Market Remarks

Morning Notes – Wednesday, February 23, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher 8:45 AM; moving sideways to up since 4:00 PM;
  • The odds are for an up day with elevated volatility; watch for a break below 4315.75 for a change of sentiments
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4325.39, 4289.34, and 4267.11
  • Critical resistance levels for S&P 500 are 4362.12, 4381.17, and 4394.30
  • Key levels for E-mini futures: break above 4345.50, the high of 4:30 AM and break below 4315.75, the low of 6:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2022) closed at 4300.00 and the index closed at 4304.76 – a spread of about -4.75 points; futures closed at 4300.00 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +28.25; Dow by +195; and NASDAQ by +137.25

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai and Singapore closed lower; Tokyo was closed for trading
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • USD/JPY
    • USD/CHF
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.963%, up +0.9 basis points from two weeks ago;
    • 30-years is at 2.258%, up +23.6 basis points;
    • 2-years yield is at 1.581%, up +23.6 basis points;
    • The 10-Year-&-2-Year spread is at 0.382, down from 0.609
    • The 30-Year-&-10-Year spread is at 0.295, down from 0.297
  • VIX
    • At 28.29 @ 7:00 AM; down from the last close; above the 5-day SMA;
    • Recent high = 32.04 on February 23; low = 23.88 on February 16
    • Sentiment: Risk-Neutral-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 18 was a spinning top candle with a longer upper shadow
    • Stochastic (9,1, 3): %K is below %D
    • RSI-9 is just above 35
  • The week was down -69.77 or -1.6%; the 5-week ATR  is 206.07
  • A down week; third in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4388.55, R1=4355.55, R2=4406.34; S1=4260.54, S2=4216.32; S1 pivot level was breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • A red spinning top candle that opened lower; bouncing off a weak support
    • Stochastic (9, 1, 3): %K crossed above %D from below 10
    • RSI-9 is near 30; below 8-day EMA;
  • Below 20-day EMA, 50-day EMA, 100-day SMA, 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving down since 8:00 Am on February 16 from a resistance level; near the lows of February 14
    • RSI-21 has risen to just below 50 from near 20
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving sideways since 3:00 PM on February 122
    • RSI-21 is moving just above 50
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 9:45 PM;
  • The Bollinger Band is expanding since 3:30 AM
    • Stochastic (9, 1, 3): %K crossed below %D at 8:00 AM from above  80
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Tuesday, February 22, in mixed volume following the President’s Day holiday. S&P 500 and Russell 2000 traded in lower volume. The major indices advanced in the early morning trading then declined before recovering some of the losses near the end of the session.

From Briefing.com:

The S&P 500 fell 1.0% on Tuesday, although it was down as much as 1.9% amid rising Russia-Ukraine tensions, pestering concerns about monetary policy, and weakening price momentum.

The Nasdaq Composite (-1.2%), Dow Jones Industrial Average (-1.4%), and Russell 2000 (-1.5%) also closed off their session lows, but they still lost more than 1.0%.

[…]

The 2-yr yield rose eight basis points to 1.55% following rate-hike commentary from Fed Governor Bowman (FOMC voter) on Monday. Strikingly, the 10-yr yield increased two basis points to 1.93% despite the geopolitical tensions, supporting the case that the market was influenced by more than the Russia-Ukraine headlines.

[…]

WTI crude futures settled above $92 per barrel ($92.27, +1.06, +1.2%) after flirting with $95 per barrel overnight. The U.S. Dollar Index was little changed at 96.07. The CBOE Volatility Index increased just 3.8% to 28.81 after topping 32.00 intraday.

[…]
  • The Conference Board’s Consumer Confidence Index dropped to 110.5 in February (Briefing.com consensus 109.0) from a downwardly revised 111.1 (from 113.8) in January. In the same period a year ago, the index stood at 95.2.
  • […]
  • The S&P Case-Shiller Home Price Index for December increased 18.6% year-over-year (Briefing.com consensus 18.3%) following an 18.3% increase in November.
  • The FHFA Housing Price Index for December increased 1.2% month-over-month following a revised 1.2% increase (from 1.1%) in November.
  • The preliminary IHS Markit Manufacturing PMI for February increased to 57.5 from 55.5 in January while the preliminary Services PMI increased to 56.7 from 51.2 in January.
[…]
  • Dow Jones Industrial Average -7.5% YTD
  • S&P 500 -9.7% YTD
  • Russell 2000 -11.8% YTD
  • Nasdaq Composite -14.5% YTD

Overseas: 

  • Europe: DAX -0.3%, FTSE +0.1%, CAC -0.0%
  • Asia: Nikkei -1.7%, Hang Seng -2.7%, Shanghai -1.0%

Commodities: 

  • Crude Oil +1.23 @ 91.28
  • Nat Gas +0.07 @ 4.49
  • Gold 7.10 @ 1906.10
  • Silver +0.27 @ 24.21
  • Copper -0.03@ 4.50
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