Market Remarks

Morning Notes – Tuesday, January 11, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM; futures rose during  the early European session and are retreating a bit since the 5:00 AM high of 4688.25
  • The odds are for an up day with elevated volatility; watch for a break below 4653.25 for a change of sentiments
  • Key economic data report due during the day:
    • Fed Chair Powell’s testimony to the Senate

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Under Pressure
  • 120-Min: Down-Side
  • 30-Min: Up-Side
  • 15-Min: Up-Side
  • 6-Min: Up-Side

Key Levels:

  • Critical support levels for S&P 500 are 4673.02, 4632.93, and 4595.67
  • Critical resistance levels for S&P 500 are 4695.72, 4718.65, and 4725.01
  • Key levels for E-mini futures: break above 4688.25, the high of 5:15 AM and break below 4653.25, the low of 1:30 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2022) closed at 4662.25 and the index closed at 4670.29 – a spread of about -8.00 points; futures closed at 4662.25 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are higher – at 7:45 AM, S&P 500 futures were up by +13.75; Dow by +63; and NASDAQ by +63.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Tokyo, and Sydney closed down;  Mumbai, Seoul, and Singapore closed up
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • Dollar index
    • EUR/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.780%, up +29.9 basis points from two weeks ago;
    • 30-years is at 2.110%, up +22.4 basis points;
    • 2-years yield is at 0.899%, up +19.4 basis points;
    • The 10-Year-&-2-Year spread is at 0.881, up from 0.705
    • The 30-Year-&-10-Year spread is at 0.330, down from 0.405
  • VIX
    • At 19.28 @ 6:45 AM; down from the last close; at/below 5-day SMA;
    • Recent high = 23.33 on January 10; low =  16.34 on January 4
    • Sentiment: Risk-On

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 January 7 was a relatively large Bearish Engulfing candle at all-time highs
    • Stochastic (9,1, 3): %K crossed below %D;
    • RSI-9 is turned down below 60
  • The week was down -89.15 or -1.9%; the 5-week ATR  is 151.11
  • A down week; second in the last five weeks, and fifth in the previous ten weeks
  • The weekly pivot point=4719.46, R1=4776.19, R2=4875.34; S1=4620.31, S2=4563.58; R1/S1/S2 pivot levels were breached
  • Above 10-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A green Hammer following a five-day decline; a potential reversal say candle
    • Stochastic (9, 1, 3): %K crossed above %D from below 10;
    • RSI-9 is just above 40; below 8-day EMA;
  • Below 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Bounced up more than 100 points from a low of 4572.75 – support created by the low of 10:00 AM on December 21
    • RSI-21 is up from below 15 to near 60; Bullish Divergence
  • Above EMA20 but below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Bounced up 100 points to a congestion zone – a down sloping channel that lasted from January 5 to January 9;
    • RSI-21 is moving just below 60;
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 9:30 PM
  • The Bollinger Band is contracting/flattening since 7:00 AM after expanding from 3:45 AM; price drop down from the upper band to below the middle band
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 20
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly lower on Monday, January 10, in most higher volume. NASDAQ Composite closed higher. Dow Jones Transportation Average traded in lower volume. Indices gapped down at the open and then traded lower in the morning session before turning around and recouping most of the losses by the close. The day’s price action looked like a reversal day.

From Briefing.com:

The S&P 500 (-0.1%) declined for the fifth straight session on Monday, but it only lost 0.1% after being down 2.0% intraday. The Nasdaq Composite (+0.1%) eked out a gain after being down 2.7% intraday, while the Dow Jones Industrial Average (-0.5%) and Russell 2000 (-0.4%) also closed well off session lows. […]

Investors started to buy the dip soon after it looked like the 10-yr yield peaked for the day, finding a good excuse to buy into an oversold condition. The Nasdaq, for instance, was down 8.2% in less than five sessions and had fallen below its 200-day moving average (14690).

The S&P 500 couldn’t reclaim its 50-day moving average (4676), though, as eight of its 11 sectors still closed lower. The industrials (-1.2%) and materials (-1.0%) sectors declined at least 1.0%, while the health care sector advanced 1.0%.

[…]

The U.S. Dollar Index increased 0.3% to 95.97. WTI crude futures declined 1.1%, or $0.83, to $78.11/bbl.

Monday’s economic data was limited to Wholesale Inventories, which increased 1.4% m/m in November (Briefing.com consensus 1.2%) following a revised 2.5% increase (from 1.2%) in October. Looking ahead, investors will receive the NFIB Small Business Optimism Index for December on Tuesday.

  • Dow Jones Industrial Average -0.7% YTD
  • S&P 500 -2.0% YTD
  • Russell 2000 -3.3% YTD
  • Nasdaq Composite -4.5% YTD

Overseas: 

  • Europe: DAX -1.1%, FTSE -0.5%, CAC -1.4%
  • Asia: Nikkei CLOSED, Hang Seng +1.1%, Shanghai +0.4%

Commodities: 

  • Crude Oil -0.83 @ 78.11
  • Nat Gas +0.35 @ 4.08
  • Gold +9.90 @ 1799.30
  • Silver +0.08 @ 22.48
  • Copper -0.06 @ 4.35
[…]
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