Morning Notes – Wednesday, April 20, 2022

/ April 20, 2022

Directional Bias For The Day:

  • S&P Futures are higher at 8:45 AM; moving up since 4:00 AM; broke above a sideways move at 5:15 AM
  • The odds are for an up day with elevated volatility – watch for a break below 4458.25 for a change of sentiments
  • Key economic data report due during the day:
    • Existing Home Sales ( 5.78M est.; prev. 6.02M) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend Under Pressure
  • 120-Min:  Side-Up
  • 30-Min: Side-Up
  • 15-Min: Side-Up
  • 6-Min: Side-Up

Key Levels:

  • Critical support levels for S&P 500 are 4471.03, 4456.00, and 4438.62
  • Critical resistance levels for S&P 500 are 4481.80, 4507.57, and 4520.41
  • Key levels for E-mini futures: break above 4482.75, the high at 3:30 AM on April 11 and a break below 4458.25, the low at 7:15 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (June 2022) closed at 4459.00 and the index closed at 4462.21 – a spread of about -3.25 points; futures closed at 4459.25 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 +19.00; Dow by +141; and NASDAQ by +60.25

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, and Seoul closed lower; Tokyo, Sydney, Mumbai, and Singapore closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.882%, up +32.6 basis points from two weeks ago;
    • 30-years is at 2.949%, up +36.5 basis points;
    • 2-years yield is at 2.602%, up +7.2 basis points;
    • The 10-Year-&-2-Year spread is at 0.280, up from 0.026
    • The 30-Year-&-10-Year spread is at 0.067, up from 0.028
  • VIX
    • At 20.34 @ 8:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 25.38 on April 12; low = 18.45 on April 4
    • Sentiment: Risk-Neutral-On

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

Weekly:
  • The week ending on April 15 was a red candle that gapped down at the open and did not fill the gap
    • Stochastic (9,1, 3): %K is below %D; just below 70
    • RSI-9 is below 50
  • The week was down -95.62 or -2.1%; the 5-week ATR  is 161.10
  • A down week; second in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4414.51, R1=4448.61, R2=4504.64; S1=4358.95, S2=4325.32; S1 pivot level was breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A large green candle completing a Morning Star pattern
    • Stochastic (9, 1, 3): %K crossed above %D from below 10; %D Bullish Divergence
    • RSI-9 turned up above 50; above 8-day EMA; Bullish Divergence
  • Above 20-day EMA and 50-day EMA; below 200-day SMA and 100-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Downtrend since 12:00 AM on March 30; the sequence of lower highs and lower lows is broken; at a resistance level around 4466.00
    • RSI-21 is moving up since 6:00 PM on April 17; above 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Breaking Above a Horizontal Channel – the 61.8% extension target is near 4535.00 and the 100% extension target is near 4578.00
    • RSI-21 is moving above 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 4:45 AM
  • The Bollinger Band is expanding since 4:45 Am with price walking up the upper band
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Tuesday, April 19, in mostly higher volume. NASDAQ Composite traded in lower volume.

The major indices opened up and then traded higher for the rest of the day. Most made Morning Star or similar bullish candlestick formations.

From Briefing.com:

The S&P 500 rose 1.6% on Tuesday in a relatively broad-based advance. The Dow Jones Industrial Average (+1.5%) kept pace with the benchmark index while the Nasdaq Composite (+2.2%) and Russell 2000 (+2.0%) outperformed with roughly 2% gains.

Ten of the 11 S&P 500 sectors closed higher with gains ranging from 0.6% (utilities) to 2.9% (consumer discretionary). The exception was the energy sector (-1.0%) amid pronounced weakness in oil ($102.07/bbl, -6.11, -5.7%) and natural gas ($7.17/MMBtu, -0.63, -8.0%) prices.

[…]

The fed-funds-sensitive 2-yr yield rose 11 basis points to 2.58% while the 10-yr yield rose five basis points to 2.91% after flirting with 1.93% in the wake of better-than-expected housing starts and building permits data for March. The U.S. Dollar Index increased 0.2% to 101.00.

[…]
  • Housing starts increased 0.3% month-over-month in March to a seasonally adjusted annual rate of 1.793 million units (Briefing.com consensus 1.750 million) while permits increased 0.4% month-over-month to a seasonally adjusted annual rate of 1.873 million.
[…]
  • Dow Jones Industrial Average -3.9% YTD
  • S&P 500 -6.4% YTD
  • Russell 2000 -9.6% YTD
  • Nasdaq Composite -13.0% YTD

Overseas: 

  • Europe: DAX -0.1%, FTSE -0.2%, CAC-0.8%
  • Asia: Nikkei +0.7%, Hang Seng -2.3%, Shanghai -0.1%

Commodities: 

  • Crude Oil -6.11 @ 102.07
  • Nat Gas -0.63 @ 7.16
  • Gold -23.20 @ 1957.70
  • Silver -0.65 @ 25.26
  • Copper -0.09 @ 4.70
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