Market Remarks

Morning Notes – Tuesday, March 15, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM; up more than 60 points since 5:00 AM after  RSI made a Bullish Divergence  on the 15-minute chart;
  • The odds are for an up day with elevated volatility; watch for a break below 4162.75 for a change of sentiments;
  • Key economic data report due during the day:
    • PPI ( 0.8% vs. 1.0% est.; prev. 1.0% ) at 8:30 AM
    • Core PPI ( 0.2% vs. 0.,6% est.; prev. 0.8%) at 8:30 AM
    • Empire State Manufacturing PMI ( -11.8 vs. 6.5 est.; prev. 3.1) at 8:30 AM
    • Day 1 of a 2-day FOMC meeting

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4163.23, 4157.87, and 4114.65
  • Critical resistance levels for S&P 500 are 4194.90, 420.09, and 4224.10
  • Key levels for E-mini futures: break above 4195.75, the high of 12:30 PM on Monday and break below 4162.75, the low of 7:45 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (June 2022) closed at 4165.00 and the index closed at 4173.11 – a spread of about -8.25 points; futures closed at 4163.50 for the day; the fair value is +1.50
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +23.75; Dow by +143; and NASDAQ by +110.50

Markets Around The World

  • Markets in the East closed mostly lower – Tokyo and Singapore closed up;
  • European markets are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/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 2.140%, up +30.1 basis points from two weeks ago;
    • 30-years is at 2.476%, up +29.4 basis points;
    • 2-years yield is at 1.867%, up +43.5 basis points;
    • The 10-Year-&-2-Year spread is at 0.273, down from 0.407
    • The 30-Year-&-10-Year spread is at 0.336, up from 0.343
  • VIX
    • At 31.84 @ 8:30 AM; up from the last close; above 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 red candle with a small lower shadow and an upper shadow twice the size of the real body following a Bearish Engulfing candle;
    • 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 down since 4:00 AM on March 9;
    • RSI-21 rising from 30 after making a slight Bullish Divergence; below 45;
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moved down since 6:00 Am on March 11 from the upper bound of a Horizontal Channel between 4325.00 and 4140.00 to its lower bound; bouncing up since 5:00 AM;
    • RSI-21 moved to just below 50 from near 30 and after making a Bullish Divergence
    • Above EMA20 but below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 6:30 PM
  • The Bollinger Band is expanding since 5:00 AM; price bounced up from the lower band to the upper band
    • Stochastic (9, 1, 3): %K is crisscrossing %D;
  • Bias:  Down-Side

Previous Session

Major U.S. indices closed mostly lower on Monday, March 14, in higher volume. Dow Jones Industrial Average closed up a bit. S&P 500 traded in higher volume. Major indices opened lower and then advanced in the morning. Then they turned around and mostly traded down for the rest of the day.

From Briefing.com:

The S&P 500 lost 0.7% on Monday, as the negative impact to growth stocks following another rise Treasury yields outweighed the benefit of weaker oil prices ($102.82, -6.28, -5.8%). The Nasdaq Composite (-2.0%) and Russell 2000 (-1.9%) both fell about 2%, while the Dow Jones Industrial Average finished flat.

Declining issues outpaced advancing issues by roughly a 3:1 margin at the NYSE and Nasdaq. The S&P 500 information technology (-1.9%), communication services (-1.8%), and consumer discretionary (-1.8%) sectors, which contain the mega-caps, were among the laggards next to the energy sector (-2.9%).

Conversely, the financials sector (+1.3%) followed rates to the top of the leaderboard. The health care (+0.7%), consumer staples (+0.6%), and industrials (+0.3%) sectors posted more modest gains. A handful of stocks within these sectors were responsible for the relative outperformance of the Dow.

[…]

The 2-yr yield settled higher by nine basis points to 1.84%, and the 10-yr yield settled higher by 14 basis points to 2.14%. The U.S. Dollar Index was roughly unchanged at 99.09.

[…]
  • Dow Jones Industrial Average -9.3% YTD
  • S&P 500 -12.4% YTD
  • Russell 2000 -13.5% YTD
  • Nasdaq Composite -19.6% YTD

Overseas: 

  • Europe: DAX +2.2%, FTSE +0.5%, CAC +1.8%
  • Asia: Nikkei +0.6%, Hang Seng -5.0%, Shanghai -2.6%

Commodities: 

  • Crude Oil -6.28 @ 102.82
  • Nat Gas -0.08 @ 4.69
  • Gold -26.90 @ 1961.90
  • Silver -0.85 @ 25.30
  • Copper -0.09 @ 4.53
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