Morning Notes – Thursday, March 17, 2022

/ March 17, 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 4320.25 for a change of sentiments;
  • Key economic data report due during the day:
    • Unemployment Claims ( 214K vs. 221K est.; prev. 229K ) at 8:30 AM
    • Philly Fed Manufacturing PMI  ( 27.4 vs. 15.1 est.; prev. 16.0) at 8:30 AM
    • Building Permits ( 1.86M vs. 1.84M est.; prev. 1.90M) at 8:30 AM
    • Housing Starts ( 1.77M vs. 1.70M est.; prev. 1.66M) at 8:30 AM
    • Industrial Production (0.5% est.; prev. 1.5% ) at 9:45 AM
    • Capacity Utilization ( 77.9% est.; prev. 77.6%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4322.57, 4301.29, and 4290.90
  • Critical resistance levels for S&P 500 are 4358.45, 4370.45, and 4397.77
  • Key levels for E-mini futures: break above 4344.75, the high of 7:00 AM on Monday and break below 4320.25, the low of 6:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2022) closed at 4351.00 and the index closed at 4357.86 – a spread of about -6.75 points; futures closed at 4349.50 for the day; the fair value is +1.50
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -16.50; Dow by -115; and NASDAQ by -72.00

Markets Around The World

  • Markets in the East closed higher
  • European markets are mostly lower – the UK and Switzerland 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 2.188%, up +32.3 basis points from two weeks ago;
    • 30-years is at 2.459%, up +22.6 basis points;
    • 2-years yield is at 1.954%, up +43.8 basis points;
    • The 10-Year-&-2-Year spread is at 0.234, down from 0.349
    • The 30-Year-&-10-Year spread is at 0.271, down from 0.368
  • VIX
    • At 27.12 @ 7:45 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-Neutral-Off

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 green candle with a small lower shadow and almost no upper shadow following a three-day Morning Star pattern;
    • Stochastic (9, 1, 3): %K is above %D; near 100
    • RSI-9 is above 55; above 8-day EMA;
  • Above 20-day EMA; below 50-day EMA, 100-day SMA, 200-day SMA
  • In Confirmed Uptrend
2-Hour (E-mini futures)
  • Downtrend since 4:00 AM on January 4; breaking above a Double Bottom – the 61.8% extension target is near 4445.00 and the 100% extension target is near 4515.00; just below a downtrend line from the all-time highs
    • RSI-21 has declined from 85 at 10:00 AM on Wednesday to just above 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Drifting down since 4:30 PM after breaking above a Horizontal Channel to just above its upper bound;
    • RSI-21 is declining since 4:00 from above 65 and after making a Bearish Diveregcne to near 50
    • At/below EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 9:30 PM
  • The Bollinger Band is expanding slightly since 6:00 AM with price moving just above the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 60;
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Wednesday, March 16, in mostly higher volume. Dow Jones Transportation Average traded in lower volume. Major indices gapped up at the open and then traded higher in the morning session. They turned around and then declined in the early afternoon session going negative and closing the gap. Following the FOMC press conference, the indices turned around and then closed near the highs for the day.

From Briefing.com:

The S&P 500 rose 2.2% on Wednesday, as the market brushed off a hawkish-sounding FOMC decision once Fed Chair Powell started speaking. The Nasdaq Composite (+3.8%) and Russell 2000 (+3.1%) both gained more than 3.0% while the Dow Jones Industrial Average increased 1.6%.

Eight of the 11 S&P 500 sectors closed higher, with the consumer discretionary (+3.4%) and information technology (+3.3%) sectors also rising more than 3.0%. Conversely, the energy (-0.4%) and utilities (-0.2%) sectors closed lower.

[…][

The 2-yr yield increased 13 basis points to 1.97% (hit 1.92% post-settlement), and the 10-yr yield increased two basis points to 1.18%. The U.S. Dollar Index fell 0.8% to 98.34. Crude futures fell 0.8%, or $0.74, to $95.42/bbl.

[…]
  • The Retail Sales report was not as disappointing as the headlines might suggest. Total retail sales increased 0.3% month-over-month in February (Briefing.com consensus +0.4%), yet they were actually stronger than expected after accounting for the large upward revision to January to +4.9% from +3.8%. The same goes for retail sales, excluding autos. They were up 0.2% month-over-month (Briefing.com consensus +0.8%), yet that followed an upward revision for January to +4.4% from +3.3%.
  • […]
  • Import prices rose 1.4% in February after increasing 1.9% in January. Excluding oil, import prices rose 0.8% after increasing 1.3% in January. Export prices rose 3.0% after increasing 2.8% in January. Excluding agriculture, export prices also rose 3.0% after increasing 2.8% in January.
  • The NAHB Housing Market Index for March decreased to 79 (Briefing.com consensus 81) from a revised reading of 81 (from 82) in February.
  • Business inventories increased 1.1% m/m in January following a revised 2.4% increase (from 2.1%) in December.
  • The weekly MBA Mortgage Applications Index declined 1.2% following an 8.5% increase in the prior week.
[…]
  • Dow Jones Industrial Average -6.3% YTD
  • S&P 500 -8.6% YTD
  • Russell 2000 -9.6% YTD
  • Nasdaq Composite -14.1% YTD

Overseas: 

  • Europe: DAX +3.8%, FTSE +1.6%, CAC +3.7%
  • Asia: Nikkei +1.6%, Hang Seng +9.1%, Shanghai +3.5%

Commodities: 

  • Crude Oil -0.74 @ 95.42
  • Nat Gas +0.19 @ 4.80
  • Gold -17.20 @ 1909.40
  • Silver -0.47 @ 24.68
  • Copper +0.10 @ 4.60
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