Morning Notes – Monday, October 18, 2021

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM; moving lower since 6:00 PM on Sunday
  • The odds are for a down day – watch for a break above 4455.00 for a change of sentiments
  • Key economic data report due during the day:
    • Industrial Production ( 0.3% est.; prev. 0.4%) at 9:15 AM
    • Capacity Utilization ( 76.6% est.; prev. 76.4%) at 9:15 AM
    • NAHB Housing Market Index ( 75 est. prev. 76) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4457.79, 4447.69, and 4430.28
  • Critical resistance levels for S&P 500 are 4467.17, 4475.82, and 4485.87
  • Key levels for E-mini futures: break above 4455.00, the high of 7:30 AM  and break below 4441.00, the low of 6:15 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (December 2021) closed at 4463.25 and the index closed at 4471.37 – a spread of about -8.25 points; futures closed at 4462.50 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -14.50; Dow by -130; and NASDAQ by -38.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Seoul, and Singapore closed lower; Hong Kong, Sydney, and Mumbai closed up
  • European markets are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals higher
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.576%, up +11.1 basis points from two weeks ago;
    • 30-years is at 2.051%, up +1.2 basis points;
    • 2-years yield is at 0.395%, up +12.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.181, up from 1.195
  • VIX
    • At 17.56 @ 6:30 AM; up from the last close; below 5-day SMA;
    • Recent high = 24.89 on October 1; low =  17.63 on September 24
    • 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 15 was a relatively large green candle rising above 10-week EMA
    • Stochastic (9,1, 3): %K crossed above %D after dipping below 30
    • RSI-9 has just risen above 60
  • The week was up +80.63 or +1.8%; the 5-week ATR increased to 138.09
  • An up week; third in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4425.70, R1=4521.49, R2=4571.60; S1=4375.59, S2=4279.80; S1 pivot level was breached
  • At/above 0-week EMA; above 39-week SMA; at/89-week SMA
  • Uptrend Under Pressure
Daily
  • A green candle that gapped up; almost no upper and lower shadows; breaking above a downtrend line from the all-time high
    • Stochastic (9, 1, 3): %K is above %D; turning down near 100
    • RSI-9 is just below 65; 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)
  • Drifting down from 4469.00 at 6:00 PM on Sunday near a resistance zone between 4450.00 and 4475.00;
    • RSI-21 is declining since 10:00 PM on October 14; made a Bearish Divergence at 6:00 Pm on Sunday
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Drifting down since 6:00 PM on Sunday; dipped below a downtrend line from Sunday high after briefly breaching it to the upside;
    • RSI-21 had declined from above 80 at 12:30 PM on October 14 to near 40
    • At/below EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 7:45 PM; making a rounding top since 10:00 Am on Friday
  • The Bollinger Band is relatively narrow and stable
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Friday, October 15, in mixed volume. Russell 2000 closed lower. Dow Jones Transportation Average and Russell 2000 traded in higher volume. Most indices gapped up at the open and then did not close the gap.

For the week, major US indices closed higher in mixed volume. All but one S&P sector – Communications Services – closed higher for the week. Most Asian markets closed up – Shanghai was down. European markets were up. The dollar index closed up, energy futures were mixed, precious metals and industrial metals were up, and soft commodities were mixed. The US Treasury yields inched down for the week.

From Briefing.com:

The S&P 500 gained 0.8% on Friday,

[…]

The Dow Jones Industrial Average rose 1.1%, while the Nasdaq Composite increased just 0.5% and the Russell 2000 fell 0.4%.

[…]

Notably, the 10-yr yield rose six basis points to 1.58%,

[…]

The 2-yr yield rose five basis points to 0.40%. The U.S. Dollar Index finished little changed at 93.94. WTI crude futures rose 1.2%, or $0.98, to $82.26/bbl.

[..]
  • Total retail sales in September were up 0.7% month-over-month (Briefing.com consensus -0.3%) following an upwardly revised 0.9% increase (from 0.7%) in August. Excluding autos, retail sales jumped 0.8% month-over-month (Briefing.com consensus +0.4%) following an upwardly revised 2.0% increase (from 1.8%) in August.
  • […]
  • The preliminary October University of Michigan Index of Consumer Sentiment dropped to 71.4 (Briefing.com consensus 73.5) from the final reading of 72.8 for September, leaving it pinned near the lows that were registered last year following the shutdown of the economy to combat the spread of COVID.
  • […]
  • Business inventories increased 0.6% m/m in August (Briefing.com consensus 0.7%) following an upwardly revised 0.6% increase (from +0.5%) in July.
  • Import prices increased 0.4% in September after decreasing 0.3% in August. Excluding oil, import prices were flat after decreasing 0.1% in August. Export prices increased 0.1% after increasing 0.4% in August. Excluding agriculture, export prices increased 0.3% after increasing a revised 0.3% (from 0.2%) in August.
[…]
  • S&P 500 +19.0% YTD
  • Nasdaq Composite +15.6% YTD
  • Dow Jones Industrial Average +15.3% YTD
  • Russell 2000 +14.7% YTD
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