Market Remarks

Morning Notes – Thursday, February 23, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM, swinging between 4023.50 and 4009.25 since 3:30 AM
  • The odds are for an up day with elevated volatility – watch for a break below 4009.25 for a change of sentiments
  • The major economic data report is due during the day:
    • Prelim GDP ( 2.7% vs. 2.9% est.; prev. 2.9%) at 8:30 AM
    • Prelim GDP Price Index (3.9% vs. 3.5% est.; prev. 3.5%) at 8:30 AM
    • Unemployment Claims ( 192K vs. 200K est.; prev. 194K) at 8:30 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Under Pressure
  • 120-Min: Down-Side
  • 30-Min: Side
  • 15-Min: Side
  • 6-Min:  Choppy

Key Levels:

  • Critical support levels for S&P 500 are 3976.90, 3964.95, and 3949.06
  • Critical resistance levels for S&P 500 are 4017.37, 4035.40, and 4052.35
  • The key levels for E-mini futures are a break above 4023.50, the high at 8:15 AM, and a break below 4011.25, the low at 8:30 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2023) closed at 4000.25, and the index closed at 3991.05 – a spread of about +9.25 points; the futures closed at 3999.00; the fair value is +1.25
  • Pre-NYSE session open, futures were higher – at 8:45 AM, S&P 500 futures were up by +14.00, Dow by +45, and NASDAQ by +95.00

Markets Around The World

  • Markets in the East closed mostly down – Seoul closed up, and Tokyo was closed
  • European markets are mostly higher – Switzerland is 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 mostly lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.957, up +30.4 basis points from two weeks ago;
    • The 30-year is at 3.943%, up +23.3 basis points;
    • The 2-year yield is at 4.700%, up +27.1 basis points;
    • The 10-Year-&-2-Year spread is at -0.737, up from -0.776
    • The 30-Year-&-10-Year spread is at -0.0111, down from 0.057
  • VIX
    • At 21.97 @ 8:45 AM; down from the last close; above the 5-day SMA;
    • Recent high = 25.84 on December 13, 2022; low = 18.11 on February 15
    • Sentiment: Risk-On

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

Weekly:
  • The week ending on February 17 was a small red candle that looked like a Doji with a small lower shadow and a relatively large upper shadow.
    • Stochastic (9,1, 3): %K crossed below the %D;
    • RSI-9 is just below 60
  • The week was down -11.37 or 0.3%; the 5-week ATR  is 136.49
  • A down week, third in the last five weeks, and sixth  in the previous ten weeks;
  • The weekly pivot point=4095.60, R1=4143.26, R2=4207.26; S1=4031.44, S2=3983.78; R1 pivot level was breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A relatively small red Spinning Top On-Neck candle, which typically indicates a continuation and is prone to failure at the uptrend line from October 13, 2022, low.
    • Stochastic (9, 1, 3): %K is turning up but is below %D;
    • RSI-9 is around 35; below 8-DMA
  • Below 20-day EMA and 50-day EMA; above 100-day SMA and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Trending down since the high of 4208.50 reached at 2:00 PM on February 2 – lower lows and lower highs; broke below a symmetrical triangle – the 100% extension target near 3990.00 is almost achieved, and the 161.8% extension target is near 3898.00;
    • RSI-21 has bounced up from around 15 to above 45
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias:  Down-Side
30-Minute (E-mini futures)
  • Moving sideways to up since 1:00 PM on Tuesday between 4025.00 and 3983.75
    • RSI-21 has bounced up to around 45 from below 25 and after a Bullish Divergence
    • Above EMA20, but below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways since 1:30 PM
  • The Bollinger Band has been expanding a little since 6:45 AM; the price has moved from the upper band to the lower band and then to the middle band
  • Bias: Side

Previous Session

Major U.S. indices closed mostly lower on Wednesday, February 22, in mixed volume. NASDAQ Composite and Russell 200 closed higher.  S&P 500 and NASDAQ Composite traded in higher volume.

The major indices opened lower but then turned around and traded higher until the FOMC Meeting Minutes release at 2:00 PM, and then declined for the rest of the day.

From Briefing.com:

[…]

Immediately after the Minutes were released, the stock market experienced some whipsaw price action before settling into a slow decline.

[…]

Ultimately, the main indices were able to climb off their post-FOMC Minutes lows by the closing bell.

[…]

Only two of the 11 S&P 500 sectors — materials (+0.7%) and consumer discretionary (+0.5%) — closed with a gain. Meanwhile, the real estate (-1.0%) and energy (-0.8%) sectors were the worst performers today.

[…]

The 2-yr note yield fell three basis points today to 4.70% and the 10-yr note yield fell three basis points to 3.92%.

  • Nasdaq Composite: +9.9% YTD
  • Russell 2000: +7.6% YTD
  • S&P Midcap 400: +7.2% YTD
  • S&P 500: +4.0% YTD
  • Dow Jones Industrial Average: -0.3% YTD
[…]

Overseas: 

  • Europe: DAX +0.0%, FTSE -0.6%, CAC -0.1%
  • Asia: Nikkei -1.3%, Hang Seng -0.5%, Shanghai -0.5%

Commodities: 

  • Crude Oil -2.40 @ 73.89
  • Nat Gas +0.10 @ 2.17
  • Gold -0.30 @ 1841.00
  • Silver -0.24 @ 21.63
  • Copper -0.02 @ 4.19
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