Market Remarks

Morning Notes – Tuesday, March 1, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; moving up since 6:45 AM
  • The odds are for a sideways to an up day with elevated volatility; watch for a break above 4396.75 and break below 4322.75 for clarity
  • Key economic data report due during the day:
    • Final Manufacturing PMI  ( 57.5 est.; prev. 57.5) at 9:45 AM
    • ISM Manufacturing PMI  ( 58.0 est.; prev. 57.6 ) at 10:00 AM
    • Construction Spending ( 0.2% est.; prev. 0.2%) at 10:00 AM
    • ISM Manufacturing Prices ( 77.4 est.; prev. 76.1) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4323.74, 4315.36, and 4286.83
  • Critical resistance levels for S&P 500 are 4388.47, 4408.79, and 4429.68
  • Key levels for E-mini futures: break above 4396.75, the high of 3:00 AM, and break below 4322.75, the low of 6:45 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2022) closed at 4369.50 and the index closed at 4373.94 – a spread of about -4.50 points; futures closed at 4368.00 for the day; the fair value is +1.50
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -12.75; Dow by -125; and NASDAQ by -54.25

Markets Around The World

  • Markets in the East closed higher – Mumbai and Seoul were closed
  • European markets are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.777%, down -21.9 basis points from two weeks ago;
    • 30-years is at 2.15%, down -15.1 basis points;
    • 2-years yield is at 1.441%, down -14.2 basis points;
    • The 10-Year-&-2-Year spread is at 0.336, down from 0.413
    • The 30-Year-&-10-Year spread is at 0.373, up from 0.305
  • VIX
    • At 31.11 @ 8:45 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 Doji Harmi candle at the close of the previous day; lower shadow longer than the upper shadow
    • Stochastic (9, 1, 3): %K is above %D; just above 60
    • RSI-9 just below 50; 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 moving sideways just above 50
    • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving higher since 9:30 PM on Sunday after the gap-open for the week; the gap was closed on Monday but the high is breached; moving sideways since 10:30 AM on Monday within a 80-point range
    • RSI-21 is declined to just below 50
    • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting sideways to down since 9:45 PM
  • The Bollinger Band is contracting a bit since 8:45 AM
    • Stochastic (9, 1, 3): %K crisscrossing %D;
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mixed on Monday, February 28, in mostly higher volume. NASDAQ Composite, Russell 2000, and Dow Jones Transportations Average closed higher. Dow Jones Industrial Average, S&P 500, NYSE Composite, and Wilshire 5000 Total Market index closed lower. NASDAQ Composite traded in lower volume. Indice opened lower and then advanced in the morning trading then declined to new lows for the day before again advancing.

From Briefing.com:

The S&P 500 declined 0.3% on Monday in a volatile session driven by Russia-Ukraine headlines. The Dow Jones Industrial Average fell 0.5%, while the Nasdaq Composite (+0.4%) and Russell 2000 (+0.4%) both gained 0.4%, thanks to a late-session push.

The financials (-1.5%), real estate (-1.8%), consumer staples (-1.3%), and materials (-1.2%) sectors underperformed with losses over 1.0%. Conversely, the energy sector (+2.6%) jumped over 2.0% amid higher oil prices ($95.53, +3.94, +4.3%), followed by industrials (+0.7%), consumer discretionary (+0.6%), and utilities (+0.4%) with more modest gains.

[…]

The 2-yr yield dropped 16 basis points to 1.43%, and the 10-yr yield dropped 15 basis points to 1.84%. The U.S. Dollar Index increased 0.1% to 96.75. The CBOE Volatility Index (VIX) increased 9.3% to 30.15 amid increased hedging interest, although the VIX did close off session highs (33.51).

[…]
  • The Chicago PMI for February decreased to 56.3 (Briefing.com consensus 62.0) from 65.2 in January.
  • The Advance report for International Trade in Goods for January showed a deficit of $107.6 billion, versus a revised $100.5 billion (from $101.0 billion) in December. The Advance report for Retail Inventories for January rose 1.9%, while the Advance report for Wholesale Inventories for January rose 0.8%.
[…]
  • Dow Jones Industrial Average -6.7% YTD
  • S&P 500 -8.2% YTD
  • Russell 2000 -8.8% YTD
  • Nasdaq Composite -12.1% YTD

Overseas: 

  • Europe: DAX -0.7%, FTSE -0.4%, CAC -1.4%
  • Asia: Nikkei +0.2%, Hang Seng -0.2%, Shanghai +0.3%

Commodities: 

  • Crude Oil +3.75 @ 95.34
  • Nat Gas -0.05 @ 4.42
  • Gold +11.00 @ 1899.90
  • Silver +0.30 @ 24.38
  • Copper -0.01 @ 4.48
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