Morning Notes – Friday December 4, 2020

/ December 4, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up to sideways day with elevated volatility – watch for the break above 3682.00 and the break below 3655.25 for clarity
  • Key economic data report:
    • Non-Farm Employment Change ( 480K est.; prev. 683K) at 8:30 AM
    • Average Hourly Earnings ( 0.1% est.; prev. 0.1%) at 8:30 AM
    • Unemployment Rate ( 6.8% est.; prev. 6.9%) at 8:30 AM
    • Trade Balance ( -64.7B est.; prev. -63.9B) at 8:30 AM
    • Factory Orders (0.8% est.; prev. 1.1%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3657.17, 3644.84, and 3624.73
  • Critical resistance levels for S&P 500 are 3682.73, 3694.43, and 3706.14
  • Key levels for E-mini futures: break above 3682.00, the high of 3:00 PM and break below 3655.25, the low of 4:00 PM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2020) closed at 3667.00 and the index closed at 3666.72 – a spread of about +0.25 points; futures closed at 3664.50 for the day; the fair value is -2.50
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +10.25; Dow by +111, and NASDAQ by +31.00

Markets Around The World

  • Markets in the East closed mostly up – Tokyo closed down
  • European markets are mostly higher – Germany is lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • Dollar index
    • AUD/USD
    • NZD/USD
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are higher
    • Most soft commodities are mostly lower
  • Treasuries
    • 10-years yield closed at 0.920%, down from the last close of 0.948%;
    • 30-years is at 1.666% down from 1.704%
    • 2-years yield is at 0.153% down from 0.172%
    • The 10-Year-&-2-Year spread is at 0.767 down from 0.776
  • VIX
    • At 21.09 @ 6:30 AM; down -0.19 from the last close; at/above 5-day SMA;
    • Recent high =  27.27 on November 12; low =  19.51 on November 27
    • Sentiment: Risk-Off-to-Neutral

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

Monthly
  • Uptrend Resumed
  • November 2020 was a large green candle with small upper and lower shadows; all-time closing and intraday highs
    • Stochastic %K crossed above %D near 100;
    • RSI-9 near 70; breaking above a downtrend line from January 2018
    • Crossing above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows is resumed
Weekly:
  • The week ending on November 27 was a green candle that opened just above previous weeks’ close and closed above it high; small lower shadow and almost no upper shadow; all-time closing high but not the intraday high;
    • Stochastic (9,1, 3): %K crossed above %D; near 90
    • RSI (9) is near 65
  • The week was up +80.81 or +2.3%; the 5-week ATR is 160.66
  • An up week following a down week; third in the last five weeks and sixth in the last ten weeks
  • The weekly week pivot point=3611.81, R1=3670.85, R2=3703.35; S1=3579.31, S2=3520.27; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23 Resumed
Daily
  • A small red candle with small lower and upper shadows; near all-time high;
    • Broke above a symmetrical triangle on November 9; 50% extension target is near 3710.00; 61.8% extension target is near 3750.00; 100% extension target is near 3900.00
    • %K is crossing below %D
    • RSI-9 moving sideways near 65; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Moving sideways-to-up along the upper band of an ascending triangle from November 9 high; 61.8% extension target is near 3764.00 and 100% extension target is near 3823.00
    • RSI-21 declined to around 60 from above 75 at 12:00 PM on Tuesday
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving sideways-to-up since 3:30 PM on Wednesday near al- time highs
    • RSI-21 moving between 50 and 60
    • %K is above %D;
  • At/above EMA20; which is at/above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving sideways-to-up since 8:00 PM on Wednesday
  • The Bollinger Band is stable but narrow
    • Stochastic (9, 1, 3): %K is below %D since 7:00 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly higher on Thursday, December 3 in mostly higher volume. S&P 500 closed down and NASDAQ Composite Russell 2000 traded in lower volume. Indices were up for most of the day but sharply declined in the last half hour of trading. Indices are mostly moving sideways-to-up for the past few days.

From Briefing.com:

The S&P 500 declined 0.1% on Thursday, as its record-setting hopes were interrupted by news that Pfizer (PFE 40.10, -0.70, -1.7%) is aiming to distribute only half of its COVID-19 vaccines it originally planned due to supply chain issues. Prior to the late-session news, the benchmark index was trading at all-time highs with a 0.4% gain.

The Russell 2000 (+0.6%), Dow Jones Industrial Average (+0.3%), and Nasdaq Composite (+0.2%) still closed higher, as investors had broadened their risk exposure outside the S&P 500 throughout the day.

[…]

Six of the 11 S&P 500 sectors slipped into negative territory on a closing basis, led lower by the utilities (-1.1%) and materials (-0.7%) sectors. The energy (+1.1%) and real estate (+0.7%) sectors outperformed.

[…]

The 2-yr yield decreased one basis point to 0.15%, and the 10-yr yield decreased three basis points to 0.92%. The U.S. Dollar Index fell 0.5% to 90.70 — its lowest level since April 2018. WTI crude futures gained 0.8%, or $0.38, to $45.66/bbl after OPEC+ agreed to a smaller-than-expected 500K bpd production increase, starting in January.

[…]
  • Initial claims for the week ending November 28 decreased by 75,000 to 712,000 (Briefing.com consensus 775,000) — the lowest since the pandemic started — while continuing claims for the week ending November 21 decreased by 569,000 to 5.520 million.
  • […]
  • The ISM Non-Manufacturing Index slipped to 55.9% in November (Briefing.com consensus 56.3%) from 56.6% in October. The dividing line between expansion and contraction is 50.0%. The November reading reflects a slightly slower pace of expansion than the prior month but the sixth straight reading above 50.0%.
  • […]
  • The Markit Services PMI for November was revised higher to 58.4 from 57.7 in the preliminary reading.
[…]
  • Nasdaq Composite +37.9% YTD
  • S&P 500 +13.5% YTD
  • Russell 2000 +10.8% YTD
  • Dow Jones Industrial Average +5.0% YTD
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