Morning Notes – Friday, April 29, 2022

/ April 29, 2022

Directional Bias For The Day:

  • S&P Futures are lower at 9:15 AM; drifting down since 2:30 – at the bottom of a range between 4280.00 and 4230.00; down almost 40 points
  • The odds are for a down day with a good chance of staying within a range with elevated volatility – watch for a break above 4279.75 and a break below 4230.00 for clarity
  • Key economic data report due during the day:
    • Core PCE Price Index (0.3% vs. 0.3% est.; prev. 0.3%) at 8:30 AM
    • Personal Income ( 0.5% vs. 0.4% est.; prev. 0.7%) at 8:30 AM
    • Personal Spending ( 1.1% vs. 0.7% est.; prev. 0.6%) at 8:30 AM
    • Chicago PMI ( 62.1 est.; prev. 62.9) at 9:45 AM
    • Revised UoM Consumer Sentiment (65.8 est.; prev. 65.7) at 10:00 AM
    • Revised UoM Inflations Expectations ( prev. 5.4%) 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:  Side-Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for S&P 500 are 4242.33, 44225.45, and 4207.78
  • Critical resistance levels for S&P 500 are 4275.82, 4300.83, and 4315.60
  • Key levels for E-mini futures: break above 4255.00, the high at 8:15 AM and a break below 4230.00, the low at 9:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (June 2022) closed at 4285.25 and the index closed at 4287.50 – a spread of about -2.25 points; futures closed at 4283.50 for the day; the fair value is +1.75
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -39.75; Dow by -146; and NASDAQ by -177.50

Markets Around The World

  • Markets in the East closed higher – Tokyo was closed for trading
  • 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 lower
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.863%, up +3.5 basis points from two weeks ago;
    • 30-years is at 2.929%, up +1.0 basis points;
    • 2-years yield is at 2.572%, up +11.7 basis points;
    • The 10-Year-&-2-Year spread is at 0.291, down from 0.373
    • The 30-Year-&-10-Year spread is at 0.066, up from 0.091
  • VIX
    • At 29.43 @ 8:45 AM; down from the last close; below the 5-day SMA;
    • Recent high = 33.81 on April 26; 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 Green candle with small upper and lower shadows relatively to the real body; three-day Morning Star candlestick formation
    • Stochastic (9, 1, 3): %K is above %D;
    • RSI-9 is above 40; above 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; lower highs and lower lows since April 21; rising since 4:00 PM on April 26 in a zig-zag move forming an upsloping flag, which is bearish in nature
    • RSI-21 is rising since 4:00 PM on April 26 after forming a Bullish Divergence;
    • At/above EMA20, which is just below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving up since 4:30 PM on April 26; broke above a downtrend line from the high of 9:30 AM on April 21; moving within a trading range between 4303.50 and 4136.75 since 1:30 PM on April 22
    • RSI-21 is declining since 3:00 PM on Thursday
    • Below  EMA20, which is at/above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting down since 4:30 AM
  • The Bollinger Band is expanding a bit with price walking down the lower band
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Thursday, April 28, in higher volume. Major indices opened higher but then decline in the morning session before turning around midday and closing near the highs for the day. Most made three-day Morning Star or similar bullish candlestick formations.

From Briefing.com:

The S&P 500 rallied 2.5% on Thursday, as earnings reactions helped instill confidence in dip-buying efforts. The Nasdaq Composite rose 3.1%, the Dow Jones Industrial Average rose 1.9%, and the Russell 2000 rose 1.8%.

[…]

All 11 sectors in the S&P 500 closed higher with gains ranging from 1.1% (utilities) to 4.0% (information technology).

[…]

The 2-yr yield rose seven basis points to 2.64%, and the 10-yr yield rose five basis points to 2.86%. The U.S. Dollar Index (103.59, +0.64, +0.6%) hit a 20-year high. WTI crude settled above $105 per barrel ($105.31, +3.56, +3.5%).

[…]
  • Real GDP decreased at an annual rate of 1.4% in the first quarter (Briefing.com consensus +1.1%) while the GDP Chain Deflator shot up 8.0% (Briefing.com consensus +7.3%). Real final sales of domestic product, which exclude the change in private inventories, were down 0.6%.
  • […]
  • Initial jobless claims for the week ending April 23 decreased by 5,000 to 180,000 (Briefing.com consensus 182,000). Continuing claims for the week ending April 16 decreased by 1,000 to 1.408 million, which is the lowest level since February 7, 1970.
[…]
  • Dow Jones Industrial Average -6.7% YTD
  • S&P 500 -10.0% YTD
  • Russell 2000 -14.6% YTD
  • Nasdaq Composite -17.7% YTD

Overseas: 

  • Europe: DAX +1.4%, FTSE +1.1%, CAC +1.0%
  • Asia: Nikkei +1.8%, Hang Seng +1.7%, Shanghai +0.6%

Commodities: 

  • Crude Oil +3.56 @ 105.31
  • Nat Gas -0.04 @ 7.02
  • Gold +1.10 @ 1891.30
  • Silver -0.26 @ 23.16
  • Copper -0.04 @ 4.43
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