Market Remarks

Morning Notes – Friday, March 11, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:00 AM; up almost 100 points from the 10:30 PM low of 4232.00; declining since 6:15 AM high of 4335.50;
  • The odds are for an up day with elevated volatility; watch for a break below 4270.50 for a change of sentiments
  • Key economic data report due during the day:
    • Prelim UoM Consumer Sentiment (61.4 est.; prev. 62.8) at 10:00 AM
    • Prelim UoM Inflation Expectations (prev. 4.9%) at 10:00 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-Side

Key Levels:

  • Critical support levels for S&P 500 are 4268.28, 4245.86, and 4215.91
  • Critical resistance levels for S&P 500 are 4299.40, 4327.01, and 4346.03
  • Key levels for E-mini futures: break above 4335.50, the high of 6:15 AM and break below 4270.50, the low of 6:15 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (March 2022) closed at 4258.00 and the index closed at 4259.52 – a spread of about -1.50 points; futures closed at 4257.25 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 7:45 AM, S&P 500 futures were up by +42.75; Dow by +315; and NASDAQ by +181.00

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Mumbai, Singapore closed up; Hong Kong, Tokyo, Mumbai, and Seoul closed lower;
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/CAD
  • 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 2.011%, up +4.2 basis points from two weeks ago;
    • 30-years is at 2.394%, up +10.1 basis points;
    • 2-years yield is at 1.702%, up +9.5 basis points;
    • The 10-Year-&-2-Year spread is at 0.309, down from 0.362
    • The 30-Year-&-10-Year spread is at 0.383, up from 0.324
  • VIX
    • At 29.17 @ 7:15 AM; down from the last close; below 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 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 small green Harami candle with a small upper shadow and a lower shadow almost six times the size of the real body;
    • Stochastic (9, 1, 3): %K is  below %D moved above 30
    • 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 e from a low of 4138.75 made at midnight on March 8; higher high and higher lows since then
    • RSI-21 is above 70;
    • Above EMA20, which is at/above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • At/near the upper bound of a Horizontal Channel between 4325.00 and 4140.00 – the 61.8% extension target is near 4433.00 and the 100%$ extension target is near 4502.00
    • RSI-21 is moving higher; above 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up since 12:30 AM
  • The Bollinger Band is expanding; price  first walked up the upper band and is retreating towards the middle band since e6:30 AM;
    • Stochastic (9, 1, 3): %K is crisscrossing %D lower;
  • Bias:  Side-Up

Previous Session

Major U.S. indices closed mostly lower on Thursday, March 10, in mostly lower volume. Dow Jones Transportation Average closed higher and NASDAQ Composite traded in higher volume. Major indices gapped down at the open and then traded down till midday. The indices then moved higher and closed near or above the open. Most made Harami candles.

From Briefing.com:

The S&P 500 declined 0.4% on Thursday, although it was down as much as 1.6% intraday amid concerns surrounding the macro environment. The Dow Jones Industrial Average (-0.3%) and Russell 2000 (-0.2%) also fell modestly while the Nasdaq Composite (-1.0%) underperformed. […]

The S&P 500 sectors closed mixed with six sectors closing lower and five sectors closing higher. The heavily-weighted information technology sector (-1.8%) fell about 2%, while the energy (+3.1%) and consumer discretionary (+1.2%) sectors rose 3% and 1%, respectively.

[…]

The fed-funds sensitive 2-yr yield rose five basis points to 1.72%. The U.S. Dollar Index rose 0.6% to 98.57 amid relative weakness in the euro, which fell 0.9% against the dollar to 1.098.

[…]
  • Total CPI increased 0.8% month-over-month in February, as expected, while core CPI, which excludes food and energy, increased 0.5%, also as expected. On a year-over-year basis, total CPI was up 7.9%, versus 7.5% in January, and core CPI was up 6.4%, versus 6.0% in January.
  • […]
  • The weekly initial claims report showed an 11,000 increase in jobless claims to 227,000 (Briefing.com consensus 220,000) for the week ending March 5. Continuing claims for the week ending February 26 increased by 25,000 to 1.494 million.
  • […]
  • The Treasury Budget showed a $216.6 bln deficit in February versus a $310.9 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the February deficit cannot be compared to the January surplus of $118.7 bln.
[…]
  • Dow Jones Industrial Average -8.7% YTD
  • Russell 2000 -10.4% YTD
  • S&P 500 -10.6% YTD
  • Nasdaq Composite -16.1% YTD

Overseas: 

  • Europe: DAX -2.9%, FTSE -1.3%, CAC -2.8%
  • Asia: Nikkei +3.9%, Hang Seng +1.3%, Shanghai +1.2%

Commodities: 

  • Crude Oil -2.59 @ 106.29
  • Nat Gas +0.12 @ 4.67
  • Gold +12.30 @ 1999.50
  • Silver +0.30 @ 26.22
  • Copper +0.08 @ 4.64
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