Market Remarks

Morning Notes – Tuesday, January 18, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; bounced up 20 points from early morning lows of 4590.75; from
  • The odds are for a down day with elevated volatility; watch for a break above 4625.25 and 4648.00 for a change of sentiments
  • Key economic data report due during the day:
    • Empire State Manufacturing Index ( -0.7 vs. 25.0 est.; prev. 31.9) at 8:30 AM
    • NAHB Housing Market Index ( 84 est.; prev. 84) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4614.75, 4595,67, and 4582.24
  • Critical resistance levels for S&P 500 are 4648.83, 4665.13, and 4673.02
  • Key levels for E-mini futures: break above 4614.75, the low of 7:30 AM and break below 4590.25, the low of 4:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (March 2022) closed at 4653.75 and the index closed at 4662.85 – a spread of about -9.00 points; futures closed at 4654.75 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -45.00; Dow by -301; and NASDAQ by -225.25

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai closed higher
  • European markets are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.820%, up +19.2 basis points from two weeks ago;
    • 30-years is at 2.145%, up +12.9 basis points;
    • 2-years yield is at 0.960%, up +18.6 basis points;
    • The 10-Year-&-2-Year spread is at 0.860, up from 0.854
    • The 30-Year-&-10-Year spread is at 0.325, down from 0.388
  • VIX
    • At 21.52 @ 7:45 AM; up from the last close; above 5-day SMA;
    • Recent high = 23.33 on January 10; low =  16.34 on January 4
    • Sentiment: Risk-Off

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

Monthly
  • December 2021 was a green candle that opened above the previous week’s real-body and closed higher with a small upper shadow and a slightly longer lower shadow; at all-time highs
    • Stochastic (9, 1, 3): %K crossed above %D; above 90;
    • RSI-9 is turning up from above 75;
    • Above the upper band of a 120-month regression channel;
  • Confirmed Uptrend: sequence of higher highs and higher lows
Weekly:
  • The week ending on January 14 was a Doji candle;
    • Stochastic (9,1, 3): %K is below %D;
    • RSI-9 is just above 55
  • The week was down -14.18 or -0.3%; the 5-week ATR  is 149.40
  • A down week; third in the last five weeks, and sixth in the previous ten weeks
  • The weekly pivot point=4664.64, R1=4747.04, R2=4831.23; S1=4580.45, S2=4498.05; S1 pivot level was breached
  • At/below 10-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A green Hammer following a small decline at 50-day EMA;
    • Stochastic (9, 1, 3): %K is below %D;
    • RSI-9 is just above 40 from 60; below 8-day EMA;
  • Below 20-day EMA; at/below 50-day EMA; above 100-day SMA, and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving down since 10:00 PM on January 17 after moving sideways from 3:30 PM on Friday; trending down since 9:30 Am on January 13
    • RSI-21 is moving below 40
  • Below EMA20, which is below  EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Moving down since 9:30 AM on Thursday
    • RSI-21 has declined to just above 30 ;
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 10:30 PM on Monday
  • The Bollinger Band is contracting since 8:00
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Down

Previous Session

Major U.S. indices closed mixed on Friday, January 14, in mostly higher volume. S&P 500, NASDAQ Composite, Russell 2000, and Wilshire 5000 Total Market Index closed higher. Dow Jones Transportation Average traded in lower volume.

For the week, most major US indices closed lower in higher volume. NYSE Composite closed up for the week and Dow Jones Industrial Average trade in lower volume. Markets in Asia were mixed but European markets were mostly down. The dollar index closed down. The energy futures and precious metals closed up. The industrial metals were mixed and soft commodities were mostly up. The US Treasury yields were mixed.

From Briefing.com:

The S&P 500 gained 0.1% on Friday after being down 1.0% intraday, as the market overcame mixed bank earnings, downbeat economic data, and a sharp rise in interest rates. The Nasdaq Composite (+0.6%) and Russell 2000 (+0.1%) also closed higher, while the Dow Jones Industrial Average fell 0.6%. […]

The financials sector (-1.0%) was the second-weakest performer in the S&P 500 behind the real estate sector (-1.2%). The materials sector (-0.8%) was restrained by a Q4 EPS warning from Sherwin-Williams […]

Conversely, the energy sector (+2.4%) was impressive, rising 2.4% amid another increase in WTI crude futures ($83.87, +1.91, +2.3%). The information technology (+0.9%) and communication services (+0.5%) sectors were instrumental in the comeback amid relative strength in the mega-caps.

[…]

The sharp increase in 10-yr yield, which rose six basis points to 1.77%, did not deter the intraday rebound effort. The 2-yr yield rose seven basis points to 0.96% on expectations for a more assertive Fed. The U.S. Dollar Index advanced 0.4% to 95.16.

[…]
  • Total retail sales were down 1.9% month-over-month in December (Briefing.com consensus 0.0%) while retail sales, excluding autos, decreased 2.3% (Briefing.com consensus 0.2%). On a year-over-year basis, total retail sales were up 16.9% and up 18.8% excluding autos.
  • […]
  • Total industrial production decreased 0.1% in December (Briefing.com consensus 0.3%) following an upwardly revised 0.7% increase (from 0.5%) in November. The capacity utilization rate dipped to 76.5% (Briefing.com consensus 77.1%) from a revised 76.6% (from 76.8%) in November.
  • […]
  • The preliminary January reading for the University of Michigan Index of Consumer Sentiment came in at 68.8 (Briefing.com consensus 68.5) versus the final December reading of 70.6.
  • […]
  • Import prices fell 0.2% in December after increasing 0.7% in November. Excluding oil, import prices increased 0.5% after increasing 0.5% in November. Export prices fell 1.8% after increasing 0.8% in November. Excluding agriculture, export prices fell 2.1% after increasing 0.6% in November.
  • Business inventories increased 1.3% m/m in November (Briefing.com consensus 1.0%) following a revised 1.3% increase (from 1.2%) in October.
[…]
  • Dow Jones Industrial Average -1.2% YTD
  • S&P 500 -2.2% YTD
  • Russell 2000 -3.7% YTD
  • Nasdaq Composite -4.8% YTD
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