Market Remarks

Morning Notes – Wednesday, February 16, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower 8:00 AM; moving sideways to up since 6:30 AM on Tuesday within a 40-point range
  • The odds are for a sideways to an up day with elevated volatility; watch for a break above 4483.00 and a break below 4436.00 for clarity
  • Key economic data report due during the day:
    • Retail Sale ( 2.1% est.; prev. -1.9%) at 8:30 AM
    • Core Retail Sales ( 1.0% est.; prev. -2..3%) at 8:30 AM
    • Import Prices ( 1.3% est.; prev. -0.2) at 8:30 AM
    • Industrial Production ( 0.4% est.; prev. -0.1%) at 9:15 AM
    • Capacity Utilization ( 76.8% est.; prev. 76.5%) at 9:15 AM
    • Business Inventories ( 2.1% est.; prev. 1.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4443.06, 4429.28, and 4394.52
  • Critical resistance levels for S&P 500 are 4472.77, 4495.10, and 4526.33
  • Key levels for E-mini futures: break above 4483.00, the high of 4:00 AM and break below 4436.00, the low of 12:30 PM on Tuesday

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2022) closed at 4464.50 and the index closed at 4471.07 – a spread of about -6.00 points; futures closed at 4464.50 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are lower – at 7:45 AM, S&P 500 futures were down by -11.50; Dow by -80; and NASDAQ by -41.50

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai was down
  • European markets are mostly lower – Switzerland is higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • Dollar index
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.045%, up +24.5 basis points from two weeks ago;
    • 30-years is at 2.362%, up +23.8 basis points;
    • 2-years yield is at 1.571%, up +40.2 basis points;
    • The 10-Year-&-2-Year spread is at 0.474, down from 0.631
    • The 30-Year-&-10-Year spread is at 0.317, down from 0.324
  • VIX
    • At 25.42 @ 7:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 32.04 on February 14; low = 19.93 on February 9
    • 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 February 11 was a Bearish Engulfing candle  with a long upper shadow and almost no lower shadow
    • Stochastic (9,1, 3): %K crossed below %D
    • RSI-9 is just above 40
  • The week was down -81.89 or -1.8%; the 5-week ATR  is 206.92
  • A down week; third in the last five weeks, and fifth in the previous ten weeks
  • The weekly pivot point=4470.03, R1=4538.64, R2=4658.65; S1=4350.02, S2=4281.41; S1 pivot level was breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • A green candle that gapped up with almost no upper and lower shadows;
    • Stochastic (9, 1, 3): %K crossed above %D; just below 50
    • RSI-9 turned up to just below 50; at/above 8-day EMA;
  • Below 20-day EMA, 50-day EMA, 100-day SMA; above 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving up since 4:00 AM from 4354.00 at 2:00 PM on Friday after deciding from 4585.00 at 4:00 PM on February 9
    • RSI-21 is just above 50
    • At/above EMA20 but below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving sideways since 3:30 PM on Tuesday
    • RSI-21 has declined from above 65 to 50
    • At/below EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 8:00 AM on Tuesday;
  • The Bollinger Band is stable and relatively narrow
    • Stochastic (9, 1, 3): %K is below %D since 7:00 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday, February 15, in mostly lower volume. Dow Jones Transportation Average traded in higher volume. The indices gapped up at the open and then drifted higher for the rest of the day.

From Briefing.com:

The S&P 500 rallied 1.6% on Tuesday, as the market welcomed a potential de-escalation in the Russia-Ukraine situation. The Nasdaq Composite (+2.5%) and Russell 2000 (+2.8%) both gained at least 2.5% while the Dow Jones Industrial Average gained 1.2%. […]

Nevertheless, the S&P 500 closed at session highs, reclaiming its 200-day moving average (4455), amid gains in nine of its 11 sectors.

The information technology (+2.7%) and consumer discretionary (+2.1%) sectors led the advance with gains over 2.0%. Conversely, the energy (-1.4%) and utilities (-0.6%) sectors closed lower.

[…]

The 2-yr yield decreased two basis points to 1.57%.

[…]
  • The Producer Price Index for final demand jumped 1.0% month-over-month in January (Briefing.com consensus +0.5%) following an upwardly revised 0.4% increase (from +0.2%) in December. Excluding food and energy, the index for final demand increased 0.8% month-over-month (Briefing.com consensus +0.4%) following an upwardly revised 0.6% increase (from 0.5%) in December. On a year-over-year basis, the index for final demand was up 9.7% year-over-year on an unadjusted basis while the index for final demand, less food and energy, was up 8.3% year-over-year on an unadjusted basis.
  • […]
  • The Empire State Manufacturing Survey for February increased to 3.1 (Briefing.com consensus 25.0) from -0.7 in January.
[…]
  • Dow Jones Industrial Average -3.7% YTD
  • S&P 500 -6.2% YTD
  • Russell 2000 -7.5% YTD
  • Nasdaq Composite -9.6% YTD

Overseas: 

  • Europe: DAX +2.0%, FTSE +1.0%, CAC +1.9%
  • Asia: Nikkei -0.8%, Hang Seng -0.8%, Shanghai +0.5%

Commodities: 

  • Crude Oil -3.05 @ 92.05
  • Nat Gas +0.15 @ 4.32
  • Gold -18.00 @ 1855.30
  • Silver -0.47 @ 23.35
  • Copper +0.05 @ 4.53
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