Market Remarks

Morning Notes – Monday November 16, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with a good chance to sideways move from pre-open levels around 3615.00 – watch for the break above 3635.75 and the break below 3603.00 for clarity
  • Key economic data report:
    • Empire State Index ( 6.3 vs. 13.8 est.; prev. 10.5) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3593.66, 3552.91, and 3537.78
  • Critical resistance levels for S&P 500 are 3618.22, 3621.15, and 3645.99
  • Key levels for E-mini futures: break above 3635.75, the high of 6:45 AM and break below 3603.00, the low of 3:45 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (December 2020) closed at 3581.75 and the index closed at 3585.15 – a spread of about -3.50 points; futures closed at 3582.00 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are mixed – at 8:30 AM, S&P 500 futures were up by +29.50; Dow up by +452, and NASDAQ down by -45.50

Markets Around The World

  • Markets in the East closed higher – Mumbai was closed for trading
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Copper
    • Platinum
    • Palladium
    • Corn
    • Soybeans
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • NatGas
    • Gold
    • Silver
    • Wheat
  • Bond
    • 10-years yield closed at 0.909%, up from November 12 close of 0.885%;
    • 30-years is at 1.662% up from 1.651%
    • 2-years yield is at 0.181% up from 0.177%
    • The 10-Year-&-2-Year spread is at 0.728 up from 0.708
  • VIX
    • At 23.50 @ 7:15 AM; up +0.40 from the last close; below 5-day SMA;
    • Recent high =  41.16 on October 16; low =  22.41 on November 9
    • Sentiment: Risk-On

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

Monthly
  • Uptrend under pressure
  • October 2020 was a red candle with long upper shadow and smaller lower shadows;
    • Stochastic %K is below %D from above 90; potential %D Bearish Divergence
    • RSI-9 below 60 from near 70; below a downtrend line that it broke above briefly in August
    • Retreating from 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 13 was a Doji candle with almost equal-sized upper and lower shadows; at the upper bound of a Broadening pattern; made all-time closing and intraday high for the week
    • Stochastic (9,1, 3): %K is above %D; above 80
    • RSI (9) is near 65
  • The week was up +75.71 or +2.2%; the 5-week ATR is 164.63
  • An up week; third in the last five weeks and fifth in the last ten weeks
  • The weekly week pivot point=3581.02, R1=3659.12, R2=3715.10; S1=3516.04, S2=3446.94; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23 Resumed
Daily
  • A relatively small green candle with almost no lower shadow and small upper shadow; above the upper bound of a recently broken, to the upside, symmetrical triangle – 50% extension target is near 3710.00; 61.8% extension target is near 3750.00; 100% extension target is near 3900.00
    • %K is crisscrossing %D with down bias; potential Bearish Divergence
    • RSI-9 moving around 65
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Broke above a Horizontal Channel, between 3576.00 and 3513.00, at 2:00 PM on Friday; reached a high of 3635.75, near 100% extension target around 3639.00, at 6:45 AM; 161.8% extension target is near 3678.00
    • RSI-21 is around 75
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Broke above a Horizontal Channel and approaching the high of 3668.00 reached at 8:30 AM on November 9
    • RSI-21 moving above 60
    • %K is crisscrossing %D with a down bias
  • Above EMA20; which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways to up since 10:45 PM on Sunday
  • The Bollinger Band was relatively stable till 6:45 AM; expanding since
    • Stochastic (9, 1, 3): %K is below %D around 20
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Friday, November 13 in lower volume. For the past five days, the major indices have been moving mostly sideways. All S&P sectors closed higher.

For the week, major US indices mostly closed higher in mixed volume. NASDAQ Composite closed lower for the week. S&P 500 and NASDAQ Composite traded in lower volume. S&P 500, Dow Jones Industrial Average, Russell 2000, and Wilshire 5000 Total Market Index made all-time closing and intraday highs for the week. NASDAQ Composite made on intraday high. All S&P sectors except Technology closed higher for the week.

Most Asian and European stock exchanges closed higher. Shanghai was an exception. Dollar and major currencies advanced but Euro declined. Most soft commodities and energy futures closed higher for the week but industrial and precious metal futures closed lower. US Treasury yields were higher for the week.

From Briefing.com:

The S&P 500 (+1.4%) and Russell 2000 (+2.1%) closed at new record highs on Friday, as cyclical and small-cap stocks claimed the new leadership roles in this part of the bull market. The Dow Jones Industrial Average gained 1.4%, and the Nasdaq Composite gained 1.0%.

The gains were broad and steady with all 11 S&P 500 sectors opening and closing in positive territory. Sector gains ranged from 0.9% (utilities) to 3.8% (energy), and all 30 Dow components also finished higher. The industrials (+2.2%) and real estate (+2.3%) sectors were other standouts.

[…]

This economic optimism was mainly manifested in equities since oil prices ($40.12/bbl, -0.96, -2.3%) settled lower by 2%, gold futures ($1886.80/ozt, +11.30, +0.7%) settled higher, and U.S. Treasuries traded relatively unchanged all session.

The 2-yr yield finished flat at 0.17%, and the 10-yr yield increased one basis point to 0.89%. The U.S. Dollar Index decreased 0.3% to 92.73. The CBOE Volatility Index dropped 8.9% to 23.10, as the bullish price action in equities continued to reduce hedging interest against a downturn in stocks.

[…]
  • The Producer Price Index (PPI) report for October was mixed, featuring a higher than expected 0.3% m/m increase in the index for final demand (Briefing.com consensus +0.2%) and a lower than expected 0.1% m/m increase in the index for final demand excluding food and energy (Briefing.com consensus +0.2%).
[…]
  • The preliminary University of Michigan Index of Consumer Sentiment for November checked in at 77.0 (Briefing.com consensus 79.0), down from the final reading of 81.8 for October and 93.2 for the same period a year ago.
[…]
  • Nasdaq Composite +31.8% YTD
  • S&P 500 +11.0% YTD
  • Russell 2000 +4.5% YTD
  • Dow Jones Industrial Average +3.3% YTD
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