Market Remarks

Morning Notes – Wednesday, January 19, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM; moving up since 2:45 AM from 4535.50 to near 4595.00
  • The odds are for an up day with elevated volatility; watch for a break below 4573.25 for a change of sentiments
  • Key economic data report due during the day:
    • Building Permits ( 1.71M est.; prev. 1.71M) at 8:30 AM
    • Housing Starts ( 1.65M est.; prev. 1.68M) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4568.70, 4554.54, and 4531.10
  • Critical resistance levels for S&P 500 are 4603.64, 4614.75, and 4632.24
  • Key levels for E-mini futures: break above 4595.75, the high of 2:45 PM on Tuesday and break below 4573.25, the low of 6:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2022) closed at 4572.50 and the index closed at 4577.11 – a spread of about -4.75 points; futures closed at 4571.25 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +16.00; Dow by +84; and NASDAQ by +91.50

Markets Around The World

  • Markets in the East closed mostly lower – Hong Kong and Singapore closed higher
  • European markets are mostly higher – Switzerland is down
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • INR/USD
    • Dollar index
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are mostly higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.865%, up +19.7 basis points from two weeks ago;
    • 30-years is at 2.184%, up +10.7 basis points;
    • 2-years yield is at 1.046%, up +28.8 basis points;
    • The 10-Year-&-2-Year spread is at 0.819, up from 0.910
    • The 30-Year-&-10-Year spread is at 0.319, down from 0.409
  • VIX
    • At 22.12 @ 6:45 AM; down from the last close; above 5-day SMA;
    • Recent high = 23.33 on January 10; low =  16.34 on January 4
    • Sentiment: Risk-On

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 relatively large red candle that is breaking down from the recent ABCD pattern – the 61.8% extension target near 4602.00 is achieved; the 100% extension target is near 4512.45 and the 161.8% extension target is near 4366.37
    • Stochastic (9, 1, 3): %K is below %D; below 5
    • RSI-9 is just above 30; below 8-day EMA;
  • Below 20-day EMA and 50-day EMA; at/below 100-day SMA; above 200-day SMA
  • In Correction
2-Hour (E-mini futures)
  • Moving down since 10:00 PM on January 17; bouncing up since e 2:00 AM from a low of 4535.50 and from a support zone; approaching a resistance zone around d4595.00 level
    • RSI-21 bounced up to near 50 from near 15
  • At/below EMA20, which is below  EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Moving down since 9:30 AM on January 13; bouncing up since 2:30 AM from 4535.50
    • RSI-21 is above 50 after making Bullish Divergence at 2:20 AM
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 3:15 AM
  • The Bollinger Band is contracting since 7:15 AM after expanding during the early European session
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Tuesday, January 18, in mostly higher volume. NASDAQ Composite traded in lower volume. Major indices are showing signs of breakdown from recent support levels. the Next support levels for Dow Jones Industrial Average and S&P 500 are the December 20, 2022 low of 35222.12 and 4531.10 respectively. The NASDAQ Composite has broken below its December low and its next support level is  October 4, 2022 low of 14181.69. 

From Briefing.com:

The S&P 500 fell 1.8% on Tuesday amid anxiety surrounding rising interest rates, as well as some concerns about corporate earnings. The Nasdaq Composite (-2.6%) and Russell 2000 (-3.1%) suffered steeper losses while the Dow Jones Industrial Average fell 1.5%.

Ten of the 11 S&P 500 sectors closed lower with losses ranging from 0.7% (real estate) to 2.5% (information technology). The energy sector (+0.4%) was the exception, extending its monthly gain to roughly 17%, amid another 2% increase in oil prices ($85.48, +1.61, +1.9%).

[…]

The 2-yr yield jumped seven basis points to 1.03%, the 10-yr yield jumped nine basis points to 1.87%, and the 30-yr yield jumped seven basis points to 2.18%. The U.S. Dollar Index increased 0.5% to 95.76.

[…]
  • The Empire State Manufacturing Survey for January dropped to -0.7 (Briefing.com consensus 25.0) from 31.9 in December.
  • The NAHB Housing Market Index for January decreased to 83 (Briefing.com consensus 84) from 84 in December.
[…]
  • Dow Jones Industrial Average -2.7% YTD
  • S&P 500 -4.0% YTD
  • Russell 2000 -6.6% YTD
  • Nasdaq Composite -7.3% YTD

Overseas: 

  • Europe: DAX -1.0%, FTSE -0.6%, CAC -0.9%
  • Asia: Nikkei -0.3%, Hang Seng -0.4%, Shanghai +0.8%

Commodities: 

  • Crude Oil +1.01 @ 84.98
  • Nat Gas -0.02 @ 4.25
  • Gold -2.10 @ 1815.20
  • Silver +0.62 @ 23.55
  • Copper -0.03 @ 4.40
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