Daily Brief For May 21, 2021

Daily commentary for U.S. broad market indices.

Market Commentary

Index futures in balance.

  • Global tax revamp is gathering pace.
  • Ahead: Home sales, PMI, Fed speak.
  • Indices sideways-to-higher overnight.

What Happened: U.S. stock index futures auctioned within prior-range, overnight, alongside calls for a global minimum corporate tax rate of 15%, data on existing home sales and PMI, as well as Fed speak.

Graphic updated 7:25 AM EST.

What To Expect: Friday’s regular session (9:30 AM – 4:00 PM EST) in the S&P 500 will likely open near 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 beyond the S&P 500’s $4,134.00 spike base, which is significant because it marked a so-called pivot on the composite profile (i.e., above = bullish, below = neutral-to-bearish).

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).

Initiative Buying: Buying within or above the previous day’s value area.

This recent ongoing rotation at higher prices comes as participants have been attempting to price in emerging dynamics with respect to rising inflation, fiscal and monetary tightening, COVID-19 case rises, geopolitical conflict, and the like.

In pricing in these dynamics, the movement has been both volatile and mechanical, halting short of key visual references suggesting the participants involved are short-term (i.e., technically-driven) in nature. Adding, amid this rotation, quite a bit of poor structure has been cleaned up (i.e., low-volume areas), but still, judging by a lack of excess at certain points on the composite volume profile, odds point to limited conviction and commitment.

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.

The major takeaway? Without follow-through to the downside, it is difficult to get pessimistic. As the saying goes, “never short a dull market.” The case for higher prices, as high as $4,300.00-$4,400.00, per JPMorgan Chase & Co (NYSE: JPM) research remains in play.

Moreover, for today, participants can trade from the following frameworks. 

In the best case, the S&P 500 trades sideways or higher; activity above the $4,153.25 high volume area (HVNode) targets the $4,177.25 HVNode. Initiative trade beyond the $4,177.25 HVNode could reach as high as the $4,227.00 POC. 

In the worst case, the S&P 500 trades lower; activity below the $4,153.25 HVNode puts in play the $4,136.25 and $4,122.25 HVNodes. Trading below those two references is negative; participants should look for the $4,071.00 POC to offer some response.

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.

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: 65-minute profile chart of the Micro E-mini S&P 500 Futures.
Graphic: Daily candlestick charts of the S&P 500 (top left), Nasdaq 100 (top right), Russell 2000 (bottom left), and Dow Jones Industrial Average (bottom right). Relative strength is shifting back to the Nasdaq.
Graphic: Physik Invest maps out the purchase of call and put options in the SPDR S&P 500 ETF Trust (NYSE: SPY), for May 20. Activity in the options market was primarily concentrated in short-dated tenors, in call strikes at and above current prices.
Graphic: SHIFT search suggests participants were most interested in call and put strikes across available strikes in the cash-settled S&P 500 Index (INDEX: SPX) and Nasdaq 100 Index (INDEX: NDX), May 20.

News And Analysis

Economy | Global tax revamp gathers pace as Europe salutes U.S. proposal. (BBG)

Economy | Markets still pricing in first rate hike well ahead of Fed guidance. (Moody’s)

Economy | Housing outlook facing more uncertainty as 2022 growth revised. (MND)

Economy | Global corporate rating stabilization continues as recovery unfolds. (Fitch)

Economy | Uneven economic, population trends contribute to diverging credit. (Moody’s)

Economy | How the post-pandemic labor crunch is curbing U.S. manufacturing. (REU)

Economy | Eurozone business growth hits a high on services resurgence. (REU)

What People Are Saying

Innovation And Emerging Trends

FinTech | Nasdaq, Benzinga partner over actionable market intelligence. (BZ)

FinTech | Analysis: How to borrow cryptocurrencies with more certainty. (VV)

FinTech | MX adds Lexi Hall to empower regulatory innovation in fintech. (BZ)

Crypto | U.S. Treasury calls for stricter cryptocurrency rules, reporting. (TC)

Energy | Ford’s powerhouse EV F-150 can actually power your house. (TC)

FinTech | Harris, CHC discussed digital banking for Northern Triangle. (Axios)


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, 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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