Morning Notes – Friday, January 27, 2023

Sunil Sharma

2 years ago

Directional Bias For The Day:

S&P Futures are lower at 9:00 AM; moving within a range – between 4070.25 and 4057.25 – since 4:30 PM on Thursday
The odds are for a sideways to an up day with elevated volatility – watch for a break above 4070.25 and a break below 4057.25 for clarity
The major economic data report is due during the day:
- Core PCE Price Index ( 0.3% vs. 0.3% est.; prev. 0.2%) at 8:30 AM
- Personal Income ( 0.2% vs. 0.2% est.; prev. 0.3%) at 8:30 AM
- Personal Spending ( -0.2% vs. -0.1% est.; prev. -0.1% ) at 8:30 AM
- Pending Home Sales ( -1.0% est.; prev. -4.0% ) at 10:00 AM
- Revised UoM Consumer Sentiment ( 64.6 est.; prev. 64.6) at 10:00 AM
- Revised UoM Inflation Expectations ( prev 4.0%) at 10:00 AM

Directional Bias Before Open:

Weekly: In Correction
Daily: Uptrend Under Pressure
120-Min: Side-Up

30-Min: Up-Side
15-Min: Side
6-Min: Side

Key Levels:

Critical support levels for S&P 500 are 4038.42, 4029.38, and 4013.29
Critical resistance levels for S&P 500 are 4061.57, 40873.0, and 4100.96
The key levels for E-mini futures are a break above 4070.25, the high at 7:15 AM, and a break below 4057.25, the low at 3:15 AM

Pre-Open

On Thursday at 4:00 PM, S&P futures (March 2023) closed at 4074.75, and the index closed at 4060.43 – a spread of about +14.25 points; the futures closed at 4075.50; the fair value is -0.75
Pre-NYSE session open, futures were lower – at 9:00 AM, S&P 500 futures were down by -13.50, Dow by -10, and NASDAQ by -59.00

Markets Around The World

Markets in the East closed mostly higher – Mumbai closed down; Shanghai was closed
European markets are mostly lower – Italy is up
Currencies (Compared to two weeks ago):

Up	Down
EUR/USD GBP/USD USD/CHF AUD/USD NZD/USD INR/USD	Dollar index USD/JPY USD/CAD

Commodities (Compared to two weeks ago):
- Energy futures are mixed
- Precious metals are higher
- Industrial metals are mostly lower
- Soft commodities are mostly higher
Treasuries (Compared to two weeks ago)
- The 10-year yield closed at 3.524, up +7.5 basis points from two weeks ago;
- The 30-year is at 3.647%, up +7.2 basis points;
- The 2-year yield is at 4.182%, up +5.0 basis points;
- The 10-Year-&-2-Year spread is at -0.658, up from -0.683
- The 30-Year-&-10-Year spread is at 0.123, up from 0.126
VIX
- At 18.95 @ 8:15 AM; up from the last close; below the 5-day SMA;
- Recent high = 23.76 on January 3; low = 18.01 on January 13
- Sentiment: Risk-Neutral-On

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

Weekly:	The week ending on January 20 was a small red candle with a small upper shadow and a long lower shadow Stochastic (9,1, 3): %K is above %D; just below 60; RSI-9 is around 55 The week was up +104.01 or +2.7%; the 5-week ATR is 142.86 A down week, third in the last five weeks, and sixth in the previous ten weeks; The weekly pivot point=3957.85, R1=4030.15, R2=4087.70; S1=3900.30, S2=3828.00; S1 pivot level was breached Above 10-week EMA and 39-week SMA; below 89-week SMA Under Pressure
*Daily*	A green candle with almost no upper shadow and a lower equal to the real body Stochastic (9, 1, 3): %K is above %D; near 90 RSI-9 is near 70; above 8-DMA Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA; Uptrend Resumed
*2-Hour (E-mini futures)*	Drifting sideways to down since 4:00 PM on January 26 from a high of 4077.00; broke above a Cup-With-Handle pattern on Thursday – the first target is around 4120.00 and the second target around 4210.00 RSI-21 drifted down to below 60 from near 75 Above EMA20, which is above EMA10 of EMA50 Bias: Side-Up
*30-Minute (E-mini futures)*	Moving sideways since 6:00 PM on Thursday around 4065.00 RSI-21 is moving around 50 At/above EMA20, which is above EMA10 of EMA50 Bias: Up-Side
*15-Minute (E-mini futures)*	The Bollinger Band (20, 2.0) has been moving sideways since 10:15 PM The Bollinger Band has been expanding a bit since 6:00 AM, with the price moving up and down Bias: Side

Previous Session

Major U.S. indices closed higher Thursday, January 26, in mixed volume. Dow Jones Industrial Average and S&P 500 traded in lower volume.

The major indices opened higher and swung around for the next couple of hours of trading before steadily rising for the rest of the day.

From Briefing.com:

[…]
Today’s trade shaped up to be decidedly positive after hitting an air pocket around mid-morning.
[…]
Ten of the 11 S&P 500 sectors logged a gain today led by energy (+3.3%), which was a reflection of Chevron’s strong performance. The influential consumer discretionary (+2.0%), communication services (+1.7%), and information technology (+1.6%) sectors were also among the top performers.

The consumer staples sector (-0.3%) was the lone the laggard sporting a loss by the close.

Nasdaq Composite: +10.0% YTD

Russell 2000: +8.1% YTD

S&P Midcap 400: +7.4% YTD

S&P 500: +5.8% YTD

Dow Jones Industrial Average: +2.4% YTD

[…]

Q4 GDP-Adv. 2.9% (Briefing.com consensus 2.6%); Prior 3.2%; Q4 Chain Deflator-Adv. 3.5% (Briefing.com consensus 3.2%); Prior 4.4%

[…]

December Durable Orders 5.6% (Briefing.com consensus 2.9%); Prior was revised to -1.7% from -2.1%; December Durable Goods-ex transportation -0.1% (Briefing.com consensus -0.2%); Prior was revised to 0.1% from 0.2%

[…]

Weekly Initial Claims 186K (Briefing.com consensus 205K); Prior was revised to 192K from 190K; Weekly Continuing Claims 1.675 mln; Prior was revised to 1.655 mln from 1.647 mln

[…]

December Adv. Intl. Trade in Goods -$90.3 bln; Prior was revised to -$82.9 bln from -$83.3 bln

December Adv. Retail Inventories 0.5%; Prior was revised to 0.0% from 0.1%

December Adv. Wholesale Inventories 0.1%; Prior was revised to 0.9% from 1.0%

December New Home Sales 616K (Briefing.com consensus 614K); Prior was revised to 602K from 640K

[…]
Overseas:

Europe: DAX +0.3%, FTSE +0.2%, CAC +0.7%

Asia: Nikkei -0.1%, Hang Seng +2.4%, Shanghai market closed

Commodities:

Crude Oil +0.87 @ 81.05

Nat Gas -0.06 @ 2.85

Gold -11.50 @ 1931.10

Silver +0.09 @ 24.04

Copper +0.02 @ 4.27