Market Remarks

Morning Notes – Monday, October 24, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; drifting down since 7:45 from 3802.00 after rising from 3736.50 at 4:30 AM
  • The odds are for an up day with elevated volatility – watch for a break below 3760.25 for a change of sentiments
  • The key economic data report is due during the day:
    • Flash Service PMI ( 49.6 est.; prev. 49.3) at 9:45 AM
    • Flash Manufacturing PMI (51.0 est.; prev. 52.0) at 9:45 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3757.89, 3731.17, and 3718.21
  • Critical resistance levels for S&P 500 are 3762.79, 3806.91, and 3819.34
  • Key levels for E-mini futures: break above 3802.50, the high at 7:45 AM, and a break below 3768.50, the low of 6:45 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (December 2022) closed at 3763.75, and the index closed at 3752.75 – a spread of about +11.00 points; the futures closed at 3764.00; the fair value is -0.25
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up y +21.50, Dow by +203, and NASDAQ by +18.75

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Hong Kong closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • Dollar index
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are mostly higher
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.186%, up +30.3 basis points from two weeks ago;
    • The 30-year is at 4.324%, up +48.3 basis points;
    • The 2-year yield is at 4.505%, up +19.3 basis points;
    • The 10-Year-&-2-Year spread is at -0.319, up from -0.429
    • The 30-Year-&-10-Year spread is at 0.138, up from -0.042
  • VIX
    • At 30.14 @ 8:00 AM; up from the last close; at/below the 5-day SMA;
    • Recent high = 34.88 on September 28; low = 28.50 on October 5
    • Sentiment: Risk-Neutral-to-Off

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

Weekly:
  • The week ending on October 21 was a green candle with almost no upper and lower shadows; a three-week Morning Star is forming just below the support level around the low of June 13 week
    • Stochastic (9,1, 3): %K is above %D;
    • RSI-9 is above 40
  • The week was up +169.68 or +4.7%; the 5-week ATR  is 206.73
  • An up week; second in the last five weeks, and third in the previous ten weeks;
  • The weekly pivot point=3718.06, R1=3797.48, R2=3842.20; S1=3673.34, S2=3593.92; R1 pivot level was breached
  • Below 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A relative large green candle – a Bullish Engulfing following Rising Three Method in a nascent up-move;
    • Stochastic (9, 1, 3): %K crossed above %D above 90;
    • RSI-9 has turned above to near 55; above 8-day EMA;
  • Above 20-day EMA; below 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Bounced up to the upper bound of a Horizontal Channel between 3820.00 and 3570.00 after retreating to its middle;
    • RSI-21 has declined to just below 70 from 80
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Forming the Handle part of the Cup-With-A-Handle pattern; a break above 3813.25 will complete the pattern with a 61.8% extension target near 3843.00 and a 100% extension target near 390.8.00
    • RSI-21 is moving just below 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 6:15 AM
  • The Bollinger Band is expanding since 6:45 AM; the price declining to the middle band from the upper band
  • Bias:  Up-Side

Previous Session

Major U.S. indices closed higher on Friday, October 21. Most indices traded in higher volume, except Dow Jones Transportations Average. The major indices traded higher for most of the day and made Bullish Engulfing candles.

For the week, the US indices closed up in mixed volume. The Asian exchanges closed mixed, and the European ones higher. The dollar index was down, energy futures were down, precious and industrial metals were up, and soft commodities were mixed. The US Treasury yields closed up for the week, and so did all S&P sectors.

From Briefing.com:

[…]

The stock market closed a strong week on a strong note, registering some big gains on this options expiration day.

[…]

All 11 S&P 500 sectors closed in the green with materials (+3.5%) sporting the biggest gain. Real estate (+0.7%) and communication services (+0.9%) brought up the rear.

[…]

Energy complex futures settled in mixed fashion. WTI crude oil futures rose 0.5% to $84.91/bbl while natural gas futures fell 7.8% to $4.95/mmbtu.

[…]

Dow Jones Industrial Average: -14.5% YTD
S&P Midcap 400: -18.6% YTD
S&P 500: -21.3% YTD
Russell 2000: -22.4% YTD
Nasdaq Composite: -30.6% YTD
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