Market Remarks

Morning Notes – Friday, April 1, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM; forming an up-sloping flag, which is bearish in nature, since 4:00 PM on Thursday
  • The odds are for a sideways to down day from pre-open levels around 4545.00 – watch for a break above 4555.50 for a change of sentiments
  • Key economic data report due during the day:
    • Non-Farm Employment Change ( 431K vs. 492K est; prev. 750K) at 8:30 AM
    • Unemployment Rate ( 3.6% vs. 3.7% est.; prev. 3.8% ) at 8:30 AM
    • Average Hourly Earnings ( 0.4% vs. 0.4% est.; prev. 0.1%) at 8:30 AM
    • Final Manufacturing PMI ( 58.5 est.; prev. 58.5) at 9:45 AM
    • ISM Manufacturing PMI ( 58.9 est.; prev. 58.6) at 10:00 AM
    • Construction Spending ( 1.0% est.; prev. 1.3% ) at 10:00 AM
    • ISM Manufacturing Prices ( 79.9 est.; prev 75.6) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4530.41, 4501.07, and 4485.19
  • Critical resistance levels for S&P 500 are 4571.95, 4603.07, and 4617.01
  • Key levels for E-mini futures: break above 4555.50, the high of 6:00 AM and break below 4538.25, the low of 2:00 PM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (June 2022) closed at 4527.75 and the index closed at 4530.41 – a spread of about -2.75 points; futures closed at 4530.75 for the day; the fair value is -3.00
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +20.75; Dow by +168; and NASDAQ by +76.00

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai, and Singapore closed up; Tokyo, Sydney, and Seoul closed down;
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.401%, up +20.9 basis points from two weeks ago;
    • 30-years is at 2.496%, up +1.1 basis points;
    • 2-years yield is at 2.342%, up +42.0 basis points;
    • The 10-Year-&-2-Year spread is at 0.059, down from 0.270
    • The 30-Year-&-10-Year spread is at 0.095, down from 0.293
  • VIX
    • At 20.25 @ 6:30 AM; dwon from the last close; above the 5-day SMA;
    • Recent high = 33.83 on March 15; low = 17.36 on January 9
    • Sentiment: Risk-Off-Neutral

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

Weekly:
  • The week ending on March 25 was a relatively small green candle with almost no upper shadow and a small lower shadow;
    • Stochastic (9,1, 3): %K is above %D; near 90
    • RSI-9 is moving above 50
  • The week was up +79.94 or +1.8%; the 5-week ATR  is 200.87
  • An up week; third in the last five weeks, and fifth in the previous ten weeks
  • The weekly pivot point=4504.46.41, R1=4584.63, R2=4626.19; S1=4462.90, S2=4382.73; No pivot levels were breached
  • Above 10-week EMA; below 39-week SMA; above 89-week SMA
  • Uptrend
Daily
  • A large red candle with almost no upper and lower shadows;
    • Stochastic (9, 1, 3): %K is below %D; below 50
    • RSI-9 is declining; below 60; 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)
  • Trending up from 4129.50 at 4:00 PM on March 15; drifted down from 2:00 PM on March 26 high of 4631.00 to 4526.00;
    • RSI-21 declined from above 80 to just above 12; bounced up to just below 40
    • Below EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Forming an upsloping flag since 4:00 PM following a steep decline on Thursday
    • RSI-21 has risen to near 45 from near 20
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up since 10:00 PM forming an upsloping flag
  • The Bollinger Band is relatively narrow
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Thursday, March 31, in mostly higher volume. NASDAQ Composite traded in lower volume. Major indices mostly traded down for the day from the open with an accelerated decline in the last hour of the session. 

From Briefing.com:

The S&P 500 fell 1.6% on Thursday, slumping into the close on no specific news catalyst. The Nasdaq Composite (-1.5%) and Dow Jones Industrial Average (-1.6%) fell comparably while the Russell 2000 fell 1.0%.

The weak finish pushed all 11 S&P 500 sectors into the red on a closing basis, with the financials (-2.3%) and communication services (-2.0%) sectors losing at least 2.0%. The utilities (-0.2%) and consumer staples (-0.4%) sectors outperformed on a relative basis with modest declines.

[…]

The 2-yr yield decreased five basis points to 2.28%, and the 10-yr yield decreased three basis points to 2.33%. The U.S. Dollar Index rose 0.6% to 98.37. The CBOE Volatility Index increased 6.4% to 20.56.

[…]
  • Personal income increased 0.5% month-over-month in February (Briefing.com consensus 0.5%), though real personal disposable income was down 0.2%. Personal spending increased 0.2% (Briefing.com consensus 0.5%) while the personal savings rate as a percentage of disposable income increased to 6.3% from a revised 6.1% (from 6.4%) in January. Real personal spending was down 0.4%. The PCE Price Index was up 0.6% (Briefing.com consensus 0.6%), pushing the year-over-year rate to 6.4% from 6.0%. The core PCE Price Index, which excludes food and energy, was up 0.4% (Briefing.com consensus 0.4%), pushing the year-over-year rate up to 5.4% from 5.2% in January.
  • […]
  • Initial jobless claims for the week ending March 26, increased by 14,000 to 202,000 (Briefing.com consensus 200,000), rising off their lowest level since September 1969. Continuing jobless claims for the week ending March 19 decreased by 35,000 to 1.307 million, a level not seen since December 27, 1969.
  • […]
  • The Chicago PMI for March increased to 62.9 (Briefing.com consensus 56.8) from 56.3 in February.
[…]
  • Dow Jones Industrial Average -4.6% YTD
  • S&P 500 -5.0% YTD
  • Russell 2000 -7.8% YTD
  • Nasdaq Composite -9.1% YTD

Overseas: 

  • Europe: DAX -1.3%, FTSE -0.8%, CAC -1.2%
  • Asia: Nikkei -0.7%, Hang Seng -0.8%, Shanghai -0.4%

Commodities: 

  • Crude Oil -7.24 @ 100.43
  • Nat Gas +0.06 @ 5.64
  • Gold +16.10 @ 1953.00
  • Silver +0.08 @ 25.07
  • Copper +0.01 @ 4.75
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