Market Remarks

Morning Notes – Wednesday, September 14, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are high at 9:00 AM; moving within a trading range between 3878.00 and 3838.00 since 3:30 PM
  • The odds are for a sideways to down day with elevated volatility – watch for a break above 3878.00 and a break below 3843.00 for clarity
  • The key economic data report due during the day:
    • PPI ( -0.1% vs. -0.1% est.; prev. -0.5%) at 8:30 AM
    • Core PPI ( 0.4% vs. 0.3% est.; prev. 0.2% ) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3921.28, 3899.50, and 3886.75
  • Critical resistance levels for S&P 500 are 3944.03, 3943.76, 3975.07
  • Key levels for E-mini futures: break above 3978.00, the low of 4:45 AM and a break below 3943.00, the low of 7:45 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2022) closed at 3951.25, and the index closed at 3932.69 – a spread of about +18.75 points; the futures closed at 3960.25; the fair value is +0.50
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +10.25, Dow by +64, and NASDAQ by +52.00

Markets Around The World

  • Markets in the East closed lower
  • European markets are mostly lower – Italy is up
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • USD/JPY
  • USD/CAD
  • Dollar index
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are mixed
    • Industrial metals are higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.437%, up +32.7 basis points from two weeks ago;
    • The 30-year is at 3.511%, up +29.1 basis points;
    • The 2-year yield is at 3.746%, up +31.3 basis points;
    • The 10-Year-&-2-Year spread is at -0.309, up from -0.323
    • The 30-Year-&-10-Year spread is at 0.074, down from 0.110
  • VIX
    • At 27.37 @ 8:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 28.15 on September 13; low = 21.67 on August 26
    • Sentiment: Risk-On-Neutral

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

Weekly:
  • The week ending on September 9 was a Bullish Engulfing candle with almost no upper shadow and small lower shadow;
    • Stochastic (9,1, 3): %K crossed above %D
    • RSI-9 is just below 50
  • The week was up + 149.10 or +3.6%; the 5-week ATR  is 159.04
  • An up week; second in the last five weeks, and sixth in the previous ten weeks;
  • The weekly pivot point=4010.31, R1=4133.86, R2=4200.37; S1=3943.80, S2=3820.25; R1 pivot level was breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A large red candle with almost no upper shadow and a small lower shadow that gapped down the open; at the uptrend line
    • Stochastic (9, 1, 3): %K is below %D; below 20
    • RSI-9 is below 40; below 8-day EMA;
  • Below 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving sideways since 4:00 PM on Tuesday after declining sharply during the NUSE session
  • RSI-21 bounced up to just above 30 from below 20
    • Below EMA20, which is Below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving sideways since 3:30 PM
    • RSI-21 is around 40 from below 20
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 9:15 PM
  • The Bollinger Band is expanding a bit since 7:30 AM
  • Bias: Side

Previous Session

Major U.S. indices closed sharply lower on Tuesday, September 13, in high volume. The major indices gapped down at the open and then traded lower for the rest of the day. The decline was more than 3.% for all.

All S&P sectors closed down for the day.

From Briefing.com:

[…]

The stock market logged steep losses today on the heels of disappointing August inflation data that served as a reality check for a market that bought into the peak inflation narrative.

[…]

Broad selling brought the S&P 500 and Nasdaq Composite below their respective 50-day moving averages, and the S&P 500 fell toward the 3,900 level by the close.

[…]

Treasury yields rose sharply in response to the CPI data. The 2-yr note yield, which was at 3.50% before the release, settled at 3.76%. The 10-yr note yield, which was at 3.30% before the release, settled at 3.42%.

The US Dollar Index also moved noticeably higher following the CPI report. It was up 1.4% to 109.86.

[…]

Decliners outpaced advancers by an 8-to-1 margin at the NYSE and a 10-to-3 margin at the Nasdaq.

Energy complex futures settled mixed with WTI crude oil futures falling 0.4% to $87.49/bbl while natural gas futures rose 0.2% to $8.33/mmbtu.

[…]
  • NFIB Small Business Optimism reading was 91.8 compared to the prior 89.9 reading
  • Total CPI increased 0.1% month-over-month in August (Briefing.com consensus -0.1%) and core CPI, which excludes food and energy, rose 0.6% month-over-month (Briefing.com consensus 0.3%). That left the year-over-year increases at 8.3% for total CPI (versus 8.5% in July) and 6.3% for core CPI (versus 5.9% in July).
  • […]
  • The Treasury Budget for August showed a deficit of $219.6 bln versus a deficit of $170.6 bln a year ago. The Treasury Budget data is not seasonally adjusted, so the August deficit cannot be compared to the deficit of $211.1 bln for July.

Dow Jones Industrial Average: -14.4% YTD
S&P 400: -14.5% YTD
S&P 500: -17.5% YTD
Russell 2000: -18.4% YTD
Nasdaq Composite: -25.6% YTD

Overseas: 

  • Europe: DAX -1.6%, FTSE -1.2%, CAC -1.4%
  • Asia: Nikkei +0.3%, Hang Seng -0.2%, Shanghai flat

Commodities: 

  • Crude Oil -0.35 @ 87.49
  • Nat Gas +0.02 @ 8.33
  • Gold -23.60 @ 1714.40
  • Silver -0.34 @ 19.49
  • Copper -0.07 @ 3.54
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