Market Remarks

Morning Notes – Tuesday, April 12, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a higher at 8:45 AM; up more than 60 points from the 3:30 AM low of 4382.25
  • The odds are for an up day with elevated volatility – watch for a break below 4416.25 for a change of sentiments
  • Key economic data report due during the day:
    • CPI ( 1.2% vs. 1.2% est.; prev. 0.8%) at 8:30 AM
    • Core CPI ( 1.3% vs. 0.5% est.; prev. 0.5%) at 8:30 AM
    • IBD/TIPP Economic Optimism ( 43.2 est.; prev. 41.0) at 10:00 AM
    • FOMC Member Brainard’s speech at 12:10 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4424.30, 4408.38, and 4386.55
  • Critical resistance levels for S&P 500 are 4444.01, 4464.35, and 4481.80
  • Key levels for E-mini futures: break above 4444.50, the low at 12:30 AM on April 7, and a break below 4416.25, the low at 8:30 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (June 2022) closed at 4409.25 and the index closed at 4412.53 – a spread of about -3.25 points; futures closed at 4409.00 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +29.75; Dow by +115; and NASDAQ by +177.50

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Hong Kong closed higher
  • European markets are mostly lower – France is higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • 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 2.780%, up +30.3 basis points from two weeks ago;
    • 30-years is at 2.820%, up +24.7 basis points;
    • 2-years yield is at 2.496%, up +15.6 basis points;
    • The 10-Year-&-2-Year spread is at 0.284, up from 0.137
    • The 30-Year-&-10-Year spread is at 0.040, down from 0.096
  • VIX
    • At 24.16 @ 7:45 AM; down from the last close; above the 5-day SMA;
    • Recent high = 24.78 on April 6; low = 18.45 on April 4
    • Sentiment: Risk-Neutral-Off

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

Weekly:
  • The week ending on April 8 was a Spinning Top Bearish Engulfing candle;
    • Stochastic (9,1, 3): %K crossed below %D; near 80
    • RSI-9 is just above 50
  • The week was down -57.58 or -1.3%; the 5-week ATR  is 173.91
  • A down week; second in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4510.59, R1=4571.14, R2=4654.00; S1=4427.73, S2=4367.18; S1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A red candle with no upper and lower shadow that gapped down;
    • Stochastic (9, 1, 3): %K is below %D; near zero
    • RSI-9 is moving down; below 40; below 8-day EMA;
  • Below 20-day EMA, 50-day EMA, 200-day SMA, and 100-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Downtrend since 12:00 AM on March 30 – lower high and lower lows; broke below a support level around 4444.00 – the 61.8% extension target around 4398.00 is achieved and the 100% extension target is around 4369.00; bouncing up since 12:00 AM
    • RSI-21 is moved up from below 20 to near 50
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Broke below a Horizontal Channel on Monday; bounced up from a low of 4382.25 at 3:30 AM to around 4420.00
    • RSI-21 is above 50 after making a Bullish Divergence at 3:30 AM
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 3:45 AM
  • The Bollinger Band is expanding with price walking up the upper band
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly lower on Monday, April 11, in mostly higher volume. Dow Jones Transportation Average closed higher in higher volume.

The major indices gapped down at the open and then traded lower for the rest of the day. All S&P sectors closed lower.

From Briefing.com:

The S&P 500 fell 1.7% on Monday, as the market remains pressured by rising rates, technical factors, and growth concerns. The Nasdaq Composite declined 2.2%, the Dow Jones Industrial Average declined 1.2%, and the Russell 2000 declined 0.7%.

The 10-yr yield, specifically, jumped another seven basis points to 2.78% (+45 bps for the month and +127 bps for the year),

[…]

The late-day slide took all 11 S&P 500 sectors into negative territory on a closing basis. The information technology (-2.6%), consumer discretionary (-1.9%), and communication services (-1.7%) sectors, which are home to the mega-caps, were influential drags on the market.

The energy sector (-3.1%) was the weakest performer, though, as oil prices dropped below $95.00 per barrel ($94.16/bbl, -4.02, -4.1%),

[…]

The industrials (-0.3%), materials (-0.5%), financials (-0.5%), and consumer staples (-0.5%) sectors outperformed on a relative basis with modest declines.

[…]

The 2-yr yield, meanwhile, decreased two basis points to 2.50%. The U.S. Dollar Index (99.99, +0.20, +0.2%) rose for the eighth straight session.

[…]
  • Dow Jones Industrial Average -5.6% YTD
  • S&P 500 -7.4% YTD
  • Russell 2000 -11.8% YTD
  • Nasdaq Composite -14.3% YTD

Overseas: 

  • Europe: DAX -0.6%, FTSE -0.7%, CAC +0.1%
  • Asia: Nikkei -0.6%, Hang Seng -3.0%, Shanghai -2.6%

Commodities: 

  • Crude Oil +1.88 @ 98.18
  • Nat Gas -0.08 @ 6.31
  • Gold +6.50 @ 1951.30
  • Silver +0.21 @ 24.97
  • Copper -0.09 @ 4.62
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