Market Remarks

Morning Notes – Friday, October 21, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; moving up since 8:45 AM with increased volatility; up more than 40 points since 8:45 AM
  • The odds are for an up day with elevated volatility – watch for a break below 3655.75 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: Side-Down
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min:  Down

Key Levels:

  • Critical support levels for S&P 500 are 3657.48, 3641.41, and3619.85
  • Critical resistance levels for S&P 500 are 3675.19, 3694.60, and 3712.75
  • Key levels for E-mini futures: break above 3683.25, the high at 9:00 AM, and a break below 3642.00, the low of 8:45 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2022) closed at 3674.50, and the index closed at 3665.78 – a spread of about +9.75 points; the futures closed at 3675.25; the fair value is -0.75
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -27.25, Dow by -216, and NASDAQ by -137.75

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Mumbai closed higher
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • NZD/USD
  • USD/CAD
  • INR/USD
  • EUR/USD
  • AUD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.323%, up +49.7 basis points from two weeks ago;
    • The 30-year is at 4.363%, up +56.9 basis points;
    • The 2-year yield is at 4.619%, up +35.7 basis points;
    • The 10-Year-&-2-Year spread is at -0.296, up from -0.436
    • The 30-Year-&-10-Year spread is at 0.044, down from -0.032
  • VIX
    • At 30.24 @ 8:00 AM; up from the last close; below the 5-day SMA;
    • Recent high = 34.88 on September 28; low = 28.50 on October 5
    • Sentiment: Risk-Off

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 candle with an upper shadow almost twice the size of the real body and a small lower shadow
    • Stochastic (9, 1, 3): %K crossed below %D;
    • RSI-9 is turned down to below 50; above 8-day EMA;
  • Below 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Retreating from near the top of a Horizontal Channel between 3820.00 and 3570.00 to below its middle;
    • RSI-21 has declined to below 30
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Drifting lower since 9:30 PM n October 18; above 50% Fibonacci retracement level f the rally from 3502.50 lo of October 13 to the 3777.25 high of October 18
    • RSI-21 is moving around 35
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 10:30 PM following the down move on Thursday
  • The Bollinger Band is a bit expanded with price near the lower band
  • Bias:  Down

Previous Session

Major U.S. indices closed lower on Thursday, October 20, in mostly higher volume. Russell 2000 traded in lower volume. The major indices opened up and moved higher in the early trading. They made highs for the day in the first hour of trading. Then they turned down and moved lower for the rest of the day.

From Briefing.com:

[…]

The major averages had a lackluster start to the day before shifting into rally mode as longer dated yields pulled back from their overnight high (4.18%) and the S&P 500 found support at the 3,700 level. The stock market quickly shifted into retreat mode as the 10-yr note yield started to climb, ultimately settling at a fresh high for the year and its highest point since 2008 (4.23%).

[…]

Still, the 2-yr note yield settled at a fresh high for the year (4.60%).

Market breadth reflected broad selling interest. Decliners led advancers by a greater than 2-to-1 margin at the NYSE and a 3-to-2 margin at the Nasdaq.

[…]

WTI crude oil futures rose 0.1% to $84.49/bbl while natural gas futures fell 1.5% to $5.37/mmbtu.

[…]
  • Weekly Initial Claims 214K (Briefing.com consensus 233K); Prior was revised to 226K from 228K; Weekly Continuing Claims 1.385 mln; Prior was revised to 1.364 mln from 1.368 mln
  • […]
  • October Philadelphia Fed Index -8.7 (Briefing.com consensus -5.0); Prior -9.9
  • September Existing Home Sales 4.71 mln (Briefing.com consensus 4.70 mln); Prior was revised to 4.78 mln from 4.80 mln
  • […]
  • September Leading Economic Index -0.4 (Briefing.com consensus -0.3%); Prior was revised to 0.0% from -0.3%

Dow Jones Industrial Average: -16.5% YTD
S&P Midcap 400: -20.3% YTD
S&P 500: -23.1% YTD
Russell 2000: -24.1% YTD
Nasdaq Composite: -32.2% YTD

Overseas: 

  • Europe: DAX +0.2%, FTSE +0.#%, CAC +0.8%
  • Asia: Nikkei -0.9%, Hang Seng -1.4%, Shanghai -0.3%

Commodities: 

  • Crude Oil +0.11 @ 84.49
  • Nat Gas -0.08 @ 5.37
  • Gold -0.40 @ 1632.90
  • Silver +0.21 @ 18.55
  • Copper +0.07 @ 3.38
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