Market Remarks

Morning Notes – Tuesday, March 8, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:15 AM; declined more than 40 points from 7:15 AM high of 4233.50
  • The odds are for a down day with elevated volatility; watch for a break above 4233.50 for a change of sentiments
  • Key economic data report due during the day:
    • Trade Balance (-87.5B est.; prev. -80.7B) at 8:30 AM
    • Final Wholesale Inventories ( 0.8% est.; prev. 0.8%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4199.85, 4171.94, and 4114.65
  • Critical resistance levels for S&P 500 are 4221.07, 4248.25, and 4276.98
  • Key levels for E-mini futures: break above 4233.50, the high of 7:15 AM and break below 4193.75, the low of 5:15 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2022) closed at 4198.00 and the index closed at 4201.09 – a spread of about -2.00 points; futures closed at 4198.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -9.75; Dow by -54; and NASDAQ down by -82.00

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai closed up
  • European markets are mostly higher – Singapore is lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
    • USD/CAD
    • EUR/USD
    • GBP/USD
  • 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 1.751%, down -19.7 basis points from two weeks ago;
    • 30-years is at 2.152%, down -10.1 basis points;
    • 2-years yield is at 1.548%, down -1.4 basis points;
    • The 10-Year-&-2-Year spread is at 0.203, down from 0.386
    • The 30-Year-&-10-Year spread is at 0.401, up from 0.305
  • VIX
    • At 36.00 @ 8:15 AM; a bit 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-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 March 4 was a red spinning top candle
    • Stochastic (9,1, 3): %K is just above %D around 30; potential Bullish Divergence
    • RSI-9 is just below 40
  • The week was down -55.78 or -1.3%; the 5-week ATR  is 188.03
  • A down week; third in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4341.73, R1=4403.92, R2=4478.97; S1=4266.68, S2=4024.49; No pivot levels were breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • A large red candle with no upper and lower shadows; breaking below an uneven Head-&-Shoulder pattern – the 61.8% extension target is near 3854.00 and the 100% extension target is near 3626.00
    • Stochastic (9, 1, 3): %K is  below %D below 30
    • RSI-9 is just above 30; below 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; new leg down since 8:00 Am on March 3 high of 4418.75; trying to bounce from a low of 4138.75 made at midnight;
    • RSI-21 is trending down to near 30;
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Bounced up from 1:00 Am low of 4138.75 to above 4230.00;
    • RSI-21 is moving around just below 50
    • At/above EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is tilting up since 3:00 AM
  • The Bollinger Band is contracting since 7:45 AM;
    • Stochastic (9, 1, 3): %K is below %D since 7:00 AM;
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Monday, March 7, in higher volume. Major indices opened lower and then traded lower for the rest of the day. The decline was more than 2.5% for all. The global markets also declined sharply. Crude oil rose but metals declined and the soft commodities were mixed. Th eUS Treasury yields also rose.

From Briefing.com:

The S&P 500 dropped 3.0% on Monday […]

The Nasdaq Composite underperformed with a 3.6% decline while the Dow Jones Industrial Average (-2.4%) and Russell 2000 (-2.5%) fell closer to 2.5%.

[…]

The underperformance of the S&P 500 consumer discretionary sector, which fell 4.8%, corroborated the consumer slowdown narrative.

[…]

On the upside, the energy (+1.6%) and utilities (+1.3%) sectors each rose more than 1.0%.

[…]

The 2-yr yield increased five basis points to 1.54%, and the 10-yr yield increased three basis points to 1.75%. The U.S. Dollar Index rose 0.5% to 99.15.

[…]
  • Consumer credit increased by $6.8 billion in January (Briefing.com consensus $25.0 billion). The prior month saw an upward revision to $22.4 bln from $18.9 bln.
[…]
  • Dow Jones Industrial Average -9.7% YTD
  • S&P 500 -11.9% YTD
  • Russell 2000 -13.1% YTD
  • Nasdaq Composite -18.0% YTD

Overseas: 

  • Europe: DAX -2.0%, FTSE -0.4%, CAC -1.3%
  • Asia: Nikkei -2.9%, Hang Seng -3.9%, Shanghai -2.2%

Commodities: 

  • Crude Oil +4.00 @ 119.27
  • Nat Gas -0.13 @ 4.87
  • Gold +27.70 @ 1996.50
  • Silver -0.07 @ 25.76
  • Copper -0.17 @ 4.75
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