, December 6, in mostly lower volume. Dow Jones Transportation Average traded in higher volume. Major indices opened higher and then mostly traded higher for the rest of the day.

From Briefing.com:

The stock market began the week on a strong note with the S&P 500 (+1.2%) reclaiming its entire loss from Friday. The Dow (+1.9%) fared even better, rising to a one-week high, while the Nasdaq (+0.9%) managed a firmly higher close after revisiting Friday’s low in early trade. […]

All eleven sectors ended the day in positive territory with nine groups gaining at least 1.0%. The energy sector (+1.5%) finished near the top of the leaderboard thanks to a daylong rally in crude oil. WTI crude climbed $3.21, or 4.84%, to $69.59/bbl, finishing the pit session just below its 200-day moving average (69.93), which offered resistance over the past week.

[…]

Other growth-sensitive sectors like financials (+1.4%) and materials (+1.5%) also finished ahead of the broader market while top-weighted technology (+1.0%) underperformed throughout the day, but still ended firmly in the green.

[…]

Treasuries finished near their lows with the 10-yr yield rising nine basis points to 1.43%.

[…]
  • S&P 500 +22.3% YTD
  • Nasdaq Composite +18.1% YTD
  • Dow Jones Industrial Average +15.1% YTD
  • Russell 2000 +11.6% YTD

Overseas: 

  • Europe: DAX +1.4%, FTSE +1.5%, CAC +1.5%
  • Asia: Nikkei -0.4%, Hang Seng -1.8%, Shanghai -0.5%

Commodities: 

  • Crude Oil +3.68 @ 69.73
  • Nat Gas -0.43 @ 3.69
  • Gold -5.10 @ 1780.60
  • Silver -0.24 @ 22.30
  • Copper +0.07 @ 4.34
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