Daily Brief For April 26, 2021

Daily commentary for U.S. broad market indices.

Market Commentary

Index futures base. Position for directional resolve. 

  • Earnings, FOMC, and more.
  • Indices base, correct by time.

What Happened: U.S. stock index futures traded sideways overnight ahead of impactful developments such as the corporate earnings, FOMC meeting, and economic data.

Key takeaway: ”We had argued for a likely breakout in bond yields, and continue to believe that equities will be able to tolerate this repricing, as growth-policy trade-off remains supportive,” JPMorgan Chase & Co. (NYSE: JPM) strategists Mislav Matejka, Prabhav Bhadani, and Nitya Saldanha said. “The phase of activity pick-up is ahead of us. At the same time, excess liquidity is likely to stay ample, as policymakers err on the side of caution.”

Graphic updated 7:50 AM EST.

What To Expect: Monday’s regular session in the S&P 500 (9:30 AM – 4:00 PM EST) will likely open inside of prior-range and -value, suggesting a limited potential for immediate directional opportunity. 

Adding, during the prior day’s regular trade, the best case outcome occurred, evidenced by initiative trade that recovered Thursday’s news-driven liquidation. Adding, the liquidation failed to take out the $4,110.50 minimal excess low. Given those nuances, odds favor (1) a correction through time (i.e., balance), rather than price, or (2) higher prices. 

Liquidation Breaks: The profile shape suggests participants were “too” long and had poor location.

Excess: A proper end to price discovery; the market travels too far while advertising prices. Responsive, other-timeframe (OTF) participants aggressively enter the market, leaving tails or gaps which denote unfair prices.

Balance (Two-Timeframe Or Bracket): Rotational trade that denotes current prices offer favorable entry and exit. Balance-areas make it easy to spot change in the market (i.e., the transition from two-time frame trade, or balance, to one-time frame trade, or trend).

For today, participants can trade from the following frameworks. 

In the best case, the S&P 500 trades sideways or higher; activity above the $4,186.75 balance-area high targets the remaining Fibonacci price targets at and above $4,200.00. 

In the worst case, the S&P 500 trades lower; activity below the $4,164.50 high-volume area (HVNode) targets the $4,153.25 HVNode. Thereafter, if lower, participants can look for responses at the $4,137.00 and $4,123.00 HVNodes. 

A break of the $4,110.50 minimal excess low suggests an inclination by participants to revert to the mean and repair some of the poor structure left behind prior discovery.

Volume Areas: A structurally sound market will build on past areas of high-volume. Should the market trend for long periods of time, it will lack sound structure (identified as a low-volume area 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.
Graphic: 4-hour profile chart of the Micro E-mini S&P 500 Futures.
Graphic: 1-day candlestick chart of the cash-settled S&P 500 Index (INDEX: SPX).
Graphic: Physik Invest maps out the purchase of call and put options in the SPDR S&P 500 ETF Trust (NYSE: SPY), for the week ending April 23. Activity in the options market was primarily concentrated in short-dated tenors, in strikes as low as $381.00, which corresponds with $3,810.00 in the cash-settled S&P 500 Index (INDEX: SPX).
Graphic: SHIFT search suggests participants are still not as inclined to add call-side exposure, through the month of May, in the cash-settled S&P 500 Index (INDEX: SPX).
Graphic: SPDR S&P 500 ETF Trust (NYSE: SPY) market liquidity, via Bookmap. Note the divergent volume delta, a measure of buying and selling power as calculated by the difference in volume traded at the bid and offer. Such conditions favor balance (two-timeframe, rotational, or bracket trade).

News And Analysis

Economy | The Fed’s next test is breaking the ice over policy shift. (WSJ)

Politics | U.K. denies Boris Johnson said “let the bodies pile high.” (REU)

Economy | A disconnect between home sales, prices, and rates. (MND)

Economy | German government has raised 2021 growth forecast. (REU)

Economy | The grocery price shock is coming to a store near you. (BBG)

Economy | APAC growth outlooks diverge amid COVID recovery. (Fitch)

What People Are Saying

Innovation And Emerging Trends

Markets | Beijing to crack down on home buying in a famous district. (BBG)

FinTech | Ant Group reveals crypto partnership history with the PBOC. (SCMP)

FinTech | It is a dangerous time to get caught up in the fintech frenzy. (FT)

Recovery | ‘We are drowning in insecurity’: young people after COVID. (FT


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.


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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