Market Remarks

Morning Notes – Friday, December 9, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; a sharp decline of more than 60 points following the release of the PPI report at 8:30 AM
  • The odds are for a down day with elevated volatility – watch for a break above 4001.25 for a change of sentiments
  • The key economic data report is due during the day:
    • PPI ( 0.3% vs. 0.2% est.; prev. 0.2%) at 8:30 AM
    • Core PPI ( 0.4% vs. 0.2% est.; prev. 0.0%) at 8:30 AM
    • Prelim UoM Consumer Sentiment ( 56.9 est.; prev. 56.8) at 10:00 AM
    • Prelim UoM Inflation Expectations ( prev. 4.9%) at 10:00 AM
    • Final Wholesale Inventories ( 0.8% est.; prev. 0.8%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3947.67, 3935.83, and 3923.00
  • Critical resistance levels for S&P 500 are 3966.62, 3974.19, and 4001.51
  • The key levels for E-mini futures: break above 4001.25, the low at 4:45 AM on Wednesday, and a break below 3959.75, the low of 8:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (March 2023) closed at 3997.25, and the index closed at 3963.51 – a spread of about +33.75 points; the futures closed at 4001.25; the fair value is -4.00
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were lower by -13.00, Dow by -95, and NASDAQ by -43.00

Markets Around The World

  • Markets in the East closed mostly higher
  • European markets are mostly higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • INR/USD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.512%, down -17.9 basis points from two weeks ago;
    • The 30-year is at 3.470%, down -28.1 basis points;
    • The 2-year yield is at 4.287%, down -19.3 basis points;
    • The 10-Year-&-2-Year spread is at -0.775, up from -0.789
    • The 30-Year-&-10-Year spread is at -0.042, down from 0.060
  • VIX
    • At 22.93 @ 8:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 26.59 on November 10; low = 18.95 on December 2
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on December 2 was a green candle with a small upper shadow and a relatively long lower shadow
    • Stochastic (9,1, 3): %K is above %D above 90 but turning down;
    • RSI-9 is near 60
  • The week was up +45.58 or +1.1%; the 5-week ATR  is 171.35
  • An up week, third in the last five weeks, and sixth in the previous ten weeks;
  • The weekly pivot point=4036.62, R1=4135.59, R2=4199.48; S1=3972.73, S2=3873.76; R1/R2/S1 pivot levels were breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A small Spinning Top candle just above the previous day’s candle;
    • Stochastic (9, 1, 3): %K crossed above %D from below 20
    • RSI-9 is just below 50; below 8-day EMA;
  • Above 20-day EMA, 50-day EMA, and 100-day SMA; below 200-day SMA;
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • The sharp decline o more than 60 points at 8:30 AM following a more than 60 points move up since 8:00 PM on December 7
    • RSI-21 is above 70
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
30-Minute (E-mini futures)
  • A sharp decline at 8:30 AM following an up move since 8:00 PM on December 7;
    • RSI-21 is moving around above 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways since 11:15 PM
  • The Bollinger Band has been expanding since 7:00 AM; the price first walked up the upper band and then walked down the lower band  since 8:30 AM
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Thursday, December 8, in mostly lower volume. Russell 2000 traded in higher volume.

Major indices opened up and traded higher in the early morning session. Then they traded sideways to a bit lower for the rest fo the day.

From Briefing.com:

[…]

The S&P 500 closed in the red eight out of the last nine sessions and has logged five straight losses to begin December. According to Bloomberg, that is the worst start to a month for the S&P 500 since 2011.

Things got started on an upbeat note today before the S&P 500 faded back to test yesterday’s closing level (3,933.92). Buyers stepped in, however, and defended that line, which aided investor sentiment.

[…]

Broad buying interest left most of the S&P 500 sectors in positive territory by the close. Communication services (-0.5%) lagged […]

On the flip side, the information technology (+1.6%) and consumer discretionary (+1.1%) sectors sat atop the leaderboard.

[…]

The 2-yr note yield rose eight basis points to 4.32% and the 10-yr note yield rose eight basis points to 3.49%.

  • Dow Jones Industrial Average: -7.0% YTD
  • S&P Midcap 400: -12.2% YTD
  • Russell 2000: -19.0% YTD
  • S&P 500: -16.8% YTD
  • Nasdaq Composite: -29.2% YTD
[…]
  • Initial claims for the week ending December 3 increased by 4,000 to 230,000 (Briefing.com consensus 220,000) and continuing claims for the week ending November 26 increased by 62,000 to 1.671 million.
[…]

Overseas: 

  • Europe: DAX +0.0%, FTSE -0.2%, CAC -0.2%
  • Asia: Nikkei -0.4%, Hang Seng +3.4%, Shanghai -0.1%

Commodities: 

  • Crude Oil -0.89 @ 71.40
  • Nat Gas +0.22 @ 5.96
  • Gold +3.10 @ 1803.20
  • Silver +0.43 @ 23.33
  • Copper +0.03 @ 3.89
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