Market Remarks

Morning Notes – Thursday, February 17, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower 9:00 AM; declined more than 20 points since 8:00 AM
  • The odds are for a down day with elevated volatility; watch for a break above 4464.25 for a change of sentiments
  • Key economic data report due during the day:
    • Philly Fed Manufacturing Index ( 16.0 vs. 19.9 est.; prev. 23.2) at 8:30 AM
    • Unemployment Claims ( 248K vs. 227K est; prev. 225K) at 8:30 AM
    • Building Permits ( 1.90M vs. 1.70M; prev. 1.89M) at 8:30 AM
    • Housing Starts ( 1.64M vs. 1.70M est.; prev. 1.70M) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4429.28, 4394.52, and 4364.84
  • Critical resistance levels for S&P 500 are 4472.26, 4489.55, and 4495.10
  • Key levels for E-mini futures: break above 4464.25, the high of 8:00 AM and break below 4431.00, the low of 8:45 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2022) closed at 4470.25 and the index closed at 4475.01 – a spread of about -4.75 points; futures closed at 4470.00 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -30.75; Dow by -206; and NASDAQ by -124.00

Markets Around The World

  • Markets in the East closed mostly higher – Tokyo and Mumbai closed lower
  • European markets are lower
  • 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 higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.979%, up +21.3 basis points from two weeks ago;
    • 30-years is at 2.298%, up +20.4 basis points;
    • 2-years yield is at 1.522%, up +36.9 basis points;
    • The 10-Year-&-2-Year spread is at 0.457, down from 0.613
    • The 30-Year-&-10-Year spread is at 0.319, down from 0.328
  • VIX
    • At 24.99 @ 7:45 AM; up from the last close; below the 5-day SMA;
    • Recent high = 32.04 on February 14; low = 19.93 on February 9
    • Sentiment: Risk-Off

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 relatively small green spinning top candle;
    • Stochastic (9, 1, 3): %K is above %D; just below 50
    • RSI-9 is just below 50; at/above 8-day EMA;
  • Below 20-day EMA, 50-day EMA; at/above 100-day SMA; above 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving sideways around 4550.00 since 4:00 AM on February 15 after rising from a low of 4354.00 at 2:00 PM on February 11 and after declining from 4585.00 at 4:00 PM on February 9
    • RSI-21 declined to below 50 from 60
    • At/below EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving sideways since 3:30 PM on Tuesday
    • RSI-21 is moving between 50 and 40
    • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down  since 9:30 PM;
  • The Bollinger Band is stable and relatively narrow
    • Stochastic (9, 1, 3): %K crossed above %D at 9:00 AM from below 20
  • Bias: Side

Previous Session

Major U.S. indices closed mixed on Wednesday, February 16, in mixed volume. Dow Jones Industrial Average, NASDAQ Composite, and Wilshire 5000 Total Market Index closed lower. Dow Jones Transportation Average and S&P 5oo traded in lower volume. The indices opened lower and then traded sideways before rising in the final hour of trading.

From Briefing.com:

The S&P 500 increased 0.1% on Wednesday, as the market reacted positively to the FOMC Minutes from the January meeting. Earlier in the day, the benchmark index was down as much as 0.9% amid negative-sounding Russia-Ukraine headlines.

The Nasdaq Composite lost 0.1% after being down 1.5% intraday. The Dow Jones Industrial Average lost 0.2% after being down 1.0% intraday. The Russell 2000 gained 0.1% after being down 0.8% intraday.

[…]

Ten of the 11 S&P 500 sectors were trading lower with the exception being energy (+0.8%) amid higher oil prices ($93.83, +1.76, +1.9%).

[…]

Nine of the 11 S&P 500 sectors ended the session in positive territory, with materials (+0.7%) finishing in second place behind energy. The information technology (-0.2%) and communication services (-0.2%) sectors closed slightly lower.

[…]

The 2-yr yield declined five basis points to 1.52%.

The 10-yr yield, meanwhile, was unchanged at 2.05%

[…]

The U.S. Dollar Index declined 0.2% to 95.78. Oil prices turned negative post-settlement.

[…]
  • Total retail sales for January increased 3.8% month-over-month (Briefing.com consensus 1.9%) following a downwardly revised 2.5% decline (from -1.9%) in December. Excluding autos, retail sales were up 3.3% month-over-month following a downwardly revised 2.8% decline (from -2.3%) in December.
  • […]
  • Total industrial production increased 1.4% month-over-month in January (Briefing.com consensus 0.4%) following an unrevised 0.1% decline in December. The capacity utilization rate jumped to 77.6% (Briefing.com consensus 76.8%) from an upwardly revised 76.6% (from 76.5%) in December.
  • […]
  • Import prices rose 2.0% in January after decreasing 0.4% in December. Excluding oil, import prices rose 1.4% after increasing 0.5% in December. Export prices rose 2.9% after decreasing 1.6% in December. Excluding agriculture, export prices rose 2.9% after decreasing 1.9% in December.
  • The NAHB Housing Market Index for February decreased to 82 (Briefing.com consensus 83) from 83 in January.
  • Business inventories increased 2.1% m/m in December (Briefing.com consensus 2.1%) following a revised 1.5% increase (from 1.3%) in November.
  • The weekly MBA Mortgage Applications Index fell 5.4% following an 8.1% decline in the prior week.
[…]
  • Dow Jones Industrial Average -3.9% YTD
  • S&P 500 -6.1% YTD
  • Russell 2000 -7.4% YTD
  • Nasdaq Composite -9.7% YTD

Overseas: 

  • Europe: DAX -0.3%, FTSE -0.1%, CAC -0.2%
  • Asia: Nikkei +2.2%, Hang Seng +1.5%, Shanghai +0.6%

Commodities: 

  • Crude Oil +1.62 @ 93.67
  • Nat Gas +0.37 @ 4.69
  • Gold +18.20 @ 1873.50
  • Silver +0.27 @ 23.62
  • Copper +0.01 @ 4.54
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