Market Remarks

Morning Notes – Monday, April 25, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; moving sideways since 9:15 PM on Sunday;
  • The odds are for a down day with elevated volatility – watch for a break above 4218.75
  • No key economic data report due during the day

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4217.54, 4187.0, and 4161.72
  • Critical resistance levels for S&P 500 are 4251.99, 4267.62, and 4284.24
  • Key levels for E-mini futures: break above 4254.25, the high at 9:15 AM and a break below 4218.75, the low at 5:15 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2022) closed at 4269.25 and the index closed at 4271.78 – a spread of about -2.50 points; futures closed at 4267.25 for the day; the fair value is +2.00
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -15.50; Dow by -91; and NASDAQ by -48.75

Markets Around The World

  • Markets in the East closed lower – Sydney was closed for trading
  • European markets are lower
  • 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 lower
    • Industrial metals are lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.906%, up +19.3 basis points from two weeks ago;
    • 30-years is at 2.944%, up +19.8 basis points;
    • 2-years yield is at 2.586%, up +10.0 basis points;
    • The 10-Year-&-2-Year spread is at 0.207, down from 0.247
    • The 30-Year-&-10-Year spread is at 0.038, up from 0.033
  • VIX
    • At 29.16 @ 8:45 AM; up from the last close; above the 5-day SMA;
    • Recent high = 25.38 on April 12; low = 19.75 on April 20
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on April 22 was a red candle with a large upper shadow and almost no lower shadow; the high of the week was above the high of the previous week;’s candle
    • Stochastic (9,1, 3): %K is below %D; near 30
    • RSI-9 is below 40
  • The week was down -120.81 or -2.8%; the 5-week ATR  is 149.43
  • A down week; third in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4350.78, R1=4433.94, R2=4596.10; S1=4188.62, S2=4105.46; R1/R2/S1/S2/S3 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A large red candle with almost no upper and lower shadows
    • Stochastic (9, 1, 3): %K is below %D; near zero
    • RSI-9 is just above 30; below 8-day EMA;
  • Below 50-day EMA, 20-day EMA, 200-day SMA, and 100-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • The downtrend since 12:00 AM on March 30; fresh leg down since 8:00 AM on April 21 from a resistance level
    • RSI-21 is moving up since 4:00 PM on Friday from around 13; Bullish Divergence at 4:00 AM
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Downtrend since 9:30 AM on April 21; drifting sideways since 9:00 PM
    • RSI-21 is moving up; near 50 after making a Bullish Divergence at 4:30 AM
    • Above EMA20 but below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 1:15 AM after moving down on Friday
  • The Bollinger Band is expanding a bit since 8:15 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Friday, April 22, in mostly the higher volume. Dow Jones Transportation Average traded in lower volume. The major indices opened lower and then moved down for the rest of the day.

For the week, the major US indices closed lower in higher volume. Markets in Asia mostly closed lower. The European markets were down. The dollar index was up for the week. The energy and most hard commodities closed lower. The soft commodities were mixed. The US Treasury yields closed up. All but two S&P sectors – Consumer Staples and Real Estate – closed down for the week.

From Briefing.com:

The major indices dropped more than 2.5% on Friday in what was largely a continuation of yesterday’s broad-based selling. The S&P 500 fell 2.8%, the Dow Jones Industrial Average fell 2.8%, the Nasdaq Composite fell 2.6%, and the Russell 2000 fell 2.6%.

All 11 S&P 500 sectors closed lower with losses ranging from 1.6% (consumer staples) to 3.7% (materials), and all 30 Dow components closed lower. Growth and value stocks fell together, as did mega-caps with micro-caps.

[…]

The fed-funds-sensitive 2-yr yield increased three basis points to 2.72% while the growth-sensitive 10-yr yield decreased one basis point to 2.91% after hitting 2.97% Thursday evening. The U.S. Dollar Index rose 0.6% to 101.16. WTI crude futures fell 1.7%, or $1.79, to $102.00/bbl.

[…]
  • Dow Jones Industrial Average -7.0% YTD
  • S&P 500 -10.4% YTD
  • Russell 2000 -13.6% YTD
  • Nasdaq Composite -17.9% YTD
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