Morning Notes – Monday, March 27, 2023

Sunil Sharma

2 years ago

Directional Bias For The Day:

S&P Futures are higher at 8:45 AM – advanced more than 35 points from the 3:45 AM low of 3997.50, retreating since 7:30 AM
The odds are for an up day with elevated volatility – watch for a break below 3997.50 for a change of sentiments
No major economic data report is due during the day.

Directional Bias Before Open:

Weekly: Uptrend Under Pressure
Daily: In Correction
120-Min: Side-Up

30-Min: Up-Side
15-Min: Up
6-Min: Side-Up

Key Levels:

Critical support levels for S&P 500 are 3971.35, 3932.03, and 3909.16
Critical resistance levels for S&P 500 are 4007.66, 4039.49, and 4047.00
The key levels for E-mini futures are a break above 4033.00, a high at 7:30 AM, and a break below 3997.50, a low at 3:45 AM

Pre-Open

On Friday at 4:00 PM, S&P futures (June 2023) closed at 4002.50, and the index closed at 3970.99 – a spread of about +31.50 points; the futures closed at 4001.25; the fair value is +1.25
Pre-NYSE session open, futures were higher – at 8:30 AM, S&P 500 futures were up by +26.50, Dow by +235, and NASDAQ by +44.50

Markets Around The World

Markets in the East closed mixed – Shanghai, Hong Kong, and Seoul closed lower; Tokyo, Sydney, Mumbai, and Singapore closed up
European markets are higher
Currencies (Compared to two weeks ago):

Up	Down
EUR/USD GBP/USD AUD/USD NZD/USD INR/USD	Dollar index USD/JPY USD/CHF USD/CAD

Commodities (Compared to two weeks ago):
- Energy futures are lower
- Precious metals are higher
- Industrial metals are higher
- Soft commodities are mixed
Treasuries (Compared to two weeks ago)
- The 10-year yield closed at 3.492, down -20.3 basis points from two weeks ago;
- The 30-year is at 3.731%, up +3.1 basis points;
- The 2-year yield is at 3.780%, down -81.5 basis points;
- The 10-Year-&-2-Year spread is at -0.288, up from -0.900
- The 30-Year-&-10-Year spread is at 0.239, up from +0.005
VIX
- At 21.42 @ 8:15 AM; down from the last close; below the 5-day SMA;
- Recent high = 30.81 on March 13; low = 19.94 on March 22
- Sentiment: Risk-On

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

Weekly:	The week ending on March 24 was a small green candle with a long upper shadow and a small lower shadow Stochastic (9,1, 3): %K is above the %D; RSI-9 is just above 50 The week was up +54.35 or +1.4%; the 5-week ATR is 154.85 An up week, third in the last five weeks, and fifth in the previous ten weeks; The weekly pivot point=3973.21, R1=4037.27, R2=4103.54; S1=3906.94, S2=3842.88; R1 pivot level was breached Below 10-week EMA; above 39-week SMA; below 89-week SMA Uptrend Under Pressure
*Daily*	A relatively small Bullish Engulfing following a red Harami candle Stochastic (9, 1, 3): %K crossed above the %D. RSI-9 is just above 50; above 8-DMA Above 20-day EMA; below 50-day EMA; above 100-day SMA and 200-day SMA; In Correction
*2-Hour (E-mini futures)*	In the middle of an up-sloping flag, which is in effect since 2:00 PM on March 9, after bouncing off the lower bound on Friday RSI-21 has risen to above 60 from near 30 and after making a Bullish Divergence Above EMA20, which is above EMA10 of EMA50 Bias: Side-Up
*30-Minute (E-mini futures)*	Broke above a Bull Wedge at 3:00 PM on Friday; trying to break above the handle of a Cuup-Wih-Handle pattern – a convincing break above 4033.00 will complete the pattern RSI-21 is just above 60 Above EMA20, which is above EMA10 of EMA50 Bias: Up-Side
*15-Minute (E-mini futures)*	The Bollinger Band (20, 2.0) has been moving sideways to up since 10:00 PM. The Bollinger Band has been expanding since 3:45 AM, with the price first walking down the lower band and then bouncing up to the upper band. Bias: Side

Previous Session

Major U.S. indices closed higher on Friday, March 24, in lower volume. On Thursday, most indices made Doji or similar indecisive candles; on Friday, most made small Bullish Engulfing or similar bullish candles. All but two S&P sectors – Financials and Consumer Discretionary – closed higher.

For the week, most major US indices closed up in lower volume. Dow Jones Transportation Average closed lower. Most Asian and European markets closed up. The dollar index was down, the energy futures were mixed, the metal futures were higher, and the soft commodities were mixed. The US Treasury yields closed lower. All but two S&P sectors – Utilities and Real Estate – closed up for the week.

From Briefing.com:

The stock market closed out the week on an upbeat note, but things didn’t start out that way today. […]
The S&P 500, which fell below its 200-day moving average (3,932) right after the open, was down 1.0% and hit 3,909 at its low for the day. The Nasdaq and Dow were down 1.0% and 0.9%, respectively, at their lows for the day.
[…]
The 2-yr note yield, which fell to 3.56% this morning, settled at 3.77%. The 10-yr note yield, which declined to 3.29% at its low, settled the session at 3.38%.
[…]
The Invesco S&P 500 Equal Weight ETF (RSP) was up 0.9% while the market-cap weighted S&P 500 had a gain of 0.6%.
[…]
Nine of the 11 S&P 500 sectors closed with a gain. Utilities (+3.1%), real estate (+2.6%), and consumer staples (+1.6%) led the pack while the consumer discretionary (-0.4%) and financial (-0.1%) sectors were alone in negative territory.

Nasdaq Composite: +13.0% YTD

S&P 500: +3.4% YTD

S&P Midcap 400: -1.1% YTD

Russell 2000: -1.5% YTD

Dow Jones Industrial Average: -2.7% YTD

[…]

Durable goods orders fell 1.0% month-over-month in February (Briefing.com consensus 1.6%) following a downwardly revised 5.0% decrease (from 4.5%) in January. Excluding transportation, durable goods orders were unchanged month-over-month (Briefing.com consensus 0.3%) following a downwardly revised 0.4% increase (from 0.7%) in January.

[…]

The IHS Markit Services PMI rose to 53.8 in the preliminary March reading versus the prior reading of 50.6. The IHS Markit Manufacturing PMI rose to 49.3 in the preliminary reading versus the prior reading of 47.3.