Morning Notes – Thursday, April 21, 2022

/ April 21, 2022

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM; moving up since 2:45 PM on Wednesday;
  • The odds are for an up day with elevated volatility – watch for a break below 4484.25 and 4468.25 for a change of sentiments
  • Key economic data report due during the day:
    • Philly Fed Manufacturing Index ( 17.5 vs 21.5 est.; prev. 27.4) at 8:30 AM
    • Unemployment Claims ( 184K vs. 177K est.; prev. 186K) at 8:30 Am
    • CB Leading Index ( 0.3% est.; prev. 0.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4476.89, 4448.76, and 4438.62
  • Critical resistance levels for S&P 500 are 4507.57, 4520.41, and 4561.51
  • Key levels for E-mini futures: break above 4497.75, the high at 8:00 AM and a break below 4484.25, the low at 6:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2022) closed at 4455.75 and the index closed at 4459.45 – a spread of about -3.75 points; futures closed at 4455.50 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +39.25; Dow by +251; and NASDAQ by +176.25

Markets Around The World

  • Markets in the East mostly higher – Shanghai and Hong Kong closed lower;
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • 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 2.840%, up +23.1 basis points from two weeks ago;
    • 30-years is at 2.879%, up +24.7 basis points;
    • 2-years yield is at 2.586%, up +10.0 basis points;
    • The 10-Year-&-2-Year spread is at 0.254, up from 0.123
    • The 30-Year-&-10-Year spread is at 0.039, up from 0.023
  • VIX
    • At 19.97 @ 7:45 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-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 relatively small red Spinning Top candle at the close of the previous day
    • Stochastic (9, 1, 3): %K is above %D; near 60 following a %D Bullish Divergence
    • RSI-9 is just 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)
  • The downtrend since 12:00 AM on March 30 is ending; breaking above the downtrend line from the March 30 high; the sequence of lower highs and lower lows is broken;
    • RSI-21 is moving up above 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Broke 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 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 3:30 AM
  • The Bollinger Band is expanding since 3:30 AM with price walking up the upper band
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mixed on Wednesday, April 20, in mixed volume. S&P 500, NASDAQ Composite, and Wilshire 5000 Total Market Index closed lower. S&P 500 and Russell 2000 traded in lower volume.

The major indices opened up and then for the rest of the day they traded sideways with volatility.

From Briefing.com:

The S&P 500 decreased 0.1% on Wednesday, as the market did a good job mitigating the huge earnings disappointment in Netflix (NFLX 226.19, -122.42, -35.1%). The Dow Jones Industrial Average (+0.7%) and Russell 2000 (+0.4%) outperformed in positive territory, while the Nasdaq Composite fell 1.2%.

[…]

The S&P 500 communication services sector (-4.1%) dropped 4% amid weakness in NFLX and FB, followed by smaller declines in the consumer discretionary (-1.4%) and information technology (-0.1%) sectors. The Vanguard Mega Cap Growth ETF (MGK 222.21, -2.79) fell 1.2%.

[…]

Granted, a closer look reveals a defensive bias with the real estate (+1.9%), consumer staples (+1.5%), health care (+1.3%), and utilities (+0.8%) sectors atop the sector standings.

[..]

In the Treasury market, the 2-yr yield decreased one basis point to 2.57%, and the 10-yr yield decreased seven basis points to 2.84%. The U.S. Dollar Index fell 0.6% to 100.31. WTI crude futures increased 0.3%, or $0.33, to $102.40/bbl.

[…]
  • Existing home sales decreased 2.7% month-over-month in March to a seasonally adjusted annual rate of 5.77 million (Briefing.com consensus 6.20 million) versus a downwardly revised 5.93 million (from 6.02 million) in February. Total sales in March were down 4.5% from a year ago.
  • […]
  • The weekly MBA Mortgage Applications Index decreased 5.0% following a 1.3% decline in the prior week.
[…]
  • Dow Jones Industrial Average -3.2% YTD
  • S&P 500 -6.4% YTD
  • Russell 2000 -9.2% YTD
  • Nasdaq Composite -14.0% YTD

Overseas: 

  • Europe: DAX +1.5%, FTSE +0.4%, CAC +1.4%
  • Asia: Nikkei +0.9%, Hang Seng -0.4%, Shanghai -1.4%

Commodities: 

  • Crude Oil +0.33 @ 102.40
  • Nat Gas -0.21 @ 6.95
  • Gold -2.70 @ 1955.00
  • Silver -0.12 @ 25.25
  • Copper -0.05 @ 4.65
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