Market Remarks

Morning Notes – Wednesday, March 8, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM, fluctuating from high to low within a Horizontal Channel between 4000.00 and 3982.00 since 1:45 PM on Tuesday
  • The odds are for a sideways to a down day – watch for a break above 4000.75 or a break below 3982.50 for clarity
  • The major economic data report is due during the day:
    • ADP Non-Farm Employment Change ( 242K vs. 197K est.; prev. 119K) at 8:15 AM
    • Trade Balance ( -68.3B vs. -68.7B est.; prev. -67.2B) at 8:30 AM
    • Fed Chair Powell’s Semi-Annual Testimony to the Congress at 10:00 AM
    • JOLTS Job Openings ( 10.58M est.; prev. 11.01M) at 10:00 AM
    • Beige Book at 2:00 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3980.31, 3964.90, and 3939.12
  • Critical resistance levels for S&P 500 are 3995.66, 4023.08, and 4036.09
  • The key levels for E-mini futures are a break above 4000.75, a high at 6:00 PM on Tuesday,  and a break below 3982.50, a low at 2:45 PM on Tuesday

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2023) closed at 3989.50, and the index closed at 3986.37 – a spread of about +3.25 points; the futures closed at 3989.75; the fair value is -0.25
  • Pre-NYSE session open, futures were higher – at 8:30 AM, S&P 500 futures were up by +2.00, Dow by +16, and NASDAQ by +12.50

Markets Around The World

  • Markets in the East closed mostly lower – Tokyo and Mumbai closed higher
  • European markets are mostly higher – the UK and Switzerland are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.975, up +2.0 basis points from two weeks ago;
    • The 30-year is at 3.888%, down -8.9 basis points;
    • The 2-year yield is at 5.015%, up +29.0 basis points;
    • The 10-Year-&-2-Year spread is at -1.040, down from -0.770
    • The 30-Year-&-10-Year spread is at -0.087, down from 0.022
  • VIX
    • At 19.92 @ 8:00 AM; up from the last close; above 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 March 3 was a green Harami candle with no upper shadow and a small lower shadow, bouncing off from the 13-week SMA
    • Stochastic (9,1, 3): %K crossed above the %D;
    • RSI-9 is just below 55
  • The week was up +75.60 or +1.9%; the 5-week ATR  is 120.13
  • An up week, second in the last five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4007.36, R1=4086.57, R2=4127.49; S1=3966.44, S2=3887.23; R1 pivot level was breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend Resumed
Daily
  • A relatively large red candle with almost no upper and lower shadows. A three-day Evening Star pattern has emerged.
    • Stochastic (9, 1, 3): %K crossed below the %D.
    • RSI-9 is below 50; above 8-DMA
  • Below 20-day EMA and 50-day EMA; above 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Declining since 12:00 PM on March 6 after hitting a resistance level around 4080.00; at the upper bound of a down-sloping flag that was broken to the upside on March 3
    • RSI-21 has bounced above 30 from around 16 at 6:00 PM on Tuesday
    • Below EMA20, which is below EMA10 of EMA50
  • Bias:  Side-Down
30-Minute (E-mini futures)
  • Moving sideways since 1:30 PM on Tuesday just below 4000.00;
    • RSI-21 has drifted up above 40 from 20
    • 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 since 7:15 PM.
  • The Bollinger Band is stable and narrow
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Tuesday, March 7, in mostly higher volume. Dow Jones Industrial Average traded in lower volume.

Major indices opened flat and declined sharply at 10:0 AM following the release of the Fed Chair’s prepared remarks to the Senate. The indices briefly tried to recover mid-day before declining more in the afternoon.

From Briefing.com:

[…]

The 6-month T-bill yield was up eight basis points to 5.21%, the 1-yr T-bill yield was up 16 basis points to 5.27%, and the 2-yr note yield rose ten basis points to 5.01%. The 10-yr note yield, meanwhile, fell one basis point to 3.98%.

[…]

According to the CME FedWatch Tool, the probability of a 50 basis points rate hike at the March meeting increased to 70.5% today from 31.4% yesterday.

[…]

The U.S. Dollar Index surged 1.2% to 105.63.

Broad selling had the S&P 500 take out support at its 50-day moving average (3,994) and close near its low for the day. All 11 S&P 500 sectors closed with losses ranging from 1.0% (consumer staples) to 2.5% (financials).

  • Nasdaq Composite: +10.2% YTD
  • Russell 2000: +6.7% YTD
  • S&P Midcap 400: +6.4% YTD
  • S&P 500: +3.8% YTD
  • Dow Jones Industrial Average: -0.9% YTD
[…]
  • January Wholesale Inventories down 0.4% month-over-month, as expected, following a 0.1% increase in December.
  • Consumer credit increased by $14.8 bln in January (Briefing.com consensus $22.9 bln) following a downwardly revised $10.6 bln (from $11.6 bln) in December.
[…]

Overseas: 

  • Europe: DAX -0.6%, FTSE -0.1%, CAC -0.5%
  • Asia: Nikkei +0.3%, Hang Seng -0.3%, Shanghai -1.1%

Commodities: 

  • Crude Oil -3.01 @ 77.52
  • Nat Gas +0.10 @ 2.85
  • Gold -35.40 @ 1819.50
  • Silver -0.95 @ 20.18
  • Copper -0.11 @ 3.98
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