Morning Notes – Friday, February 10, 2023

Sunil Sharma

2 years ago

Directional Bias For The Day:

S&P Futures are lower at 8:15 AM, moved down more than 30 points from the 3:00 AM high of 4098.00
The odds are for a down day with elevated volatility – watch for a break above 4098 for a change of sentiments
The major economic data report is due during the day
- Prelim UoM Consumer Sentiment ( 65.0 est.; prev. 64.9) at 10:00 AM
- Prelim UoM Inflation Expectations ( prev. 3.9% ) at 10:00 AM
- Federal Budget ( -40.5B est.; prev. -85.0B) at 2:00 PM

Directional Bias Before Open:

Weekly: Uptrend
Daily: Uptrend
120-Min: Side-Down

30-Min: Down
15-Min: Down
6-Min: Down

Key Levels:

Critical support levels for S&P 500 are 4037.20, 4015.55, and 4005.28
Critical resistance levels for S&P 500 are 4088.39, 4092.67, and 4115.31
The key levels for E-mini futures are a break above 4098.00, the high at 3:00 AM, and a break below 4060.75, the low at 7:45 AM

Pre-Open

On Thursday at 4:00 PM, S&P futures (March 2023) closed at 4092.00, and the index closed at 4081.50 – a spread of about +10.50 points; the futures closed at 4091.75; the fair value is +0.25
Pre-NYSE session open, futures were lower – at 8:00 AM, S&P 500 futures were down by -29.50, Dow by -185, and NASDAQ by -143.25

Markets Around The World

Markets in the East closed mostly lower – Tokyo and Singapore closed up
European markets are lower
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 mixed
Treasuries (Compared to two weeks ago)
- The 10-year yield closed at 3.683, up +19.0 basis points from two weeks ago;
- The 30-year is at 3.744%, up +11.6 basis points;
- The 2-year yield is at 4.429%, up +24.7 basis points;
- The 10-Year-&-2-Year spread is at -0.746, down from -0.689
- The 30-Year-&-10-Year spread is at 0.061, down from 0.135
VIX
- At 21.73 @ 6:15 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

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 red candle with small upper and lower shadows following a red Harami candle falling back into a Horizontal channel, which was broken to the upside on February 2 Stochastic (9, 1, 3): %K is below %D; RSI-9 has declined to just above 50; below 8-DMA Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA; Uptrend Under Pressure
*2-Hour (E-mini futures)*	The uptrend since January 19 is in danger of reversing; near the lower band of a symmetrical triangle; down more than 100 points after finding resistance at 4180.00, the high of December 13, 2022 RSI-21 has declined to around 25 Below EMA20, which is below EMA10 of EMA50 Bias: Side-Down
*30-Minute (E-mini futures)*	Broke below a support level around 4100.00 – 61.8% extension target is near 4050.00, and the 100% extension target is near 4020.00; the cash index broke below a symmetrical triangle on the 30-minute chart – the 61.8% extension target is near 4010.00, and the 100% extension target is near 3950.00 – the futures are 10-12 points above the cash index. RSI-21 has declined to near 30 Below EMA20, which is below EMA10 of EMA50 Bias: Down
*15-Minute (E-mini futures)*	The Bollinger Band (20, 2.0) has been moving down since 4:00 AM after a sideways move from 8:30 PM. The Bollinger Band has been expanding since 4:00 AM, with the price walking down the lower band. Bias: Down

Previous Session

Major U.S. indices closed lower on Thursday, February 9, in mixed volume. The major indices gapped up at the open but turned around immediately and traded lower for the rest fo the day, closing near the lows for the day.

The major indices made relatively large red candles with almost small upper and lower shadows. Most are within their respective congestion zones. The market sentiment has turned decidedly bearish.

All three S&P sectors closed lower.

From Briefing.com:

[…]
The 2-yr note yield, which slipped to 4.40% overnight, settled the day at 4.52%, and the 10-yr note yield, which saw 3.58% overnight, settled the session at 3.69%.
[…]
The S&P 500 communication services sector (-2.8%) was today’s biggest loser,
[…]
All 11 S&P 500 sectors ended the day with a loss. Other key laggards included the financials (-1.2%), industrial (-0.9%), health care (-0.9%), and information technology (-0.5%) sectors.
[…]
Declining stocks led advancing stocks by a nearly 3-to-1 margin at the NYSE and by a better than 2-to-1 margin at the Nasdaq.

Nasdaq Composite: +12.6% YTD

Russell 2000: +8.7% YTD

S&P Midcap 400: +8.3% YTD

S&P 500: +6.3% YTD

Dow Jones Industrial Average: +1.7% YTD

Reviewing today’s economic data:

Initial claims for the week ending February 4 increased by 13,000 to 196,000 (Briefing.com consensus 194,000). Continuing jobless claims for the week ending increased by 38,000 to 1.688 million.

[…]
Overseas:

Europe: DAX +0.7%, FTSE +0.3%, CAC +1.0%

Asia: Nikkei -0.1%, Hang Seng +1.6%, Shanghai +1.2%

Commodities:

Crude Oil -0.83 @ 77.65

Nat Gas +0.01 @ 2.41

Gold -14.10 @ 1877.40

Silver -0.31 @ 22.11

Copper +0.03 @ 4.08