Market Remarks

Morning Notes – Thursday, March 2, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:00 AM; bounced up  more than 20 points from 3925.00 at 3:00 AM to a resistance level around 3947.00
  • The odds are for a down day with elevated volatility – a good chance of a dead cat bounce – watch for breaks above 3947.75 for a change of sentiments
  • The major economic data report is due during the day:
    • Unemployment Claims ( 196K est.; prev. 192K) at 8:30 AM
    • Revised Nonfarm Productivity ( 2.5% est.; prev. 3.0% ) at 8:30 AM
    • Revised Unit Labor Costs ( 1.6% est.; prev. 1.1% ) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3929.05, 3924.50, and 3897.70
  • Critical resistance levels for S&P 500 are 3941.51, 3956.49, and 3968.70
  • The key levels for E-mini futures are a break above 3947.75, the high at 7:00 AM, and a break below 3927.00, the low at 5:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (March 2023) closed at 3957.75, and the index closed at 3951.39 – a spread of about +6.25 points; the futures closed at 3956.50; the fair value is -0.75
  • Pre-NYSE session open, futures were mixed – at 7:45 AM, S&P 500 futures were down by -15.25, Dow up by +65, and NASDAQ down by -68.25

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 20.91 @ 7:15 AM; down from the last close; at/below the 5-day SMA;
    • Recent high = 23.63 on February 22; low = 18.11 on February 15
    • Sentiment: Risk-Neutral-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 red tear-drop spinning top candle with the real body entirely within the lower shadow of the Friday’s candle; at the 200-day SMA.
    • Stochastic (9, 1, 3): %K is below the %D; below 10
    • RSI-9 is just above 32; 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 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;
  • Broke below another symmetrical triangle – a potential flag within a downtrend – the 61.8% extension target around 3900.00 and the 100% extension target around 3870.00
    • RSI-21 is bouncing up from 25
    • Below EMA20, which is below EMA10 of EMA50
  • Bias:  Down
30-Minute (E-mini futures)
  • Moving sideways since 9:00 PM on March 1 between 3950.00 and 3925.00, the bias is still down.
    • RSI-21 is around 45 from at/below 40
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 1:15 AM.
  • The Bollinger Band has been expanding since 5:45 AM, with the price walking up the upper band.
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Wednesday, March 1, in mixed volume. S&P 500, NASDAQ Composite, and Wilshire 5000 Total Market Index closed lower. Dow Jones Industrial Average and Dow Jones Transportation Average traded in lower volume.

Most major indices opened lower and traded sideways-to-down for the rest of the day. Most commodities closed higher – Coffee, Cattle, and Lumber closed down. Only three S&P sectors – Energy, Materials, and Industrials – closed higher.

From Briefing.com:

[…]

The new month started on a mostly downbeat note. The S&P 500 and Nasdaq closed with decent losses, weighed down by weakness in the mega cap space, while the Dow managed a slim gain.

[…]

The 10-yr note yield reached 4.00% earlier and settled up eight basis points at 3.99%. The 2-yr note yield rose ten basis points to 4.90%.

[…]

Most of the S&P 500 sectors registered losses with the interest rate sensitive real estate (-1.5%) and utilities (-1.7%) sectors suffering the steepest declines. On the flip side, the energy (+1.9%), materials (+0.7%), and industrials (+0.4%) sectors were the lone standouts in positive territory,

[…]

Notably, small and mid cap stocks fared better than their larger peers today. The Russell 2000 (+0.1%) and S&P Mid Cap 400 (+0.3%) were among the best performers for the major indices.

  • Nasdaq Composite: +8.7% YTD
  • Russell 2000: +7.8% YTD
  • S&P Midcap 400: +7.3% YTD
  • S&P 500: +2.9% YTD
  • Dow Jones Industrial Average: -1.5% YTD
[…]
  • Weekly MBA Mortgage Applications Index -5.7%; Prior -13.3%
  • February IHS Markit Manufacturing PMI – Final 47.3; Prior 47.8
  • February ISM Manufacturing Index 47.7% (Briefing.com consensus 47.8%); Prior 47.4%
  • […]
  • January Construction Spending -0.1% (Briefing.com consensus 0.3%); Prior was revised to -0.7% from -0.4%
[…]

Overseas: 

  • Europe: DAX -0.4%, FTSE +0.5%, CAC -0.5%
  • Asia: Nikkei +0.3%, Hang Seng +4.2%, Shanghai +1.0%

Commodities: 

  • Crude Oil +0.67 @ 77.69
  • Nat Gas +0.08 @ 2.95
  • Gold +8.20 @ 1845.50
  • Silver +0.05 @ 21.12
  • Copper +0.08 @ 4.16
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