Market Remarks

Morning Notes – Wednesday, April 6, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:15 AM; moving down since 10:00 AM on Tuesday from a high of 4588.75;
  • The odds are for a down day with elevated volatility – watch for a break above 4506.25 for a change of sentiments
  • Key economic data report due during the day:
    • FOMC Meeting Minutes at 2:00 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4485.19, 4455.81, and 4424.30
  • Critical resistance levels for S&P 500 are 4507.57, 4529.11, and 4561.51
  • Key levels for E-mini futures: break above 4506.25, at 5:00 AM and a break below 4473.25 at 8:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (June 2022) closed at 4521.25 and the index closed at 4525.12 – a spread of about -4.00 points; futures closed at 4520.25 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -42.25; Dow by -236; and NASDAQ by -231.75

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai closed up; Shanghai  and Hong Kong were closed;
  • European markets are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • AUD/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • NZD/USD
    • 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 2.556%, up +18.3 basis points from two weeks ago;
    • 30-years is at 2.584%, down -0.9 basis points;
    • 2-years yield is at 2.53%, up +35.5 basis points;
    • The 10-Year-&-2-Year spread is at 0.026, down from 0.198
    • The 30-Year-&-10-Year spread is at 0.028, down from 0.220
  • VIX
    • At 23.27 @ 7:45 AM; up from the last close; above the 5-day SMA;
    • Recent high = 33.83 on March 15; low = 18.45 on April 4
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on April 1 was a Doji candle;
    • Stochastic (9,1, 3): %K turned down but is still above %D; near 90
    • RSI-9 is above 50
  • The week was up +2.80 or +0.1%; the 5-week ATR  is 172.68
  • An up week; third in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4563.58, R1=4619.58, R2=4693.31; S1=4489.85, S2=4433.85; R1/R2 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A Bearish Engulfing with a small upper shadow and a smaller lower shadow;
    • Stochastic (9, 1, 3): %K crossed below %D; just above 30
    • RSI-9 turned down just above 60; below 8-day EMA;
  • Above 20-day EMA, 50-day EMA, 200-day, and SMA; below 100-day SMA;
  • In Confirmed Uptrend
2-Hour (E-mini futures)
  • Moving down since 2:00 PM on March 29; broke a sequence of higher highs and higher lows since 4:00 PM on March 15; breaking below a support level around 4493.00; the next support is around 4445.00
    • RSI-21 declined to just above 20
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Trending down since 3:30 PM on March 29; fresh leg down since 10:00 AM on April 5
    • RSI-21 is moving below 30
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 8:00 AM on April 5
  • The Bollinger Band is expanding since 3:15 AM with price walking down the lower band
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Tuesday, April 5, in mostly higher volume. Dow Jones Industrial Average traded in lower volume. Major indices opened up and moved up in the first half-hour and then turned around and declined for the rest of the day.

From Briefing.com:

The S&P 500 fell 1.3% on Tuesday, as a sharp rise in interest rates weighed on the growth stocks and risk sentiment following some hawkish-sounding Fed commentary. The Nasdaq Composite (-2.3%) and Russell 2000 (-2.4%) underperformed with losses over 2.0% while the Dow Jones Industrial Average fell 0.8%. […]

The 2-yr yield rose nine basis points to 2.51%, and the 10-yr yield rose 14 basis points to 2.55%.

The S&P 500 information technology (-2.2%), consumer discretionary (-2.4%), and communication services (-1.4%) sectors underperformed amid weakness in the mega-caps. Despite the curve-steepening bias in the Treasury market, the financials sector (-0.8%) struggled in negative territory.

Investors leaned defensively into the utilities (+0.7%), health care (+0.2%), consumer staples (+0.1%), and real estate (+0.1%) sectors. Likewise, the U.S. Dollar Index (99.48, +0.48, +0.5%) strengthened, and the CBOE Volatility Index (21.03, +2.46, +13.3%) shot higher.

[…]

WTI crude futures settled lower by 1.8%, or $1.81, to $101.53/bbl.

[…]
  • The ISM Non-Manufacturing Index for March increased to 58.3% (Briefing.com consensus 58.5%) from 56.5% in February. The dividing line between expansion and contraction is 50.0%. The March reading marks the 22nd straight month of growth for the services sector, with some acceleration from the prior month.
  • […]
  • The February Trade Balance Report showed a deficit of $89.2 billion (Briefing.com consensus -$88.5 billion) versus an upwardly revised deficit of $89.2 billion for January (from -$89.7 billion). The three-month moving average for total trade in goods and services widened to $86.8 billion in February from $83.7 billion in January and $66.2 billion a year ago.
[…]
  • Dow Jones Industrial Average -4.7% YTD
  • S&P 500 -5.1% YTD
  • Russell 2000 -8.9% YTD
  • Nasdaq Composite -9.2% YTD

Overseas: 

  • Europe: DAX -0.7%, FTSE +0.7%, CAC -1.3%
  • Asia: Nikkei +0.2%, Hang Seng market closed, Shanghai market closed

Commodities: 

  • Crude Oil -1.81 @ 101.53
  • Nat Gas +0.32 @ 6.03
  • Gold -10.40 @ 1926.70
  • Silver -0.15 @ 24.45
  • Copper +0.00 @ 4.78
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