Market Remarks

Morning Notes – Wednesday, March 2, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM; moving down since 5:15 AM
  • The odds are for a sideways to an up day with elevated volatility; watch for a break above 4343.00 and break below 4278.25 for clarity
  • Key economic data report due during the day:
    • ADP Non-Farm Employment Change  ( 475K vs. 378K est.; prev 509K) at 8:17 AM
    • Semi-annual testimony of the Fed Chair to the Congress at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4309.44, 4279.54, and 4238.38
  • Critical resistance levels for S&P 500 are 4328.43, 4347.67, and 4378.45
  • Key levels for E-mini futures: break above 4343.00, the high of 5:00 AM, and break below 4278.25, the low of 2:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2022) closed at 4303.25 and the index closed at 4306.26 – a spread of about -3.00 points; futures closed at 4303.75 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +13.25; Dow by +131; and NASDAQ by +40.50

Markets Around The World

  • Markets in the East closed mostly lower – Sydney and Seoul closed higher
  • European markets are mostly higher -Italy and Switzerland are down
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/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 mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.707%, down -33.8 basis points from two weeks ago;
    • 30-years is at 2.104%, down -25.8 basis points;
    • 2-years yield is at 1.349%, down -22.2 basis points;
    • The 10-Year-&-2-Year spread is at 0.358, down from 0.474
    • The 30-Year-&-10-Year spread is at 0.397, up from 0.317
  • VIX
    • At 32.62 @ 7:00 AM; down from the last close; above the 5-day SMA;
    • Recent high = 37.79 on February 24; low = 23.88 on February 16
    • Sentiment: Risk-On (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 red candle with a lower shadow double the size of the upper shadow;
    • Stochastic (9, 1, 3): %K crossed below %D from just above 60
    • RSI-9 is just above 40; above 8-day EMA;
  • 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 just above 50
    • At/below EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving sideways to down since 9:30 AM on February 28; 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 up since 4:15 PM on Tuesday
  • The Bollinger Band is expanding a bit since 2:00 AM
    • Stochastic (9, 1, 3): %K crisscrossing %D lower;
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Tuesday, March 1, in mixed volume. Dow Jones Transportations Average and Russell 2000 traded in higher volume. Major indices traded down from the open, though they moved mostly sideways near the end of trading.

From Briefing.com:

The S&P 500 fell 1.6% on Tuesday in a risk-off session, which saw oil prices peak above $106 per barrel and Treasury yields drop noticeably in response to worsening geopolitical tensions. The Nasdaq Composite (-1.6%), Dow Jones Industrial Average (-1.8%), and Russell 2000 (-1.9%) also declined more than 1.5%. […]

Ten of the 11 S&P 500 sectors closed lower, with the financials sector (-3.7%) taking the brunt of the damage and the information technology sector (-1.9%) acting as a heavy drag. Growth and value stocks alike declined together.

The energy sector (+1.0%), unsurprisingly, closed higher, but it was a little surprising to see just a 1.0% gain when oil prices settled higher by 8.3%, or $7.88, to $103.41/bbl.

[…]

The 10-yr yield accordingly dropped 13 basis points to 1.71% (-28 bps in two days). The 2-yr yield also dropped 13 basis points to 1.30% (-27 bps in two sessions)

[…]

The U.S. Dollar Index rose 0.7% to 97.35. The CBOE Volatility Index rose 10.5% to 33.32. Gold futures rose 2.3% to $1944.70/ozt.

[…]
  • The February ISM Manufacturing Index increased to 58.6% (Briefing.com consensus 58.0%) from 57.6% in January. A number above 50.0% is indicative of expansion. February marked the 21st straight month of expansion for the manufacturing sector.
  • […]
  • Total construction spending increased 1.3% month-over-month in January (Briefing.com consensus -0.4%) following an upwardly revised 0.8% increase (from 0.2%) in December. That was the strongest increase since the same period a year ago.
  • […]
  • The final IHS Markit Manufacturing PMI for February decreased to 57.3 from 57.5 in the preliminary reading.
[…]
  • Dow Jones Industrial Average -8.4% YTD
  • S&P 500 -9.7% YTD
  • Russell 2000 -10.6% YTD
  • Nasdaq Composite -13.5% YTD

Overseas: 

  • Europe: DAX -3.9%, FTSE -1.7%, CAC -3.9%
  • Asia: Nikkei +1.2%, Hang Seng +0.2%, Shanghai +0.8%

Commodities: 

  • Crude Oil +8.09 @ 103.43
  • Nat Gas +0.16 @ 4.58
  • Gold +44.70 @ 1944.60
  • Silver +1.17 @ 25.55
  • Copper +0.11 @ 4.59
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