Market Remarks

Morning Notes – Thursday, March 24, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM; declining since 7:00 AM; possible Doble Top pattern on the 15-minute chart
  • The odds are for a sideways to down day from pre-open levels around 4470.00- watch for a break above 4481.25 for a change of sentiments
  • Key economic data report due during the day:
    • Durable Goods Orders ( -2.2% vs. -0.5% est.; prev. 1.6%) at 8:30 AM
    • Core Durable Goods Orders ( -0.6% vs. 0.5% est.; prev. 0.8%) at 8:30 AM
    • Unemployment Claims ( 187K vs. 210K est.; prev. 215K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4455.81, 4433.97, and 4424.30
  • Critical resistance levels for S&P 500 are 4479.44, 4485.58, and 4501.07
  • Key levels for E-mini futures: break above 4481.25, the high of 7:00 AM and break below 4461.25, the low of 3:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2022) closed at 4446.75 and the index closed at 4456.24 – a spread of about -9.50 points; futures closed at 4447.50 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +20.50; Dow by +118; and NASDAQ by +74.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai, and Seoul closed lower; Tokyo, Sydney, and Singapore closed higher
  • European markets are mixed – Germany, France, Spain, and STOXX 600 are lower; the UK, Itlay, and Switzerland are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
    • EUR/USD
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.321%, up +37.3 basis points from two weeks ago;
    • 30-years is at 2.519%, up +21.7 basis points;
    • 2-years yield is at 2.108%, up +43.0 basis points;
    • The 10-Year-&-2-Year spread is at 0.213, down from 0.270
    • The 30-Year-&-10-Year spread is at 0.198, down from 0.354
  • VIX
    • At 23.54 @ 7:45 AM; down from the last close; at/above the 5-day SMA;
    • Recent high = 33.83 on March 15; low = 19.93 on February 9
    • Sentiment: Risk-On

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  red candle with a small upper shadow and almost no lower shadow; potential three-day Evening Star pattern
    • Stochastic (9, 1, 3): %K crossed below %D; near 90
    • RSI-9 declined to below 65 from above 65; above 8-day EMA;
  • Above 20-day EMA, 50-day EMA; at/below 200-day SMA; below 100-day SMA
  • In Confirmed Uptrend
2-Hour (E-mini futures)
  • Bouncing off the neckline of a potential Head-&-Shoulder pattern emerging – a break below 4444.75 will complete it – the 61.8% extension target is near 4402.00 and the 100% extension target is near 4375.00
    • RSI-21 rose above 50 from near 30 at 4:00 PM
    • At/below EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving down since 1:30 AM on March 23 – lower highs and lower lows;
    • RSI-21 has risen to above 50 from near 30
    • At/below EMA10 of EMA50, which is above EMA20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 9:45 PM
  • The Bollinger Band is relatively stable; price declined to the middle band from the upper band
    • Stochastic (9, 1, 3): %K is below %D since 7:30 AM;
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Wednesday, March 23, in mixed volume. S&P 500 and NASDAQ Composite traded in higher volume. Major indices opened lower and then mostly drifted sideways to down.

From Briefing.com:

The stock market ended Wednesday on a lower note with the Dow (-1.3%), Nasdaq (-1.3%), and S&P 500 (-1.2%) recording comparable losses while the Russell 2000 (-1.7%) finished behind the large cap indices. […]

On the downside, nine sectors recorded losses with six surrendering at least 1.0%. Financials (-1.8%) and health care (-1.8%) lagged throughout the day due to broad weakness.

[…]

Top-weighted technology (-1.5%) finished near the bottom of the leaderboard

[…]

Treasuries ended the day in positive territory with the 10-yr note reclaiming its loss from yesterday and sending its yield lower by five basis points to 2.32%.

[…]
  • New home sales decreased 2.0% month-over-month in February to a seasonally adjusted annual rate of 772,000 units (Briefing.com consensus 820,000) from a downwardly revised 788,000 (from 801,000) in January. On a year-over-year basis, new home sales were down 6.2%.
  • […]
  • The weekly MBA Mortgage Index fell 8.1% after decreasing by 1.2% during the previous week. The Purchase Index fell 1.5% while the Refinance Index fell 14.4%.
[…]
  • Dow Jones Industrial Average -5.5% YTD
  • S&P 500 -6.5% YTD
  • Russell 2000 -8.6% YTD
  • Nasdaq Composite -11.0% YTD

Overseas: 

  • Europe: DAX -1.3%, FTSE -0.2%, CAC -1.2%
  • Asia: Nikkei +3.0%, Hang Seng +1.2%, Shanghai +0.3%

Commodities: 

  • Crude Oil +5.78 @ 115.26
  • Nat Gas +0.04 @ 5.26
  • Gold +14.00 @ 1936.30
  • Silver +0.23 @ 25.16
  • Copper +0.07 @ 4.78
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