First Call December 20, 2021

Dec 20, 2021 | First Call, Unlocked Notes

  • S&P futures down 1.2% and Nasdaq futures down 1.3% off worst levels in Monday morning trading after US equities finished mostly lower last week with growth and momentum factors the big underperformers. European markets seeing big pullbacks after Asian markets came under pressure. Treasuries firmer with a bit of curve steepening. 10Y yield back below 1.40%. Dollar weaker vs euro but little changed on yen cross and better against select commodity currencies. Gold down 0.4%. Bitcoin  off 2.3%. WTI crude down 4.8%.
  • Risk-off trade driven by latest ramp in Omicron worries and Manchin’s announcement that he won’t support the ~$1.7T BBB social spending and climate plan. Omicron cases surging and accompanied by headlines about new restrictions and canceled events. Netherlands announced a strict lockdown. UK refused to rule out stricter measures. While Fauci said US lockdowns likely won’t be necessary, expects hospital system to come under stress. NIH Director Collins said US could soon see 1M cases per day. US growth forecasts coming down on dampened prospects for BBB, while economists were already expecting a negative fiscal stimulus for 2022. However, some reprieve from lack of tax increases.
  • Biden to deliver speech on Covid on Tuesday, with plans to unveil new measures to support communities in need and highlight importance of vaccinations. White House reportedly shifting focus from Covid cases to severity. Some discussion about changing central bank reaction function to Covid. Also talk about how Fed is about to start tightening cycle as inflation may be starting to moderate and fiscal support wanes. Elsewhere, China lowered its benchmark LPR for first time since April 2020 following recent policy shift signals. Participation/liquidity expected to be light this week ahead of the Christmas holiday. Thursday brings PCE inflation, durable goods, claims, Michigan consumer sentiment and new home sales.
  • The good news is the markets are closed on Friday

market snapshot

economic reports today

premarket trading


S&P and Nasdaq’s bullish sentiment was down on Friday. Keep in mind sentiment has held the 50% mid point

Bond bullish sentiment

Currency bullish sentiment

Commodity bullish sentiment remains mostly depressed and under 50%


S&P futures 60-minute now has new DeMark buy Countdown 13’s in play and a bounce is likely however it will be a lower high wave 2 bounce as this was the first of five waves down. Expect chop as best case. A break of the lows with failing 13’s has 4500 to contend with. If trading long which I think could work use today’s low as a firm stop.

S&P futures daily has a Sequential sell Countdown working as expected. 4500 is key obvious support

NDX 60 minute time frame also has DeMark buy Countdown 13’s in downside wave 3 of 5. If trading long use today’s low as a firm stop. The downside wave 3 price objective is lower at 15,246 however what matters more is that is did qualify into wave 3. A corrective lower high wave 4 is expected (a lower high below wave 2 (yellow)

NDX futures daily did lock in the Sequential sell Countdown 13 at the highs and has drifted lower failing to break out in the last 3 weeks. Now below the 50 day and a new lower low was made. Currently this is in wave 3 of 5 with a downside wave 3 potential price objective of 15,195

extra Charts we’re watching

On yesterday’s Commodity Weekly I showed this chart and believed this was another lower high bounce (wave 4 of 5) with the potential for downside wave 5. A break of ~65 the wave 3 low would qualify wave 5

US Dollar Index daily has a Sequential now on day 8 of 13 however note this is trading on the lows of the day and lacks momentum on the upside

US 10 year yield 60-minute time frame did achieve the downside wave 5 price objective on the short term with a new DeMark Sequential buy Countdown 13 therefore a bounce is possible to start from here

Bitcoin daily remains under pressure while it continues to hold the 45k level

EURo STOXX 50 and 600 daily charts with Demark observations