Market Remarks

Morning Notes – Friday, February 11, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher 8:45 AM; advanced more than 50 points since 12:45 AM
  • The odds are for an up day with elevated volatility; watch for a break below 4484.25v and 4467.00 for a change of fortunes
  • Key economic data report due during the day:
    • Prelim UoM Consumer Sentiments ( 67.2 est.; prev. 67.2) at 10:00 AM
    • Prelim UoM Inflation Expectations ( prev. 4.9%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4484.31, 4465.40, and 4451.50
  • Critical resistance levels for S&P 500 are 4510.74, 4529.94, and 4554.18
  • Key levels for E-mini futures: break above 4504.00, the high of 3:45 PM and break below 4467.00, the low of 4:45 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (March 2022) closed at 4498.00 and the index closed at 4504.08 – a spread of about -6.00 points; futures closed at 4497.50 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 +6.50; Dow by +41; and NASDAQ by +29.75

Markets Around The World

  • Markets in the East closed lower – Tokyo was closed
  • European markets are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.031%, up +22.4 basis points from two weeks ago;
    • 30-years is at 2.309%, up +21.8 basis points;
    • 2-years yield is at 1.587%, up +39.6 basis points;
    • The 10-Year-&-2-Year spread is at 0.444, down from 0.616
    • The 30-Year-&-10-Year spread is at 0.278, down from 0.284
  • VIX
    • At 24.91 @ 7:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 26.26 on February 4; low = 19.93 on February 9
    • Sentiment: Risk-Off-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 February 2 was a green candle  with a long upper shadow and almost no lower 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 +1.5%; the 5-week ATR  is 200.38
  • An up week; second in the last five weeks, and fifth in the previous ten weeks
  • The weekly pivot point=4504.29, R1=4592.55, R2=4684.58; S1=4411.26, S2=4322.00; R1 pivot level was breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • A relatively large red spinning top candle;
    • Stochastic (9, 1, 3): %K crossed below %D from above 90
    • RSI-9 turned down to near 50 from near 60; at/below 8-day EMA;
  • Below 20-day EMA, 50-day EMA, and 100-day SMA,; above 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Moving down since 4:00 PM on February 9 from the high of February 2 – potential double top; downtrend since January 4 – lower lows and lower highs;
    • RSI-21 declined to below 30 from above 75; just above 40
    • Below above EMA10 of EMA50, which is below EMA20
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Bouncing off from a support level around 4450.00 and forming a saucer pattern since 3:30 PM on February 10
    • RSI-21 is moving above 50
    • Above EMA20, but below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 11:45 PM;
  • The Bollinger Band is expanding slightly since e7:00 Am with price walking up the upper band
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Thursday, February 10, in mostly higher volume. Dow Jones Transportation Average traded in lower volume. The indices gapped down at the open then rose and almost reached the previous day’s high by 10:30 AM before turning around and declining for the rest of the day and closing near the lows.

From Briefing.com:

The S&P 500 fell 1.8% on Thursday, as rate-hike angst was fueled by the Consumer Price Index (CPI) for January and by comments from St. Louis Fed President Bullard (FOMC voter). The Nasdaq Composite (-2.1%), Dow Jones Industrial Average (-1.5%), and Russell 2000 (-1.6%) also suffered steep losses.

All 11 S&P 500 sectors closed lower with eight sectors losing at least 1.0%. The information technology (-2.8%) and real estate (-2.9%) sectors led the retreat, while the materials (-0.6%) and energy (-0.7%) sectors posted modest declines. Energy stocks received offsetting support from elevated oil prices ($89.84, +0.19, +0.2%).

[..]

The 10-yr yield cracked above 2.00% and settled at 2.04%, or ten basis points above yesterday’s settlement. The 2-yr yield spiked 22 basis points to 1.56%. The U.S. Dollar Index gained 0.2% to 95.69.

[…]
  • Total CPI increased 0.6% month-over-month in January (Briefing.com consensus +0.5%) on the heels of an upwardly revised 0.6% (from 0.5%) for December. Core CPI, which excludes food and energy, was also up 0.6% month-over-month (Briefing.com consensus +0.5%) after increasing 0.6% in December. On a year-over-year basis, total CPI is up 7.5% — the highest since February 1982 — and core CPI is up 6.0% — the highest since August 1982
  • […] .
  • Initial jobless claims for the week ending February 5 decreased by 16,000 to 223,000 (Briefing.com consensus 234,000) while continuing claims for the week ending January 29 held steady at 1.621 million.
[…]
  • Dow Jones Industrial Average -3.0% YTD
  • S&P 500 -5.5% YTD
  • Russell 2000 -8.7% YTD
  • Nasdaq Composite -9.3% YTD

Overseas: 

  • Europe: DAX +0.1%, FTSE +0.4%, CAC -0.4%
  • Asia: Nikkei +0.4%, Hang Seng +0.4%, Shanghai +0.2%

Commodities: 

  • Crude Oil +0.28 @ 89.76
  • Nat Gas -0.03 @ 3.96
  • Gold +2.40 @ 1836.00
  • Silver +0.18 @ 23.45
  • Copper +0.16 @ 4.64
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