Daily Brief For April 27, 2021

Daily commentary for U.S. broad market indices.

Market Commentary

Index futures auction sideways, validating higher prices.

  • 80% of companies beat expectations.
  • Ahead: FOMC, Biden Address, GDP.
  • Indices balance and correct with time.

What Happened: U.S. stock index futures auctioned sideways, overnight, while Treasury yields and commodities posted substantive gains.

This price action comes as nearly 80% of companies that reported their earnings have either met or beaten expectations. The muted response suggests much the optimism has already been priced in. Now, participants are looking for more information to base their next move. 

See here for information on how to read an earnings report.

Ahead, is data on home prices, consumer confidence, and manufacturing. On Wednesday, Federal Reserve Chair Jerome Powell will hold a conference on central bank policy. On the same day, Joe Biden will address Congress. Thursday, U.S. GDP will likely show improvement in the first quarter, 2021.

Graphic updated 8:30 AM EST.

What To Expect: Tuesday’s regular session (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 sideways trade just shy of the $4,186.75 balance-area high. 

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).

All this comes after a substantial advance. The S&P 500 is up nearly 13% since the start of March and it could be said that the product has been marked up, enough. Given the busy calendar, the odds favor sideways trade. The reason being: a market in balance tends to stay in balance unless some exogenous factor provides participants more information to base their next move.

Adding, Jeff Buchbinder, Equity Strategist for LPL Financial says: “[W]hile sentiment may be overly optimistic and a pickup in volatility would be totally normal, strong breadth measures suggest stocks still may have more upside. This week we tackle that same topic of peak optimism, but by looking at some valuation metrics. While valuations are elevated, they still appear reasonable when factoring in interest rates and inflation.”

Moving on, 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 ledge targets the $4,191.75 overnight high (ONH). Initiative trade beyond the ONH may introduce excess and could reach as high as the Fibonacci-derived price targets, $4,197.25-$4,263.00. 

In the worst case, the S&P 500 trades lower; activity below $4,173.25 regular-trade low (RTH Low) targets the $4,164.25 high-volume area (HVNode). Thereafter, if lower, participants can look for responses at the $4,163.25, $4,137.25, and $4,122.75 HVNodes.

Ledges: Flattened area on the profile which suggests responsive participants are in control, or initiative participants lack the confidence to continue the discovery process. The ledge will either hold and force participants to liquidate (cover) their positions, or crack and offer support (resistance).

Overnight Rally Highs (Lows): Typically, there is a low historical probability associated with overnight rally-highs (lows) ending the upside (downside) discovery process.

Initiative Trade: Buying (selling) within or above (below the previous day’s value area.

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.

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.

As long as the S&P 500 remains in the $4,186.75-$4,110.50 balance area, the course of action is responsive trade.

Graphic: 65-minute profile chart of the Micro E-mini S&P 500 Futures.
Graphic: SHIFT search maps out the trade of call and put options in the SPDR S&P 500 ETF Trust (NYSE: SPY), for April 26. Activity in the options market was primarily concentrated in short-dated tenors, in strikes near current prices. To put it simply, not much is going on, yet.

News And Analysis

Banking | Nomura, UBS take global banks’ Archegos hit to $10B. (BBG)

Economy | U.S. auto dealers are winners as chip shortage lifts profit. (REU)

Markets | Goldman Sachs watching total margin loans after blow-ups. (REU)

M&A | New York Community Bancorp will buy Flagstar Bancorp. (REU)

Economy | France, and Germany support U.S. 21% corporate tax plan. (BBG)

Travel | The E.U. set to let vaccinated U.S. tourists visit this summer. (NYT)

What People Are Saying

Innovation And Emerging Trends

FinTech | Citi eyes mortgage tech in push to close the wealth gap. (BBG)

Innovation | Germany to spend recovery money on green, digital goals. (REU)

FinTech | Mobile bank Current raises $220M Series D, tripling value. (TC)

FinTech | S!NG wants creators to lean on NFTs to protect their IP. (TC


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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