Market Remarks

Morning Notes – Wednesday, March 1, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; down more than 30 points since 6:15 AM after breaking below a rising wedge at 7:00 AM
  • The odds are for a down day with elevated volatility – watch for breaks above 3986.75 for a change of sentiments
  • The major economic data report is due during the day:
    • Final Manufacturing PMI ( 4.8% est.; prev. 47.8) at 9:45 AM
    • ISM Manufacturing PMI ( 47.9 est.; prev. 47.6) at 10:00 AM
    • Construction Spending ( 0.2% est.; prev. -0.4% ) at 10:00 AM
    • ISM Manufacturing Prices ( 45.5 est.; prev. 44.5 ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3956.82, 3949.34, and 3924.50
  • Critical resistance levels for S&P 500 are 3970.18, 3987.40, and 3997.50
  • The key levels for E-mini futures are a break above 3986.75, the high at 7:30 AM, and a break below 3956.00, the low at 8:00 PM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2023) closed at 3972.00, and the index closed at 3970.15 – a spread of about +1.75 points; the futures closed at 3975.50; the fair value is -3.50
  • Pre-NYSE session open, futures were lower – at 8:45 AM, S&P 500 futures were down by -7.00, Dow by -69, and NASDAQ down by -11.00

Markets Around The World

  • Markets in the East closed mostly higher – Sydney was down, and Seoul was closed
  • European markets are mostly higher – Spain and STOXX 600 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 mixed
    • Precious metals are mostly higher
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.947, up +18.6 basis points from two weeks ago;
    • The 30-year is at 3.925%, up +12.3 basis points;
    • The 2-year yield is at 4.820%, up +17.7 basis points;
    • The 10-Year-&-2-Year spread is at -0.873, up from -0.882
    • The 30-Year-&-10-Year spread is at -0.022, down from 0.041
  • VIX
    • At 20.44 @ 8:30 AM; down from the last close; below the 5-day SMA;
    • Recent high = 23.63 on February 22; low = 18.11 on February 15
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on February 24 was a red candle with a small lower shadow and almost no upper shadow
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 is just below 50
  • The week was down -109.05 or 2.7%; the 5-week ATR  is 137.72
  • A down week, third in the last five weeks, and sixth  in the previous ten weeks;
  • The weekly pivot point=3988.49, R1=4033.90, R2=4097.76; S1=3924.63, S2=3879.22; S1/S2 pivot levels were breached
  • At/below 10-week EMA; above 39-week SMA; below 89-week SMA
  • Uptrend Under Pressurere
Daily
  • A small red candle with a long upper shadow and almost no lower shadow
    • Stochastic (9, 1, 3): %K crossed below the %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; bounced up more than 50 points from 3947.50 on February 24
  • Broke below a descending triangle at 4:00 AM on February 21 – the 61.8% extension target near 3970.00 is achieved, and the 100% extension target is near 3914.00; within another symmetrical triangle – a break below 3955.00 will have a 61.8% extension target around 3900.00 and the 100% extension target around 3870.00
    • RSI-21 declined to below 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias:  Down-Side
30-Minute (E-mini futures)
  • Moving within a range between 4034.25 and 3947.50 since 1:00 PM on February 21 with a down bias – near the lower bound of the range;
    • RSI-21 has declined to below 40
    • Below EMA10 of EMA50, which is below EMA20
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 8:00 AM
  • The Bollinger Band has been expanding since 8:00 AM, with the price walking down the lower band
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly lower on Tuesday, February 28, in mixed volume. Russell 2000 closed higher, and Dow Jones Transportation Average and NASDAQ Composite traded in lower volume.

Most major indices opened lower and traded high a litter until 2:00 PM when they turned down and closed near the lows for the day.

From Briefing.com:

[…]

The stock market was mixed on this last trading day of the month.

[…]

The S&P 500 spent a good portion of today’s session above its 50-day moving average (3,979), thanks to some technical buying interest after the S&P 500 closed above that level yesterday, before things started to deteriorate in the afternoon trade. Ultimately, the main indices closed near their lows for the day and the S&P 500 finished below its 50-day moving average. Overall losses were relatively modest in scope.

[…]

Only three of the S&P 500 sectors squeezed out a gain today — materials (+0.5%), communication services (+0.2%), and financials (+0.2%) — while the utilities (-1.7%) and energy (-1.4%) sectors exhibited the biggest decline.

[…]

The 10-yr note yield hit 3.97% earlier, but ran into resistance there and settled at 3.92%

[…]

The 2-yr note yield was unchanged at 4.80%.

[…]
  • Nasdaq Composite: +9.5% YTD
  • Russell 2000: +7.7% YTD
  • S&P Midcap 400: +7.0% YTD
  • S&P 500: +3.4% YTD
  • Dow Jones Industrial Average: -1.5% YTD
[…]
  • January Adv. Intl. Trade in Goods -$91.5 bln; Prior was revised to -$89.7 bln from -$90.3 bln
  • January Adv. Retail Inventories 0.3%; Prior was revised to 0.4% from 0.5%
  • January Adv. Wholesale Inventories -0.4%; Prior 0.1%
  • December FHFA Housing Price Index -0.1%; Prior -0.1%
  • December S&P Case-Shiller Home Price Index 4.6% (Briefing.com consensus 5.8%); Prior 6.8%
  • February Chicago PMI 43.6 (Briefing.com consensus 45.0); Prior 44.3
  • February Consumer Confidence 102.9 (Briefing.com consensus 108.4); Prior was revised to 106.0 from 107.1
[…]

Overseas: 

  • Europe: DAX -0.1%, FTSE -0.7%, CAC -0.4%
  • Asia: Nikkei +0.1%, Hang Seng -0.8%, Shanghai +0.7%

Commodities: 

  • Crude Oil +1.31 @ 77.02
  • Nat Gas +0.03 @ 2.87
  • Gold +12.90 @ 1837.30
  • Silver +0.29 @ 21.07
  • Copper +0.07 @ 4.08
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