Market Remarks

Morning Notes – Tuesday, February 1, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:45 AM; moving up since 4:30 AM
  • The odds are for an up day with elevated volatility; watch for a break below 4482.00 for a change of sentiments
  • Key economic data report due during the day:
    • Final Manufacturing PMI ( 55.0 est.; prev. 55.0) at 9:45 AM
    • ISM Manufacturing PMI ( 57.4 est.; prev. 58.7 ) at 10:00 AM
    • JOLTS Job Openings (10.35M est.; 10.56M ) at 10:00 AM
    • Construction Spending (0.7% est.; prev. 0.4%) at 10:00 AM
    • ISm Manufacturing Prices ( 67.6 est.; prev. 68.2) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Correction
  • Daily: Confirmed Uptrend
  • 120-Min: Down-Side
  • 30-Min: Side-Up
  • 15-Min: Up-Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for S&P 500 are 4491.76, 4471.46, and 4454.13
  • Critical resistance levels for S&P 500 are 4530.20, 4552.62, 4579.96
  • Key levels for E-mini futures: break above 4514.50, the high of 3:15 AM and break below 4482.00, the low of 4:45 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2022) closed at 4501.75 and the index closed at 4515.55 – a spread of about -13.75 points; futures closed at 4504.25 for the day; the fair value is -2.50
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +6.00; Dow by +35; and NASDAQ by +49.00

Markets Around The World

  • Markets in the East closed higher – Shanghai, Hong Kong, Seoul, and Singapore were closed
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.766%, down -9.9 basis points from two weeks ago;
    • 30-years is at 2.098%, down -8.6 basis points;
    • 2-years yield is at 1.181%, up +13.4 basis points;
    • The 10-Year-&-2-Year spread is at 0.585, down from 0.818
    • The 30-Year-&-10-Year spread is at 0.332, up from 0.319
  • VIX
    • At 24.44 @ 8:30 AM; down from the last close; below the 5-day SMA;
    • Recent high = 38.9 on January 24; low =  17.36 on January 12
    • Sentiment: Risk-On-Neutral

The trend and patterns in 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 28 was a green candle that looked like a hammer with a small upper shadow;
    • Stochastic (9,1, 3): %K is crossing above %D from near zero
    • RSI-9 has turned up; just below 40
  • The week was up +33.91 or +0.8%; the 5-week ATR  is 180.75
  • An up week; second in the last five weeks, and fourth in the previous ten weeks
  • The weekly pivot point=4369.23, R1=4515.85, R2=4599.84; S1=4285.24, S2=4138.62; S1/S2 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • A large green candle with almost no upper shadow and a small lower shadow; breaking above a resistance level the low of December 3, 2021
    • Stochastic (9, 1, 3): %K is above %D; above 75
    • RSI-9 has moved just above 50; above 8-day EMA;
  • Below 20-day EMA, 50-day EMA, 100-day SMA; at 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Moving above that congestion area from January 24; downtrend since January 4 – lower lows and lower highs;
    • RSI-21 is rising in a zig-zag manner; above 65
    • Above EMA 20, which is above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Broke above a downtrend line from January 4 high;  broke above a Horizational Channel between 4440.00 and 4260.00; the 61.8% extension target near 4551.24 and the 100% extension target near 4620.00
    • RSI-21 is moving above 60
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 6:00 PM
  • The Bollinger Band is expanding slightly since 3:00 AM with price moving towards the upper band
    • Stochastic (9, 1, 3): %K is crisscrossing %D above 80
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Monday, January 31, in lower volume. The major indices opened up and then traded higher for most of the day closing near the highs. They are moving above a congestion area that they stayed in for the past few days.

From Briefing.com:

The S&P 500 rose 1.9% on Monday in a steady advance paced by the growth stocks. The Nasdaq Composite (+3.4%) and Russell 2000 (+3.1%) outperformed with gains over 3.0%, while the Dow Jones Industrial Average underperformed on a relative basis with a 1.2% gain. […]

All 11 S&P 500 sectors closed in positive territory amid another strong finish. The consumer discretionary (+3.8%), information technology (+2.7%), and communication services (+2.4%) sectors, which contain the mega-caps, finished atop the standings while the energy sector increased just 0.4%.

[…]

The 2-yr yield decreased one basis point to 1.16%, and the 10-yr yield was unchanged at 1.78%. The U.S. Dollar Index pulled back 0.7% to 96.63. WTI crude futures settled above $88 per barrel ($88.16, +1.42, +1.6%).

[…]
  • Dow Jones Industrial Average -3.3% YTD
  • S&P 500 -5.3% YTD
  • Nasdaq Composite -9.0% YTD
  • Russell 2000 -9.7% YTD

Overseas: 

  • Europe: DAX +1.0%, FTSE flat, CAC +0.5%
  • Asia: Nikkei +1.1%, Hang Seng +1.1%, Shanghai closed for holiday

Commodities: 

  • Crude Oil +1.24 @ 88.07
  • Nat Gas +0.22 @ 4.90
  • Gold +13.80 @ 1799.30
  • Silver +0.22 @ 22.46
  • Copper +0.03 @ 4.33
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