Morning Notes – Wednesday, March 16, 2022

/ March 16, 2022

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM; up more than 70 points since  the 8:00 PM low of 4239.00; moving sideways since 6:00 AM;
  • The odds are for an up day with elevated volatility; watch for a break below 4278.50 for a change of sentiments;
  • Key economic data report due during the day:
    • Retail Sales ( 0.3% vs. 0.4% est.; prev. 3.8% ) at 8:30 AM
    • Core Retail Sales ( 0.2% vs. 0..9% est.; prev. 3.3%) at 8:30 AM
    • Import Prices ( 1.4% vs. 1.7% est.; prev. 2.0%) at 8:30 AM
    • Business Invetories ( 1.2% est.; prev. 2.1%) at 10:00 AM
    • NAHB Housing Market Index (81 est.; prev. 82) at 10:00 AM
    • Fed Funds Rate ( <0.50% est.; prev. <0.25%) at 2:00 PM
    • FOMC Statement at 2:00 PM
    • FOMC Press COnference at 2:30 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4299.40, 4271.05, and 4217.54
  • Critical resistance levels for S&P 500 are 4327.01, 4339.48, and 4370.45
  • Key levels for E-mini futures: break above 4314.75, the high of 6:00 AM on Monday and break below 4278.50, the low of 3:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (June 2022) closed at 4256.25 and the index closed at 4262.45 – a spread of about -6.25 points; futures closed at 4253.75 for the day; the fair value is +2.50
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +57.75; Dow by +414; and NASDAQ by +262.50

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.160%, up +45.3 basis points from two weeks ago;
    • 30-years is at 2.505%, up +40.1 basis points;
    • 2-years yield is at 1.868%, up +51.9 basis points;
    • The 10-Year-&-2-Year spread is at 0.292, down from 0.358
    • The 30-Year-&-10-Year spread is at 0.345, down from 0.397
  • VIX
    • At 28.60 @ 7:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 37.52 on March 8; low = 23.88 on February 16
    • Sentiment: Risk-On with 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 large green candle; a three-day Morning Star pattern;
    • Stochastic (9, 1, 3): %K crossed above %D from below 20
    • RSI-9 turned up to above 46 from 35; 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 off a Double Bottom; the pattern will complete after a break above 4326.75 – the 61.8% extension target is near 4445.00 and the 100% extension target is near 4515.00
    • RSI-21 has risen to above 80 from near 30 and after a Bullish Divergence;
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving up since 5:00 AM on March 15 from the lower bound of a Horizontal Channel between 4325.00 and 4140.00 to its upper bound;
    • RSI-21 is moving 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 moving up since 1:00 AM
  • The Bollinger Band is expanding since 1:00 AM with price walking up the upper bound
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 70;
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Tuesday, March 15, in mixed volume. Dow Jones Transportation Average and S&P 500 traded in higher volume. Major indices opened higher and then moved higher. They closed higher after moving sideways mid-afternoon.

From Briefing.com:

The S&P 500 rose 2.1% on Tuesday, providing investors relief as oil prices extended their pullback and PPI data for February was better than feared. The Nasdaq Composite gained 2.9%, the Dow Jones Industrial Average gained 1.8%, and the Russell 2000 gained 1.4%.

Stocks that have been the hardest hit this year saw the biggest gains today, particularly the large growth stocks within the S&P 500 information technology (+3.4%) and consumer discretionary (+3.4%) sectors. The energy sector (-3.7%) was the only sector that closed lower, losing 3.7% amid the drop in oil prices.

Crude futures fell 6.5%, or $6.66, to $96.16/bbl, as growth concerns lingered due to China’s recent COVID-19 lockdowns.

[…]

The 2-yr yield increased two basis points to 1.86% after touching 1.79% intraday, and the 10-yr yield increased two basis points to 2.16% after touching 2.08% intraday. The U.S. Dollar Index was little changed at 98.99.

[…]
  • The Producer Price Index for final demand increased 0.8% month-over-month in February (Briefing.com consensus +1.0%) following an upwardly revised 1.2% increase (from 1.0%) in January. The index for final demand, less foods and energy, rose 0.2% month-over-month (Briefing.com consensus +0.6%) following an upwardly revised 1.0% increase (from 0.8%) in January. On a year-over-year basis, the index for final demand was up 10.0% on an unadjusted basis while the index for final demand, less foods and energy, was up 8.4%.
  • […]
  • The Empire State Manufacturing Survey for March dropped to -11.8 (Briefing.com consensus 9.0) from 3.1 in February.
[…]
  • Dow Jones Industrial Average -7.7% YTD
  • S&P 500 -10.6% YTD
  • Russell 2000 -12.3% YTD
  • Nasdaq Composite -17.2% YTD

Overseas: 

  • Europe: DAX -0.1%, FTSE -0.3%, CAC -0.2%
  • Asia: Nikkei +0.2%, Hang Seng -5.7%, Shanghai -5.0%

Commodities: 

  • Crude Oil -6.66 @ 96.16
  • Nat Gas -0.08 @ 4.61
  • Gold -35.30 @ 1926.60
  • Silver -0.15 @ 25.15
  • Copper -0.03 @ 4.50
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