Market Remarks

Morning Notes – Thursday, February 9, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM, drifting lower since 6:00 AM – declined by more than 15 points to around 4155.00
  • The odds are for an up day with elevated volatility – watch for a break below 4146.00 for a change of sentiments
  • The major economic data report is due during the day
    • Unemployment Claims ( 191K est.; prev. 183K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4137.27, 4111.67, and 4088.39
  • Critical resistance levels for S&P 500 are 4156.85, 4176.54, and 4195.44
  • The key levels for E-mini futures are a break above 4170.25, the high at 5:45 AM, and a break below 4148.25, the high at 1:00 PM on Wednesday

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2023) closed at 4129.25, and the index closed at 4117.86 – a spread of about +11.50 points; the futures closed at 4130.50; the fair value is -1.25
  • Pre-NYSE session open, futures were higher – at 7:00 AM, S&P 500 futures were up by +32.50, Dow by +217, and NASDAQ by +142.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, and Mumbai closed up; Tokyo, Sydney, Seoul, and Singapore closed down
  • European markets are higher
  • 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 3.653, up +19.1 basis points from two weeks ago;
    • The 30-year is at 3.710%, up +8.7 basis points;
    • The 2-year yield is at 4.429%, up +30.0 basis points;
    • The 10-Year-&-2-Year spread is at -0.776, down from -0.667
    • The 30-Year-&-10-Year spread is at 0.057, down from 0.161
  • VIX
    • At 19.160 @ 6:30 AM; down 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-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 red Harami candle with almost no upper and lower shadows just above the upper bound of a Horizontal channel, which was broken to the upside on February 2
    • Stochastic (9, 1, 3): %K crossed below %D;
    • RSI-9 turned down to below; below 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; making a second attempt to break above a symmetrical trinagle
    • RSI-21 has bounced up to above 60 from around 35 at 2:00 PM on Wednesday
    • Above EMA20, which is above EMA10 of EMA50
  • Bias:  Up-Side
30-Minute (E-mini futures)
  • Moving up since 3:00 PM on Wednesday; near the congestion zone of Wednesday pre-open around 41.70.00
    • RSI-21 has drifted up to around 60 from 40
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 8:00 PM on February 8
  • The Bollinger Band has been contracting a bit since 6:00 AM after expanding from 2:45, and with price walking up the upper band
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Wednesday, February 8, in lower volume. The major indices opened lower and traded a bit lower until late-morning. they then traded sideways until the close. Most indices had an inside day, and they made red Harami candles.

All three S&P sectors closed lower.

From Briefing.com:

[…]

All 11 S&P 500 sectors registered losses today with the real estate (-0.3%) and health care (-0.3%) sectors enjoying the slimmest declines.

[…]

The 10-yr note yield settled at 3.65% and the 2-yr note yield settled at 4.45%.

  • Nasdaq Composite: +13.8% YTD
  • Russell 2000: +10.3% YTD
  • S&P Midcap 400: +9.7% YTD
  • S&P 500: +7.3% YTD
  • Dow Jones Industrial Average: +2.4% YTD
[…]
  • Weekly MBA Mortgage Applications Index 7.4%; Prior -9.0%
  • December Wholesale Inventories 0.1% (Briefing.com consensus 0.5%); Prior was revised to 0.9% from 1.0%
[…]

Overseas: 

  • Europe: DAX +0.6%, FTSE +0.3%, CAC -0.2%
  • Asia: Nikkei -0.3%, Hang Seng -0.1%, Shanghai -0.5%

Commodities: 

  • Crude Oil +1.27 @ 78.48
  • Nat Gas -0.17 @ 2.40
  • Gold +9.70 @ 1891.50
  • Silver +0.29 @ 22.41
  • Copper +0.00 @ 4.05
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