Market Remarks

Morning Notes – Wednesday, March 23, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM; declined from 4513.00 at 1:45 AM to around 4480.00;
  • The odds are for a down day – watch for a break above 4501.50
  • Key economic data report due during the day:
    • New Home Index ( 809K est.; prev. 801K) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4483.35, 4469.10, and 4461.56
  • Critical resistance levels for S&P 500 are 4495.25, 4522.00, and 4532.73
  • Key levels for E-mini futures: break above 4501.50, the high of 4:45 AM and break below 4480.00, the low of 7:45 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (June 2022) closed at 4505.50 and the index closed at 4511.61 – a spread of about -6.25 points; futures closed at 4505.00 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -18.50; Dow by -118; and NASDAQ by -101.00

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai closed lower;
  • European markets are mostly lower – the UK is higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lowered
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.373%, up +50.1 basis points from two weeks ago;
    • 30-years is at 2.593%, up +34.9 basis points;
    • 2-years yield is at 2.174%, up +56.9 basis points;
    • The 10-Year-&-2-Year spread is at 0.199, down from 0.267
    • The 30-Year-&-10-Year spread is at 0.220, down from 0.372
  • VIX
    • At 23.96 @ 7:45 AM; up from the last close; at/below the 5-day SMA;
    • Recent high = 33.83 on March 15; low = 19.93 on February 9
    • Sentiment: Risk-Off

The trend and patterns in various time frames for S&P 500:

Weekly:
  • The week ending on March 18 was a large Bullish Engulfing candle with almost no upper shadow and a small lower shadow;
    • Stochastic (9,1, 3): %K crossed above %D from below 30;
    • RSI-9 bounced up above 50 from just above 30
  • The week up +258.81 or +6.2%; the 5-week ATR  is 208.99
  • An up week; second in the last five weeks, and fourth in the previous ten weeks
  • The weekly pivot point=4363.41, R1=4565.11, R2=4667.09; S1=4261.43, S2=4059.73; R1/R2 pivot levels were breached
  • Above 10-week EMA; below 39-week SMA; above 89-week SMA
  • Uptrend
Daily
  • A  green candle following an indecisive Doji candle;
    • Stochastic (9, 1, 3): %K crossed above %D; just below 100
    • RSI-9 is above 65; above 8-day EMA;
  • Above 20-day EMA, 50-day EMA, and 200-day SMA; below 100-day SMA
  • In Confirmed Uptrend
2-Hour (E-mini futures)
  • Retreated from 4514.75 at 2:00 PM on Tuesday to around 4485.00; broke above a Double Bottom pattern on March 16 – the 100% extension target is near 4515.00 is achieved and the 161.8% extension target is near 4630.00;
    • RSI-21 declined to below 50 from above 75 and after making a Bearish Divergence
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving Sideways to down in an inverted saucer pattern since 10:00 AM on Tuesday;
    • RSI-21 declined to near 40 from above 70 and after making a Bearish Divergence
    • Below EMA10 of EMA50, which is below EMA20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 3:30 AM
  • The Bollinger Band is expanding since contracting since 3:30 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D;
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Tuesday, March 22, in lower volume. Major indices opened higher and then moved higher in the early morning trading before plateauing and moving sideways in the afternoon session.

From Briefing.com:

The stock market ended Tuesday on a firmly higher note with the Nasdaq (+2.0%) pacing a daylong advance while the S&P 500 (+1.1%) and Dow (+0.7%) recorded slimmer gains. […]

Ten sectors finished the day in positive territory with consumer discretionary (+2.5%) and communication services (+2.0%) holding the lead throughout the day.

[…]

Other influential sectors like technology (+1.4%) and financials (+1.6%) also spent the day in positive territory

[…]

Selling across the curve drove Treasury yields to fresh highs for the year with the 10-yr yield rising six basis points to 2.37%.

On the downside, the energy sector (-0.6%) was the lone decliner, pulling back from Monday’s rally.

[…]
  • Dow Jones Industrial Average -4.2% YTD
  • S&P 500 -5.3% YTD
  • Russell 2000 -7.0% YTD
  • Nasdaq Composite -9.8% YTD

Overseas: 

  • Europe: DAX +1.0%, FTSE +0.5%, CAC +1.2%
  • Asia: Nikkei +1.5%, Hang Seng +3.2%, Shanghai +0.2%

Commodities: 

  • Crude Oil -0.73 @ 109.48
  • Nat Gas +0.28 @ 5.22
  • Gold -6.40 @ 1922.30
  • Silver -0.32 @ 24.93
  • Copper +0.01 @ 4.71
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