Categories
Commentary

Daily Brief For April 15, 2021

Daily commentary for U.S. broad market indices.

Market Commentary

Index futures attempting to initiate out of balance and explore higher prices.

  • Fed to taper before rate increase.
  • Watch claims and other releases.
  • The market rejected lower prices.

What Happened: U.S. stock index futures rose ahead of releases on key economic data and earnings reports.

What To Expect: Thursday’s regular session (9:30 AM – 4:00 PM EST) may open inside of prior-range and -value, suggesting a limited potential for immediate directional opportunity. 

Adding, during the prior day’s regular trade, the worst-case outcome occurred, evidenced by an intraday liquidation that found responsive buyers near the prior day’s pull-back low at $4,120.00. 

As noted in the past few commentaries, U.S. equity index futures are best positioned for balance (i.e., sideways trade) or further upside into Friday’s monthly options expiration (OPEX). Afterward, all bets are off. The potential to correct into the poor structure left behind by the prior week’s price discovery increases dramatically. Spending any considerable amount below the high-volume area (HVNode) at $3,900.00 would change the near-term bullish tone.

Option Expiration (OPEX) Significance: Option expiries mark an end to pinning (i.e, the theory that market makers and institutions short options move stocks to the point where the greatest dollar value of contracts will expire worthless) and the reduction dealer gamma exposure.

More On Volume Areas: A structurally sound market will build on past areas of high-volume (HVNode). Should the market trend for long periods of time, it will lack sound structure (identified as a low-volume area (LVNode) which denotes directional conviction and ought to offer support on any test). 
If participants were to auction and find acceptance into areas of prior low-volume, then future discovery ought to be volatile and quick as participants look to areas of high volume for favorable entry or exit.

For today, participants can trade from the following frameworks. 

In the best case, the S&P 500 trades sideways or higher; activity above yesterday’s fairest price to do business, $4,137.00, targets the $4,143.75 regular-trade high (RTH High). Initiative trade beyond the RTH High could reach as high as the $4,152.00 and $4,162.75 price extensions. In the worst case, the S&P 500 trades lower; activity below the regular-trade low (RTH Low) at $4,113.00 targets the $4,104.00 spike base and $4,092.50 untested POC (VPOC).

More On Spikes: Spike’s mark the beginning of a break from value. Spikes higher (lower) are validated by trade at or above (below) the spike base (i.e., the origin of the spike).

POCs: POCs (like HVNodes described above) are valuable as they denote areas where two-sided trade was most prevalent. Participants will respond to future tests of value as they offer favorable entry and exit.
Graphic: 4-hour profile chart of the Micro E-mini S&P 500 Futures.
Graphic: Physik Invest maps out the purchase of call and put options in the SPDR S&P 500 ETF Trust (NYSE: SPY), for April 14, 2021. Activity in the options market was primarily concentrated in short-dated tenors, in strikes as low as $364, which corresponds with $3,640 in the cash-settled S&P 500 Index (INDEX: SPX).
Graphic: SHIFT search shows that trade in the SPDR S&P 500 ETF Trust (NYSE: SPY) lacks duration. This could be construed as the absence of directional commitment.

News And Analysis

Markets | Wall Street banks pivot from pandemic to boom times. (Axios)

Markets | Chinese fund jumps 258% after ditching Dalio playbook. (BBG)

Economy | Consumer, main street demand for loans is lacking. (REU)

Economy | Freddie Mac sees rates and prices leveling off into 2022. (MND)

Economy | Biden infrastructure plan to boost growth, employment. (Moody’s)

Economy | U.S. economy gaining momentum, consumers confident. (REU)

Economy | U.S. import prices increase solidly, boosting inflation. (REU)

Politics | Biden to hit Putin with Russia sanctions after summit offer. (BBG)

Markets | BlackRock assets hit $9T on stimulus, vaccine hopes. (BBG)

Markets | Cathie Wood’s ARK buys into Coinbase, sells some Tesla. (REU)

Markets | VanEck launches new digital asset-focused ETF on Nasdaq. (TB)

What People Are Saying

Innovation And Emerging Trends

Supply Chain | Kroger launches a massive robot-filled fulfillment center. (TC)

Automotive | Ford takes aim at Tesla, GM with its autonomous system. (TC)

Crypto | AXA allows customers to pay insurance premiums in bitcoin. (TB)

FinTech | One Finance CEO eyes massive overhaul of digital finance. (Fox

 About

Renato founded Physik Invest after going through years of self-education, strategy development, and trial-and-error. His work reporting in the finance and technology space, interviewing leaders such as John Chambers, founder, and CEO, JC2 Ventures, Kevin O’Leary, Canadian businessman and Shark Tank host, Catherine Wood, CEO and CIO, ARK Invest, among others, afforded him the perspective and know-how very few come by.

Having worked in engineering and majored in economics, Renato is very detailed and analytical. His approach to the markets isn’t built on hope or guessing. Instead, he leverages the unique dynamics of time and volatility to efficiently act on opportunity.

Disclaimer

At this time, Physik Invest does not manage outside capital and is not licensed. In no way should the materials herein be construed as advice. Derivatives carry a substantial risk of loss. All content is for informational purposes only.

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