Morning Notes – Friday, September 23, 2022

Directional Bias For The Day:

• S&P Futures are lower at 9:00 AM; bouncing up since 8:45 AM from a low of 3715.25
• The odds are for a down day with elevated volatility – watch for a break above 3761.75 and 3773.00
• The key economic data report due during the day:
  • Flash Services ( 45.5 est.; prev. 43.7 ) at 9:45 AM
  • Flash Manufacturing PMI ( 51.0 est.; prev. 51.5 ) at 9:450 AM
  • Fed Chair Powell Speech at 2:00 PM

Directional Bias Before Open:

Key Levels:

• Critical support levels for S&P 500 are 3721.56, 3715.31, and 3707. 71
• Critical resistance levels for S&P 500 are 3749.45, 3756.86, ad 3789.67
• Key levels for E-mini futures: break above 3761.75, the high of 4:00 AM and a break below 3715.25, the low of 8:45 AM

Pre-Open

• On Thursday at 4:00 PM, S&P futures (December 2022) closed at 3771.25, and the index closed at 3757.99 – a spread of about +13.25 points; the futures closed at 3772.00; the fair value is -0.75
• Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -36.50, Dow by -291, and NASDAQ by -91.75

Markets Around The World

• Markets in the East closed lower – Tokyo was closed
• European markets are lower
• Currencies (Compared to two weeks ago):

• Commodities (Compared to two weeks ago):
  • Energy futures are lower
  • Precious metals are mixed
  • Industrial metals are mostly higher
  • Soft commodities are mixed
• Treasuries (Compared to two weeks ago)
  • The 10-year yield closed at 3.761%, up +46.9 basis points from two weeks ago;
  • The 30-year is at 3.666%, up +22.4 basis points;
  • The 2-year yield is at 4.127%, up +60.5 basis points;
  • The 10-Year-&-2-Year spread is at -0.378, down from -0.230
  • The 30-Year-&-10-Year spread is at -0.092, down from 0.150
• VIX
  • At 28.60 @ 8:15 AM; down from the last close; above the 5-day SMA;
  • Recent high = 30.22 on June 30; low = 22.64 on September 9
  • Sentiment: Risk-Off

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

Previous Session

Major U.S. indices closed lower on Thursday, September 22, in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in higher volume. The major indices gapped down a bit at the open and mostly traded sideways to down for the rest of the day. The day’s price range was relatively small.

From Briefing.com:

[…] The major indices started the session on a soft note, giving in to follow-through selling interest […] That point was evident in an advance-decline line that favored decliners by a better than 4-to-1 margin at the NYSE and a better than 3-to-1 margin at the Nasdaq. […] When the closing bell rang, there were just two sectors showing a gain: health care (+0.5%) and communication services (+0.1%). The consumer discretionary sector (-2.2%) led the losers, underperforming as worries about rate hikes and a slowdown in discretionary spending hit home. Other notable sector laggards included the financial (-1.7%), industrials (-1.5%), and materials (-1.2%) sectors. […] For the week ending September 17, initial claims increased by 5,000 to 213,000 (Briefing.com consensus 220,000). For the week ending September 10, continuing jobless claims decreased by 22,000 to 1.379 million. […] The Q2 Current Account Deficit improved to -$251.5 billion (Briefing.com consensus -$260.0 billion) from an upwardly revised -$282.5 billion (from -$291.4 billion) in the first quarter. The August Leading Economic Index decreased 0.3% month-over-month following a downwardly revised 0.5% decline (from -0.4%) in July. Dow Jones Industrial Average: -17.3% YTD S&P Midcap 400: -19.5% YTD S&P 500: -21.2% YTD Russell 2000: -23.3% YTD Nasdaq Composite: -29.3% YTD Overseas:  Europe: DAX -1.8%, FTSE -1.1%, CAC -1.9% Asia: Nikkei -0.6%, Hang Seng -1.6%, Shanghai -0.3% Commodities:  Crude Oil +0.50 @ 83.44 Nat Gas -0.69 @ 7.09 Gold +5.10 @ 1680.80 Silver -0.14 @ 19.62 Copper -0.01 @ 3.47