Market Remarks

Morning Notes – Wednesday, February 8, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:15 AM, drifting lower since 1:00 AM – declined by more than 20 points to around 4155.00
  • The odds are for a down to a sideways day – watch for a break above 4175.00 for a change of sentiments
  • The major economic data report is due during the day
    • Final Wholesale Inventories ( 0.1% est.; prev. 0.1%) at 10:00 AM
    • FOMC members speeches

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4139.22, 4128.47, and 4107.6
  • Critical resistance levels for S&P 500 are 4162.89, 4176.14, and 4195.44
  • The key levels for E-mini futures are a break above 4175.00, the high at 3:00 AM, and a break below 4149.75, the low at 3:00 PM on Tuesady

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2023) closed at 4175.00, and the index closed at 4164.00 – a spread of about +11.00 points; the futures closed at 4175.75; the fair value is -0.75
  • Pre-NYSE session open, futures were lower – at 6:30 AM, S&P 500 futures were down by -13.25, Dow by -88, and NASDAQ by -25.25

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, and Tokyo closed down; Sydney, Mumbai, Seoul, and Singapore closed up
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CAD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • USD/CHF
  • 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 3.674, up +20.5 basis points from two weeks ago;
    • The 30-year is at 3.705%, up +8.2 basis points;
    • The 2-year yield is at 4.471%, up +26.0 basis points;
    • The 10-Year-&-2-Year spread is at -0.797, down from -0.742
    • The 30-Year-&-10-Year spread is at 0.031, down from 0.154
  • VIX
    • At 18.80 @ 6:15 AM; up from the last close; at/above the 5-day SMA;
    • Recent high = 23.76 on January 3; low = 17.06 on February 2
    • Sentiment: Risk-Neutral-On

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 relatively large Bullish Engulfing candle that bounced off the upper bound of a Horizontal channel, which was broken to the upside on February 2
    • Stochastic (9, 1, 3): %K crossed above %D;
    • RSI-9 turned up to above 65 after a short dip from above 75; at/above 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • The uptrend since January 19, found resistance at 4180.00, the high of December 13, 2022, with higher highs and higher lows.
    • 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)
  • Drifting sideways to down since 4:00 PM on Tuesday, following the break to the upside of an ascending triangle on Tuesday.
    • RSI-21 has declined to around 50 from above 60 and after making a Bearish Divergence
    • At/below 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 to down since 8:45 PM on February 7
  • The Bollinger Band is contracting a bit
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Tuesday, February 7, in higher volume. The major indices opened lower and traded sideways in subdued trading until Chair Powell’s interview at around Noon. Then, after a wild swing, they settled on an up move at 1:30 PM. Most are trying to break above there respective resistance levels. All but three S&P sectors – Utilities, Real Estate, and Consumer Staples – closed higher.

From Briefing.com:

[…]

The main indices oscillated around their flat lines in the first half of the day as investors awaited Fed Chair Powell’s “Conversation with David Rubenstein” at the Economic Club of Washington, D.C. at 12:40 p.m. ET.

[…]

Most of the S&P 500 sectors closed with a gain led by energy (+3.1%), communication services (+2.5%), and information technology (+2.5%). The consumer staples (-0.4%), real estate (-0.3%), and utilities (-0.1%) sectors were alone in the red by the closing bell.

[…]

The 2-yr note yield was unchanged at 4.46% and the 10-yr note yield rose four basis points to 3.67%.

  • Nasdaq Composite: +15.7% YTD
  • Russell 2000: +12.0% YTD
  • S&P Midcap 400: +11.0% YTD
  • S&P 500: +8.5% YTD
  • Dow Jones Industrial Average: +3.1% YTD
[…]
  • December Trade Balance -$67.4 bln (Briefing.com consensus -$68.5 bln); Prior was revised to -$61.0 bln from -$61.5 bln
  • […]
  • Consumer credit increased by $11.6 bln in November (Briefing.com consensus $24.5 bln) following an upwardly revised $33.1 bln (from $27.9 bln) in November.
[…]
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