Morning Notes – Monday, April 17, 2023

Directional Bias For The Day:

• S&P Futures are lower at 9:00 AM – moving sideways to down since 6:00 PM on Sunday
• The odds are for a down day with elevated volatility – watch for a break above 4176.00 for a change of sentiments
• The major economic data report is due during the day:
  • Empire State Manufacturing Index ( 10.8 vs. -17.7 est.; prev. -24.6) at 8:30 AM
  • NAHB House Market ( 45 est.; prev. 44) at 10:00 AM

Directional Bias Before Open:

Key Levels:

• Critical support levels for S&P 500 are 4119.17, 4113.20, and 4099.40
• Critical resistance levels for S&P 500 are 4139.65, 4163.19, and 4176.54
• The key levels for E-mini futures are a break above 4176.00, the high at 3:30 AM, and a break below 4160.00, the low at 3:45 PM on Friday

Pre-Open

• On Friday at 4:00 PM, S&P futures (June 2023) closed at 4163.25, and the index closed at 4137.64 – a spread of about +26.50 points; the futures closed at 4163.75; the fair value is -0.50
• Pre-NYSE session open, futures were mixed – at 8:30 AM, S&P 500 futures were down by -1.00, Dow up by +24, and NASDAQ down by -17.25

Markets Around The World

• Markets in the East closed mostly higher – Mumbai was closed down
• European markets are mixed – The UK, Spain, and Stoxx 600 are higher; Germany, France, Italy, and Switzerland are lower
• Currencies (Compared to two weeks ago):

• Commodities (Compared to two weeks ago):
  • Energy futures are mixed
  • Precious metals are higher
  • Industrial metals are higher
  • Soft commodities are mostly higher
• Treasuries (Compared to two weeks ago)
  • The 10-year yield closed at 3.543, up +7.0 basis points from two weeks ago;
  • The 30-year is at 3.776%, up +8.7 basis points;
  • The 2-year yield is at 4.110%, up +8.3 basis points;
  • The 10-Year-&-2-Year spread is at -0.546, up from -0.533
  • The 30-Year-&-10-Year spread is at 0.212, up from +0.195
• VIX
  • At 17.64 @ 8:15 AM; up from the last close; below the 5-day SMA;
  • Recent high = 25.21 on March 24; low = 17.06 on February 2
  • Sentiment: Risk-Neutral-Off

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

Previous Session

Major U.S. indices closed mostly lower on Friday, April 14, in mixed volume. The Dow Jones Transportation Average closed lower. NASDAQ Composite and Russell 2000 traded in higher volume.

The major indices opened up and moved higher in the first half hour of trading before turning down and trading lower for the rest of the day.

For the week, the major indices closed higher in higher volume. Markets in Asia and Europe closed higher. The dollar index was down; the energy futures were up; the precious metals were mixed, the industrial metals were higher, and most soft commodities were up. The US Treasury yields inched up for the week.

From Briefing.com:

[…] The main indices tried to move higher in the early going, but quickly fell below their flat lines and remained in the red through the close. […] The 2-yr note yield rose 11 basis points to 4.10% and the 10-yr note yield rose seven basis points to 3.52%. […] Nasdaq Composite: +15.8% YTD S&P 500: +7.8% YTD S&P Midcap 400: +2.4% YTD Dow Jones Industrial Average: +2.2% YTD Russell 2000: +1.1% YTD […] Total retail sales declined 1.0% month-over-month in March (Briefing.com consensus -0.4%) following an upwardly revised 0.2% decline (from -0.4%) in February. Excluding autos, retail sales were down 0.8% month-over-month (Briefing.com consensus -0.4%) following an upwardly revised unchanged reading (from -0.1%) in February. […] Import prices declined 0.6% month-over-month and were down 4.6% year-over-year. Excluding fuel, import prices were down 0.5% month-over-month and down 1.5% year-over-year. Export prices fell 0.3% month-over-month and were down 4.8% year-over-year. Excluding agricultural products, export prices were down 0.2% month-over-month and were down 5.2% year-over-year. Total industrial production increased 0.4% month-over-month in March (Briefing.com consensus +0.2%) following an upwardly revised 0.2% increase (from 0.0%) in February. The capacity utilization rate jumped to 79.8%(Briefing.com consensus 79.0%) following an upwardly revised 79.6% (from 79.1%) in February. […] Business Inventories rose 0.2% in February (Briefing.com consensus +0.3%) following a revised 0.1% decrease in January (from -0.1%). The preliminary University of Michigan Consumer Sentiment Index for April checked in at 63.5 (Briefing.com consensus 62.7) versus the final reading of 62.0 for March. In the same period a year ago, the index stood at 65.2.