Morning Notes – Tuesday December 15, 2020

Directional Bias For The Day:

  • S&P Futures are higher ;
  • The odds are for an up day; watch for a break below 3645.50 for change of fortunes
  • Key economic data report due during the day:
    • Empire State Manufacturing PMI (4.9 vs. 6.3 est.; prev. 6.3) at 8:30 AM
    • Import Prices (0.1% vs. 0.3% est.; prev. -0.1%) at 8:30 AM
    • Capacity Utilization Rate ( 73.1% est.; prev. 72.8%) at 9:15 AM
    • Industrial Production ( 0.3% est.; prev. 1.1%) at 9:15 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3662.91, 3645.84, and 3633.40
  • Critical resistance levels for S&P 500 are 3675.27, 3697.61, and 3712.39
  • Key levels for E-mini futures: break above 3668.50, the high of 7:00 AM and break below 3645.50, the low of 3:00 AM


  • On Monday at 4:00 PM, S&P futures (March 2021) closed at 3637.50 and the index closed at 3647.49 – a spread of about -10.00 points; futures closed at 3640.00 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 +24.75; Dow by +168, and NASDAQ by +80.75

Markets Around The World

  • Markets in the East closed mostly down – Mumbai was up
  • European markets are mixed – Germany, France, and Itlay are up; the UK, Spain, Switzerland, and STOXX 600 are down
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Most soft commodities mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 0.903%, up 5.9 BP from two weeks ago;
    • 30-years is at 1.642%, up 6.9 BP;
    • 2-years yield is at 0.121%, down 2.4 BP;
    • The 10-Year-&-2-Year spread is at 0.782, up from 0.699
  • VIX
    • At 23.21 @ 6:30 AM; down from the last close; at/above 5-day SMA;
    • Recent high =  27.27 on November 12; low =  19.51 on November 27
    • Sentiment: Risk-On-Neutral

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

  • 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
  • The week ending on December 11 was a relatively small Harami candle, a spinning top candle with small upper and lower shadows; made an all-time intraday high;
    • Stochastic (9,1, 3): %K is crossing below %D; above 90
    • RSI (9) is turning down from near 70
  • The week was down -35.66 or -1.0%; the 5-week ATR is 99.31
  • A down week; fourth in the last five weeks and seventh in the last ten weeks
  • The weekly week pivot point=3669.75, R1=3706.10, R2=3748.74; S1=3627.11, S2=3590.76; no pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23
  • A red candle with almost no lower shadow and an upper shadow almost equal to the real body; the daily trend is sideways-to-down
    • Broke above a symmetrical triangle at 3550.00 level on November 9; the 61.8% extension target is near 3750.00; 100% extension target is near 3900.00
    • %K is below %D; from above 90 to below 20
    • RSI-9 turning down from near 70 to just above 50; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Bouncing up since 2:00 PM on Monday after declining from early Monday morning high; within a congestion area of past many days; gap-up at the open of the week on Sunday is filled
    • RSI-21 is near 55 after dipping near 30 at 2:00 PM
  • Above EMA20 but at/below EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Moving up since 12:00 AM after making a Double Bottom – the e100% extension target is achieved and the 161.8% extension target is near 3675.00
    • RSI-21 is moving higher near 60 after making a Bullish Divergence at 12:00 AM
    • %K is below %D since 3:30 AM; Bearish Divergence
  • Above EMA20, which is at EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) is moving up since 2:45 AM
  • The Bollinger Band is expanding slightly since 2:45 AM with price walking up the upper band
    • Stochastic (9, 1, 3): %K is below %D since 7:30 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly lower on Monday, December 14 in mixed volume.  NASDAQ Composite and Russell 2000 closed higher. Dow Jones Industrial Average and Dow Jones Transportation Average traded in lower volume. Major indices gapped up at the open but started to decline in the late morning and picked up steam near the close of trading. Major indices are mostly lower from a week ago. The daily market trend is sideways-to-down.


The S&P 500 started Monday’s session with a 0.9% gain as the U.S. began distributing the first COVID-19 vaccines to the public, but an orderly retreat ensued that left the benchmark index down 0.4% for the session. The Dow Jones Industrial Average (-0.6%) joined the benchmark index in the red after hitting an all-time high in early action.

The Nasdaq Composite (+0.5%) and Russell 2000 (+0.1%), however, ended the session in positive territory.


Within minutes after the open, the S&P 500 energy sector (-3.5%) and last week’s hot IPO companies succumbed to profit-taking interest, sapping some enthusiasm from this market. The financials (-1.2%), materials (-1.3%), and industrials (-1.3%) sectors also lagged, while the consumer discretionary (+0.5%) and information technology (+0.4%) sectors closed higher.


U.S. Treasuries finished little changed after starting the session in the red, as investors returned to bonds amid the lackluster intraday price action in the major indices. The 2-yr yield was flat at 0.11%, and the 10-yr yield was flat at 0.89%. The U.S. Dollar Index declined 0.3% to 90.69. WTI crude increased 0.9%, or $0.42, to $47.00/bbl.

  • Nasdaq Composite +38.6% YTD
  • Russell 2000 +14.7% YTD
  • S&P 500 +12.9% YTD
  • Dow Jones Industrial Average +4.6% YTD
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