Market Remarks

Morning Notes – Monday, March 14, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; broke below an up-sloping flag, which is bearish in nature, at 7:00 AM after rising more than 45 points from Friday’s low;
  • The odds are for an up day with elevated volatility; watch for a break below 4199.50 for a change of sentiments;
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4203.91, 4168.40, and 4157.87
  • Critical resistance levels for S&P 500 are 4258.61, 4273.79, and 4291.01
  • Key levels for E-mini futures: break above 4218.50, the high of 8:45 AM and break below 4199.50, the low of 8:00 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2022) closed at 4195.00 and the index closed at 4204.31 – a spread of about -9.25 points; futures closed at 4192.50 for the day; the fair value is +2.50
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +17.00; Dow by +238; and NASDAQ by +16.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, and Seoul closed lower; Tokyo, Sydney, Mumbai, and Singapore closed up;
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • 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 mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.004%, up +1.8 basis points from two weeks ago;
    • 30-years is at 2.364%, up +6.8 basis points;
    • 2-years yield is at 1.752%, up +17.8 basis points;
    • The 10-Year-&-2-Year spread is at 0.252, down from 0.410
    • The 30-Year-&-10-Year spread is at 0.360, up from 0.310
  • VIX
    • At 31.36 @ 8:15 AM; up from the last close; below the 5-day SMA;
    • Recent high = 37.52 on March 8; 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 11 was a large red candle with almost no upper shadow and a small lower shadow;
    • Stochastic (9,1, 3): %K crossed below %D; below 30;
    • RSI-9 is just above 30
  • The week was down -124.56 or -2.9%; the 5-week ATR  is 185.98
  • A down week; fourth in the last five weeks, and seventh in the previous ten weeks
  • The weekly pivot point=4229.73, R1=4301.59, R2=4398.87; S1=4132.45, S2=4060.59; S1/S2 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • A Bearish Engulfing candle following a Harami candle with a small upper shadow and almost no lower shadow;
    • Stochastic (9, 1, 3): %K is  below %D; below 20
    • RSI-9 declined to just below 40; 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; moving sideways to dow since 4:00 AM on March 9;
    • RSI-21 is below 45;
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving sideways to up near the middle of a Horizontal Channel between 4325.00 and 4140.00;
    • RSI-21 is moving below 40 and 50
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up since 8:45 PM
  • The Bollinger Band is expanding since 7:00 AM; the declined to the lower bound and then bounced up to the middle band
    • Stochastic (9, 1, 3): %K is crisscrossing %D;
  • Bias:  Down-Side

Previous Session

Major U.S. indices closed lower on Friday, March 11, in mostly lower volume. S&P 500 traded in higher volume. Major indices opened higher but then declined and traded sideways in the early afternoon before declining even more near the close.

For the week, the major indices closed lower in mixed volume. The markets in Asia closed mostly lower but the European markets were up. The dollar index was up, energy and industrial metals futures were down, the precious metals closed up and the soft commodities were mixed. The US Treasury yields closed up. All but one S&P sector – Energy – closed lower for the week.

From Briefing.com:

The S&P 500 fell 1.3% on Friday, as investors appeared frustrated with the state of the market and economy. The Nasdaq Composite (-2.2%) and Russell 2000 (-1.6%) lost more than 1.5% while the Dow Jones Industrial Average lost 0.7%.

All 11 S&P 500 sectors closed in negative territory, leaving the benchmark index at session lows after it started the day with a 0.7% gain. The information technology (-1.8%), consumer discretionary (-1.8%), and communication services (-1.9%) fell nearly 2.0% while the utilities sector decreased just 0.4%.

[…]

The 2-yr yield increased three basis points to 1.75% while the 10-yr yield declined one basis point to 2.00%. The U.S. Dollar Index rose 0.6% to 99.11.

[…]
  • The preliminary March reading for the University of Michigan Consumer Sentiment Index checked in at 59.7 (Briefing.com consensus 62.5) versus the final reading of 62.8 for February. The March reading marks the lowest level for the index since October 2012.
[…]
  • Dow Jones Industrial Average -9.3% YTD
  • S&P 500 -11.8% YTD
  • Russell 2000 -11.8% YTD
  • Nasdaq Composite -17.9% YTD
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