Market Remarks

Morning Notes – Tuesday, January 4, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:45 AM; rising up from 4795.25at 7: 15 AM near the 20-bar EMA on the 15-minute chart after declining from 4807.50
  • The odds are for an up day – watch for a break below 4795.25 and 4792.50 for a change of sentiments
  • Key economic data report due during the day:
    • ISM Manufacturing PMI ( 60.0 est.; prev. 61.1) at 10:00 AM
    • ISM Manufacturing Prices ( 79.3 est.; prev. 82.4) at 10:00 AM
    • JOLTS Job Openings (11.06M est.; prev. 11.03M) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Resumed
  • 120-Min: Up-Side
  • 30-Min: Side-Up
  • 15-Min: Up
  • 6-Min: Up

Key Levels:

  • Critical support levels for S&P 500 are 4796.38, 4784,80, and 4758.17
  • Critical resistance levels for S&P 500 are 4809.41, 4822.26, and 4847.88
  • Key levels for E-mini futures: break above 4807.50, the high of 6:00 AM and break below 4795.25, the low of 7:15 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2022) closed at 4786.50 and the index closed at 4796.56 – a spread of about -10.00 points; futures closed at 4786.00 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +16.25; Dow by +144; and NASDAQ by +29.00

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was down;
  • European markets are mostly higher – Switzerland is lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.679%, up +26.0 basis points from two weeks ago;
    • 30-years is at 2.069%, up +22.0 basis points;
    • 2-years yield is at 0.731%, up +9.7 basis points;
    • The 10-Year-&-2-Year spread is at 0.905, up from 0.785
    • The 30-Year-&-10-Year spread is at 0.390, down from 0.430
  • VIX
    • At 16.69 @ 8:15 AM; up from the last close; below 5-day SMA;
    • Recent high = 27.39 on December 20; low =  16.03 on November 16
    • Sentiment: Risk-Neutral

The trend and patterns on various time frames for S&P 500:

Monthly
  • December 2021 was a green candle that opened above the previous week’s real-body and closed higher with a small upper shadow and a slightly longer lower shadow; at all-time highs
    • Stochastic (9, 1, 3): %K crossed above %D; above 90;
    • RSI-9 is turning up from above 75;
    • Above the upper band of a 120-month regression channel;
  • Confirmed Uptrend: sequence of higher highs and higher lows
Weekly:
  • The week ending on December 31 was a small green candle like a tear-drop
    • Stochastic (9,1, 3): %K is turning down above %D; near 80
    • RSI-9 is just above 65
  • The week was up +40.39 or +0.9%; the 5-week ATR  is 155.50
  • An up week; third in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4769.70, R1=4805.41, R2=4844.64; S1=4730.47, S2=4694.76; R1 pivot level was breached
  • Above 10-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend Resumed
Daily
  • A green candle that looks like a Hammer near all-time highs
    • Stochastic (9, 1, 3): %K crossed above %D; above 90
    • RSI-9 is turning up; above 60; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Breaking above a Horizontal Channel between 4798.00 and 4750.00 – the 61.8% extension target is near 4822.50 and the 100% extension target is near 4840.00
    • RSI-21 has risen to above 65 from near 20 at 6:00 PM on December 30
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving up since 9:30 AM on January 3 after a sideways move that last for a few days;
    • RSI-21 is moving around above 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up  since 2:00 PM on January 3
  • The Bollinger Band is expanding since 5:00 AM; price first waked up the upper band, then fell back to the middle band and not again rising up
    • Stochastic (9, 1, 3): %K is above %D since 7:30 AM
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Monday, January 3, in higher volume. Dow Jones Transportation Average closed lower. The major indices opened up and then traded sideways for some time before climbing up in the afternoon session.

From Briefing.com:

The major indices had a great start to 2022 on Monday, featuring record closes in the S&P 500 (+0.6%) and Dow Jones Industrial Average (+0.7%). The Nasdaq Composite (+1.2%) and Russell 2000 (+1.2%) tied for the lead with 1.2% gains. […]

The S&P 500 consumer discretionary sector, which is home to TSLA and AMZN, advanced 2.8%, but it was outdone by the energy sector (+3.1%) amid higher oil prices ($76.05/bbl, +0.76, +1.0%). The financials (+1.2%) and information technology (+1.2%) sectors followed suit, with the former keying off a big jump in longer-dated Treasury yields.

[…]

In the Treasury market, the 10-yr yield rose 12 basis points to 1.63%, with selling interest influenced by the positive showing in the stock market and potentially due to an improving perspective on the economy. The 2-yr yield rose six basis points to 0.79%. The U.S. Dollar Index increased 0.3% to 96.21.

[…]
  • Total construction spending increased 0.4% month-over-month in November (Briefing.com consensus +0.6%) following an upwardly revised 0.4% increase (from 0.2%) in October. Total private construction increased 0.6% month-over-month while total public construction spending decreased 0.2%. On a year-over-year basis, total construction spending was up 9.3%.
  • […]
  • The preliminary December IHS Markit Manufacturing PMI decreased to 57.7 from a revised final reading of 58.3 (from 57.8) in November.
[…]
  • Nasdaq Composite +1.2% YTD
  • Russell 2000 +1.2% YTD
  • Dow Jones Industrial Average +0.7% YTD
  • S&P 500 +0.6% YTD

Overseas: 

  • Europe: DAX +0.9%, FTSE closed for holiday, CAC +0.9%
  • Asia: Nikkei closed for holiday, Hang Seng -0.5%, Shanghai closed for holiday

Commodities: 

  • Crude Oil 0.76 @ 76.05
  • Nat Gas -0.04 @ 3.69
  • Gold -27.20 @ 1802.20
  • Silver -0.45 @ 22.91
  • Copper -0.03 @ 4.43

Fair Value for Tuesday, January 4:

  • S&P 500: 4,788
  • Nasdaq 100: 16,496
  • DJIA: 36,463
Exit mobile version