Market Remarks

Morning Notes – Monday, February 28, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; moved up more than 70 points from the 9:45 PM low of 4258.50
  • The odds are for a down day with elevated volatility; watch for a break above 4342.25 and 4353.25 for a change of sentiments
  • Key economic data report due during the day:
    • Good Trade Balance ( -107.6B vs. -99.6B est.; prev. -100.5B) at 8:30 AM
    • Chicago PMI  ( 62.1 est.; prev. 65.2 ) at 9:45 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4313.52, 4286.83, and 4268.09
  • Critical resistance levels for S&P 500 are 4353.32, 4385.07, and 4408.79
  • Key levels for E-mini futures: break above 4342.25, the high of 7:15 AM, and break below 4307.25, the low of 8:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (March 2022) closed at 4380.00 and the index closed at 4384.65 – a spread of about -4.75 points; futures closed at 4380.00 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -57.00; Dow by -425; and NASDAQ by -163.75

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong closed lower
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.969%, down -6.2 basis points from two weeks ago;
    • 30-years is at 2.293%, down -1.6 basis points;
    • 2-years yield is at 1.588%, up +0.1 basis points;
    • The 10-Year-&-2-Year spread is at 0.381, down from 0.444
    • The 30-Year-&-10-Year spread is at 0.324, up from 0.278
  • VIX
    • At 32.63 @ 8:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 37.79 on February 24; low = 23.88 on February 16
    • Sentiment: Risk-Off (High Volatility)

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 25 was a  green Hammer with a large lower shadow
    • Stochastic (9,1, 3): %K crossed above %D from near 20; potential Bullish Divergence
    • RSI-9 is just below 40
  • The week was up +35.78 or +0.8%; the 5-week ATR  is 206.71
  • An up week; third in the last five weeks, and fifth in the previous ten weeks
  • The weekly pivot point=4294.88, R1=4475.11, R2=4565.57; S1=4206.42, S2=4024.19; S1/S2/S3 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • A green candle that gapped up the open with almost no lower and upper shadows; a three-day Morning Star pattern;
    • Stochastic (9, 1, 3): %K is above %D; near 50
    • RSI-9 just below 50 from near 25; above 8-day EMA; Bullish Divergence
  • Below 20-day EMA, 50-day EMA, 100-day SMA, 200-day SMA
  • In Correction
2-Hour (E-mini futures)
  • Downtrend since 4:00 AM on January 4; bouncing up from the February 24 low of 4101.75; broke below a not-so-perfect upsloping flag at 4:00 PM on February 11 – the 61.8% extension target near 4208 is achieved and the 100% extension target is near 3977.38;
    • RSI-21 is rising in a zig-zag move from below 20 to above 50
    • At/above EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Gapped down at the week’s open; bounced up almost 65 points from Sunday low though the gap is not closed yet
    • RSI-21 is drifting higher since 10:00 PM from just above 40 to just above 50
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting higher since 1:45 AM;
  • The Bollinger Band is relatively narrow and stable;
    • Stochastic (9, 1, 3): %K crisscrossing %D; above 80
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Friday, February 25, in lower volume. Major indices moved higher from the open and after a sideways move in the afternoon closed near the highs for the day. Most major indices are making a three-day Morning Star pattern.

For the week, most major US indices closed higher in mostly higher volume. Dow Jones Industrial Average closed lower. Russell 2000 and Dow Jones Transportation Average traded in lower volume. The markets in Asia and Europe closed lower for the week. The dollar index was up, energy futures were up, precious metals,  industrial metals, and soft commodities were mixed. Th eUS Treasury yield closed down for the week.

From Briefing.com:

The S&P 500 rose 2.2% on Friday […]

The Dow Jones Industrial Average (+2.5%) and Russell 2000 (+2.3%) also gained more than 2.0% while the Nasdaq Composite (+1.6%) was the relative underperformer with a 1.6% gain after outperforming yesterday.

[…]

The advance in equities was steady and broad-based with all 11 S&P 500 sectors closing higher between 1.4% (information technology) and 3.6% (materials). Interestingly, the defensive-oriented consumer staples (+3.1%), utilities (+3.1%), and health care (+3.0%) sectors were among the leaders,

[…]

The 2-yr Treasury note yield increased five basis points to 1.57%, although that was below the level it was trading prior to the PCE inflation data. The 10-yr yield increased two basis points to 1.99%. The U.S. Dollar Index fell 0.6% to 96.54. The CBOE Volatility Index fell 9.0% to 27.59.

[…]
  • Personal income was unchanged month-over-month in January (Briefing.com consensus -0.3%), but real disposable personal income was down 0.5%. Personal spending was up a robust 2.1% (Briefing.com consensus 1.5%), but clearly, consumers were spending out of savings as the personal savings rate, as a percentage of disposable personal income, fell to 6.4% from 8.2%. The PCE Price Index was up 0.6% (Briefing.com consensus 0.5%), taking the year-over-year rate to 6.1% from 5.8%. The core PCE Price Index, which excludes food and energy, was up 0.5% for the fourth straight month (Briefing.com consensus 0.5%), taking the year-over-year growth rate to 5.2% from 4.9%.
    • The key takeaway from the report is that the Fed still has an acute inflation problem on its hands with, or without, the Ukraine situation.
  • Durable Goods Orders jumped 1.6% month-over-month January (Briefing.com consensus 0.6%) following a 1.2% increase in December. Excluding transportation, durable goods orders were up 0.7% (Briefing.com consensus 0.3%) on the heels of a 0.9% increase in December.
  • […]
  • The final reading for the University of Michigan Consumer Sentiment Index for February was revised up to 62.8 (Briefing.com consensus 61.6) from the preliminary reading of 61.7. The final reading for January was 67.2.
  • […]
  • Pending home sales fell 5.7% m/m in January following a revised 2.3% decline (from -3.8%) in December.
[…]
  • Dow Jones Industrial Average -6.3% YTD
  • S&P 500 -8.0% YTD
  • Russell 2000 -9.1% YTD
  • Nasdaq Composite -12.5% YTD
Exit mobile version