Market Remarks

Morning Notes – Tuesday, September 27, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; moving up with large swings since 1:15 PM on Monday – up more than 50 points
  • The odds are for an up day with elevated volatility – watch for a break below 3695.00 for a change in sentiments
  • The key economic data report is due during the day:
    • Core Durable Goods Orders ( 0.2% vs. 0.3% est.; prev. 0.2%) at 8:30 AM
    • Durable Goods Orders ( -0.2% vs. 0.1% est.; prev. -0.1%) at 8:30 AM
    • HPI ( -0.6% vs. 0.0% est.; prev. 0.1%) at 9:00 AM
    • S&P/CS Composite-20 HPI ( 16.1% vs. 17.1% est.; prev. 18;6%) at 9:00 AM
    • CB Consumer Confidence ( 104.0 est.; prev. 10.32) at 10:00 AM
    • New Home Sales ( 500k est.; prev. 511K) at 10:00 AM
    • Richmond Manufacturing Index ( -10 est.; prev. -8) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Uptrend Under Pressure
  • Daily: Correction
  • 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 3682.48, 3653.65, and 3646.71
  • Critical resistance levels for S&P 500 are 3702.04, 3715.67, and 3727.14
  • Key levels for E-mini futures: break above 3725.00, the high of 3:30 AM and a break below 3695.00, the low of 6:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2022) closed at 3671.00, and the index closed at 3655.04 – a spread of about +16.00 points; the futures closed at 370.00; the fair value is +1.00
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +38.50, Dow by +241, and NASDAQ by +158.75

Markets Around The World

  • Markets in the East closed mostly higher  – Mumbai and Singapore closed down
  • European markets are mostly higher – Spain and Itlay 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 lower
    • Precious metals are mixed
    • Industrial metals are lower
    • Soft commodities are lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.878%, up +51.6 basis points from two weeks ago;
    • The 30-year is at 3.698%, up +18.5 basis points;
    • The 2-year yield is at 4.299%, up +67.1 basis points;
    • The 10-Year-&-2-Year spread is at -0.421, down from -0.266
    • The 30-Year-&-10-Year spread is at -0.180, down from 0.151
  • VIX
    • At 31.30 @ 9:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 35.05 on June 13; low = 22.64 on September 9
    • Sentiment: Risk-Neutral

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

Weekly:
  • The week ending on September 23 was a large red candle with small upper ad lower shadows
    • Stochastic (9,1, 3): %K is below %D; below ten
    • RSI-9 is just above 30
  • The week was down -180.15 or -4.7%; the 5-week ATR  is 212.40
  • A down week; fourth in the last five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=3749.24, R1=3851.01, R2=4008.84; S1=3591.41, S2=3489.64; S1/S2 pivot levels were breached
  • Below 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A red candle with a small lower shadow and longer upper shadow; the real body was entirely contained within the lower shadow of the previous day’s candle;
    • Stochastic (9, 1, 3): %K crossed below %D; below  five
    • RSI-9 is near 20; below 8-day EMA;
  • Below 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Trending down with lower lows and lower highs; moving sideways since 6:00 AM on September 23
  • RSI-21 is rising since 10:00 AM on September 23; above  50 from near 15
    • Above EMA20, but below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Trending down; moving sideways to up since 11:00 AM on September 23 – making a rounding bottom pattern.
    • RSI-21 is moving around/above 50; Bullish Divergence at 2:30 PMon Friday
    • At/below EMA10 of EMA50 but above EMA20
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 6:45 PM on Monday
  • The Bollinger Band is expanded but stable, with price moving near the upper band
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Monday, September 26, in lower volume. The major indices opened higher and advanced more in the first half-hour of trading. Then declined to test the lows of Friday before rebounding in the late afternoon trading.

Dow Jones Industrial Average, Dow Jones Transportation Average, and NYSE Composite have broken below their respective June lows. S&P 500 is testing tits June lows. NASDAQ Composite, Russell 200, and Wilshire 5000 Total Market index are news their lows.

From Briefing.com:

[…]

It looked poised to stage a rebound midmorning with the Nasdaq up more than 1.0% at its high. Upside momentum quickly faded and the stock market sank, bringing the S&P 500 slightly below Friday’s low (3,644). The selling impulse weakened at that point and stocks managed to bounce a bit, but the S&P 500 did log a fresh closing low for the year (3,655).

[…]

The British pound tumbled to an all-time low against the dollar (1.0349) before staging a sharp recovery to 1.0933 amid a growing belief that the Bank of England (BoE) would step-in with an emergency rate hike to support the currency.

[…]

The US Dollar Index was up 0.8% to 114.05 with GBP/USD -1.5% to 1.0692.

The 2-yr note yield, at 4.20% shortly before the BoE update, settled at 4.31%. The 10-yr note yield, at 3.75% shortly before the BoE update, settled at 3.88%.

[…]

Ten of the 11 S&P 500 sectors closed in the red with losses ranging from 0.2% (consumer discretionary) to 2.6% (real estate). The lone holdout in the green, consumer staples (+0.01%), barely squeezed a gain. Decliners led advancers by a 5-to-1 margin at the NYSE and a better than 2-to-1 margin at the Nasdaq.

[…]

Dow Jones Industrial Average: -19.5% YTD
S&P Midcap 400: -22.4% YTD
S&P 500: -23.3% YTD
Russell 2000: -26.3% YTD
Nasdaq Composite: -31.0% YTD

Overseas: 

  • Europe: DAX -0.5%, FTSE +0.0%, CAC -0.2%
  • Asia: Nikkei -2.7%, Hang Seng -0.4%, Shanghai -1.2%

Commodities: 

  • Crude Oil -2.11 @ 76.63
  • Nat Gas +0.02 @ 7.01
  • Gold -21.60 @ 1634.00
  • Silver -0.46 @ 18.45
  • Copper -0.06 @ 3.28
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