Market Remarks

Morning Notes – Tuesday, February 7, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed at 8:00 AM, moving near the middle of an ascending triangle on intraday charts, which is a typically bullish pattern
  • The odds are for a sideways day – watch for a break above 4133.25 and or a break below 4113.00 for clarity
  • The major economic data report is due during the day
    • Trade Balance ( -68.5B est.; prev. -61.5b) at 8:30 AM
    • Fed Chair Powell Speach at 12:00 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4093.38, 4076.71, and 4066.36
  • Critical resistance levels for S&P 500 are 4124.63, 4145.40, and 4159.17
  • The key levels for E-mini futures are a break above 4133.25, the high at 4:30 AM, and a break below 4113.00, the low at 3:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2023) closed at 4122.75, and the index closed at 4111.08 – a spread of about +11.75 points; the futures closed at 4123.50; the fair value is -0.75
  • Pre-NYSE session open, futures were mixed – at 6:45 AM, S&P 500 futures were up by +1.25, Dow down by -47, and NASDAQ up by +36.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, and Seoul closed up; Tokyo, Sydney, Mumbai, and Singapore closed down
  • European markets are mostly higher – Germany and Switzerland are down
  • 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 higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.634, up +10.9 basis points from two weeks ago;
    • The 30-year is at 3.672%, down -1.9 basis points;
    • The 2-year yield is at 4.483%, up +26.0 basis points;
    • The 10-Year-&-2-Year spread is at -0.849, down from -0.698
    • The 30-Year-&-10-Year spread is at 0.038, down from 0.166
  • VIX
    • At 19.49 @ 7:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 23.76 on January 3; low = 17.06 on February 2
    • Sentiment: Risk-Off-Neutral

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

Weekly:
  • The week ending on February 3 was a green candle with small upper and lower shadows breaking above a downtrend line from January 2022 high; broke above a symmetrical triangle – the 61.8% extension target is near 4530.00, and the 100% extension target is near 4850.00
    • Stochastic (9,1, 3): %K is above %D;
    • RSI-9 is around 60
  • The week was up +65.92 or +1.6%; the 5-week ATR  is 138.68
  • An up week, fourth in the last five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4115.82, R1=4216.10, R2=4295.71; S1=4036.21, S2=3935.93; R1/R2 pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A small red candle that looks like a Doji with a small lower shadow and a large upper shadow just above the upper bound of a Horizontal channel, which is acting as a support, that was broken to the upside on February 2
    • Stochastic (9, 1, 3): %K is below %D; Bearish Divergence
    • RSI-9 turned down to around 60 from above 75; below 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Drifting sideways since 6:00 PM on Sunday within an uptrend since January 19, found resistance at 4180.00, the high of December 13, 2022
    • RSI-21 has bounced up to near 50 from around 25 at 4:00 AM on Monday
    • At/above EMA10 of EMA50, which is at/below EMA20
  • Bias:  Up-Side
30-Minute (E-mini futures)
  • Moving sideways to up since 6:00 PM on Sunday, an ascending triangle is emerging with the price near its middle.
    • RSI-21 is moving around 50
    • At/below EMA20, which is at/below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to up since 9:00 AM on February 6
  • The Bollinger Band is relatively stable
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Monday, February 6, in lower volume. The major indices gapped down at the opened lower and then mostly traded sideways – a bit lower than Friday’s close. The day’s price range was small, and most filled the da’s open gap. Most made Doji or similar indecisive candles.

From Briefing.com:

[…]

The indices started the session in a southerly direction, and while they rebounded from their early lows that saw the S&P 500 slip below 4,100, they could never sustain any upward momentum. Instead, they spent much of the day moving laterally in a relatively tight trading range below their flatlines.

[…]

Monday’s session was a day of consolidation for the market following its big run to begin the year.

[…]

The 2-yr note yield jumped 17 basis points to 4.46% and the 10-yr note yield rose 10 basis points to 3.63%. In turn, the U.S. Dollar Index jumped 0.7% to 103.61.

[…]

The communication services (-1.3%), information technology (-1.2%), and materials (-1.1%) sectors were today’s biggest losers. The lone sectors to end the day in positive territory were utilities (+0.9%) and consumer staples (+0.02%).

[…]

Decliners led advancers by a 3-to-1 margin at the NYSE and by a 2-to-1 margin at the Nasdaq.

  • Nasdaq Composite: +13.6% YTD
  • Russell 2000: +11.2% YTD
  • S&P Midcap 400: +10.2% YTD
  • S&P 500: +7.1% YTD
  • Dow Jones Industrial Average: +2.2% YTD
[…]

Overseas: 

  • Europe: DAX -0.8%, FTSE -0.8%, CAC -1.3%
  • Asia: Nikkei +0.7%, Hang Seng -2.0%, Shanghai -0.8%

Commodities: 

  • Crude Oil +0.93 @ 74.21
  • Nat Gas +0.03 @ 2.44
  • Gold +3.80 @ 1880.50
  • Silver -0.14 @ 22.25
  • Copper -0.01 @ 4.04
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