Market Remarks

Morning Notes – Tuesday, April 26, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; moving sideways since 3:15 AM within a trading range between 4288.25 and 4266.00;
  • The odds are for a sideways to down day with elevated volatility – watch for a break above 4288.25 and a break below 4266.00 for clarity
  • Key economic data report due during the day:
    • Durable Goods Orders (0.8% vs. 1.0% est.; prev. -2.1%) at 8:30 AM
    • Core Durable Goods Orders ( 1.1% vs. 0.5% est.; prev. -0.5%) at 8:30 AM
    • HPI ( 2.1% vs. 1.5% est.; prev. 1.6%) at 9:00 AM
    • S&P/CS Composite-20 HPI ( 20.2% vs. 19.2% est.; prev. 18.9%) at 9:00 AM
    • CB Consumer Confidence ( 105. est.; prev. 107.2) at 10:00 AM
    • New Homes Sales ( 774K est.; prev. 772K) at 10:00 AM
    • Richmond Fed Manufacturing Index ( 9 est.; prev. 13) at 10:00 AM

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-Down

Key Levels:

  • Critical support levels for S&P 500 are 4251.75, 4223.01, and 4200.82
  • Critical resistance levels for S&P 500 are 4299.02, 4315.69, and 4330.67
  • Key levels for E-mini futures: break above 4288.25, the high at 5:00 AM and a break below 4266.00, the low at 3:30 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (June 2022) closed at 4293.00 and the index closed at 4296.12 – a spread of about -3.25 points; futures closed at 4292.75 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -25.50; Dow by -215; and NASDAQ by -85.25

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Sydney, and Singapore closed lower; Hong Kong, Tokyo, Mumbai, and Seoul closed higher
  • European markets are mostly higher – Spain is 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 2.761%, down -1.9 basis points from two weeks ago;
    • 30-years is at 2.852%, up +3.2 basis points;
    • 2-years yield is at 2.722%, up +22.7 basis points;
    • The 10-Year-&-2-Year spread is at 0.039, down from 0.285
    • The 30-Year-&-10-Year spread is at 0.091, up from 0.040
  • VIX
    • At 27.61 @ 8:15 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 green hammer candle with almost no upper shadow and a lower shadow slightly bigger than the real body; possible reversal day
    • Stochastic (9, 1, 3): %K crossed above %D from near zero
    • RSI-9 turned up from 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; bouncing off  from a low of 4195.25 at 10:00 AM on Monday; drifting sideways to down since 4:00 PM
    • RSI-21 is drifting down from 60 to around 45
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving sideways to down since 3:30 PM on Monday – between 4303.50 and 4268.00
    • RSI-21 is moving around 45
    • At/below EMA20, which is at/above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 9:30 PM after moving down on Friday
  • The Bollinger Band is contracting a bit
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mostly higher on Monday, April 25, in mixed higher volume. NYSE Composite closed lower. Dow Jones  Industrial Average and NASDAQ Composite traded in higher volume.

The major indices gapped down at the open and then drifted sideways to lower in the morning session. They turned around in the late morning and then moved higher for the rest of the day giving a semblance of a reversal day.

From Briefing.com:

The S&P 500 advanced 0.6% on Monday after being down as much as 1.7% earlier in the day. The Nasdaq Composite (+1.3%), Dow Jones Industrial Average (+0.7%), and Russell 2000 (+0.7%) followed similar price action, with the tech-sensitive Nasdaq scoring the performance edge.

Seven of the 11 S&P 500 sectors closed higher after each traded lower during the session. The information technology (+1.4%) and communication services (+1.5%) sectors, which are this month’s worst-performing sectors, outperformed, while the energy sector (-3.3%) was by far the worst performer today.

[…]

Despite the comeback, growth concerns were still evident in the eight-basis-point decline in the 10-yr yield (2.83%), the 3% decline in oil prices ($98.63/bbl, -3.37, -3.3%),

[..]

Separately, the U.S. Dollar Index increased 0.5% to 101.71. The 2-yr Treasury note yield fell nine basis points to 2.63%.

[…]
  • Dow Jones Industrial Average -6.3% YTD
  • S&P 500 -9.9% YTD
  • Russell 2000 -13.0% YTD
  • Nasdaq Composite -16.9% YTD

Overseas: 

  • Europe: DAX -1.5%, FTSE -1.9%, CAC -2.0%
  • Asia: Nikkei -1.9%, Hang Seng -3.7%, Shanghai -5.1%

Commodities: 

  • Crude Oil -3.37 @ 98.63
  • Nat Gas +0.15 @ 6.65
  • Gold -37.30 @ 1896.30
  • Silver -0.59 @ 23.67
  • Copper -0.12 @ 4.44
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