Morning Notes – Monday, October 17, 2022

Sunil Sharma

2 years ago

Directional Bias For The Day:

S&P Futures are higher at 9:00 AM; they have moved up more than 70 points since 6:00 PM on Sunday;
The odds are for an up day with elevated volatility – watch for a break below 3634.00 for a change of sentiments
No key economic data report is due during the day:

Directional Bias Before Open:

Weekly: Uptrend Under Pressure
Daily: Correction
120-Min: Down-Side

30-Min: Side-Up
15-Min: Side-Up
6-Min: Up

Key Levels:

Critical support levels for S&P 500 are 3617.44, 3579.68, and 3544.41
Critical resistance levels for S&P 500 are 3645.00, 3661.28, and 3685.12
Key levels for E-mini futures: break above 3660.25, the low of 5:45 AM on Friday, and a break below 3634.00, the low of 8:00 AM

Pre-Open

On Friday at 4:00 PM, S&P futures (December 2022) closed at 3599.25, and the index closed at 3583.07 – a spread of about +16.00 points; the futures closed at 3597.50; the fair value is +1.75
Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +51.50, Dow by +337, and NASDAQ by +198.75

Markets Around The World

Markets in the East closed mostly higher – Tokyo, Sydney, and Singapore closed lower
European markets are higher
Currencies (Compared to two weeks ago):

Up	Down
Dollar index GBP/USD USD/JPY USD/CHF USD/CAD INR/USD	EUR/USD AUD/USD NZD/USD

Commodities (Compared to two weeks ago):
- Energy futures are mixed
- Precious metals are lower
- Industrial metals are mostly higher
- Soft commodities are mixed
Treasuries (Compared to two weeks ago)
- The 10-year yield closed at 3.922%, up +11.8 basis points from two weeks ago;
- The 30-year is at 3.933%, up +16.8 basis points;
- The 2-year yield is at 4.511%, up +23.2 basis points;
- The 10-Year-&-2-Year spread is at -0.589, down from -0.475
- The 30-Year-&-10-Year spread is at 0.011, up from -0.039
VIX
- At 32.08 @ 8:00 AM; down from the last close; below the 5-day SMA;
- Recent high = 34.88 on September 28; low = 28.50 on October 5
- Sentiment: Risk-On

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

Weekly:	The week ending on October 14 was a red Spinning Top with upper and lower shadows bigger than the real body; at/below a support level around the low of June 13 week Stochastic (9,1, 3): %K is above %D; around ten RSI-9 is just below 35 The week was down -56.59 or -1.6%; the 5-week ATR is 227.22 A down week; fourth in the last five weeks, and seventh in the previous ten weeks; The weekly pivot point=3595.55, R1=3699.52, R2=3815.97; S1=3479.10, S2=3375.13; S1 pivot level was breached Below 10-week EMA, 39-week SMA, and 89-week SMA Uptrend Under Pressure
*Daily*	A red Dark Cloud Cover candle with a relatively small shadow and no lower shadow; Stochastic (9, 1, 3): %K turned down; just above %D; RSI-9 turned to down; below 8-day EMA; Below 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA; In Correction
*2-Hour (E-mini futures)*	Bounced up from a low of 3502.00 after breaking below a Horizontal Channel; back within the channel RSI-21 is above 50 after dippngbelow5 on Friday; At/below EMA20, which is at/below EMA10 of EMA50 Bias: Down-Side
*30-Minute (E-mini futures)*	Drifting up since 6:00 PM on Sunday RSI-21 is above 55 Above EMA20, which is at/above EMA10 of EMA50 Bias: Side-Up
*15-Minute (E-mini futures)*	The Bollinger Band (20, 2.0) is moving up since 7:30 PM The Bollinger Band is expanding slightly since 8:30 AM, with the price walking up the upper band Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Friday, October 14, in lower volume. The major indices opened higher but then turned down and traded lower for the rest of the day. Most indices made Dark Cloud Cover or similar candles.

For the week, the major indices closed mixed in higher volume. Dow Jones Industrial Average and Dow Jones Transportation Average closed higher for the week. Most Asian exchanges closed lower, and the European bourses closed mixed. The dollar index closed up, and most commodities closed down. The US Treasury yields inched up. All but three S&P sectors – Staples, Financials, and Healthcare – closed down.

From Briefing.com:

[…]
The S&P 500 pushed above the 3,700 level right after the open before the market quickly switched gears and spent the rest of the session in retreat mode. The S&P 500 swung more than 100 points peak to trough today and closed below the 3,600 level.
[…]
The 10-yr note yield settled above the 4.00% level, up six basis points on the day and 13 on the week to 4.01%. The 2-yr note yield rose five basis points on the day and 20 on the week to 4.50%.
[…]
All 11 S&P 500 sectors closed in negative territory today. Consumer discretionary (-3.9%) had the biggest loss while health care (-0.8%) had the slimmest.
[…]

Total retail sales were unchanged month-over-month in September (Briefing.com consensus +0.2%) following an upwardly revised 0.4% increase (from 0.3%) in August. Excluding autos, retail sales were up 0.1% month-over-month (Briefing.com consensus 0.0%) following an upwardly revised 0.1% decline (from -0.3%) in August.

[…]

The September Import-Export Price Index brought some better inflation news. Import prices were down 1.2% month-over-month and down 0.4% excluding fuel. Export prices were down 0.8% month-over-month and down 0.9% excluding agricultural products.

The preliminary October University of Michigan Index of Consumer Sentiment rose to 59.8 (Briefing.com consensus 58.6) from the final reading of 58.6 for September. In the same period a year ago, the index stood at 71.7.

[…]

August Business Inventories rose 0.8% (Briefing.com consensus 0.9%) following a revised increase of 0.5% in July (from 0.6%).

Dow Jones Industrial Average: -18.5% YTD
S&P Midcap 400: -20.8% YTD
S&P 500: -24.8% YTD
Russell 2000: -24.9% YTD
Nasdaq Composite: -34.0% YTD