Market Remarks

Morning Notes – Wednesday, December 7, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM; declined more than 30 points since 11:00 PM to around 3925.00
  • The odds are for a down day with elevated volatility – watch for a break above 3936.00 and 3950.50  for a change of sentiments
  • The key economic data report is due during the day:
    • Revised Non-Farm Productivity  ( 0.6% est.; prev. 0.3%) at 8:30 AM
    • Revised Unit Labor Cost ( 3.1% est.; prev. 3.5%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3918.39, 3906.54, and 3887.71
  • Critical resistance levels for S&P 500 are 3943.86, 3960.12, and 3984.49
  • The key levels for E-mini futures: break above 3936.50, the high at 6:00 AM, and a break below 3914.50, the low of 3:15 PM on Tuesday

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2022) closed at 3943.75, and the index closed at 3941.26 – a spread of about +2.50 points; the futures closed at 3945.00; the fair value is -1.25
  • Pre-NYSE session open, futures are lower – at 6:45 AM, S&P 500 futures were down by -15.25, Dow by -87, and NASDAQ by -76.00

Markets Around The World

  • Markets in the East closed lower
  • European markets are closed lower
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • INR/USD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.513%, down -24.5 basis points from two weeks ago;
    • The 30-year is at 3.523%, down -30.7 basis points;
    • The 2-year yield is at 4.367%, down -14.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.854, down from -0.751
    • The 30-Year-&-10-Year spread is at 0.010, down from 0.072
  • VIX
    • At 22.53 @ 6:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 26.59 on November 10; low = 18.95 on December 2
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on December 2 was a green candle with a small upper shadow and a relatively long lower shadow
    • Stochastic (9,1, 3): %K is above %D above 90 but turning down;
    • RSI-9 is near 60
  • The week was up +45.58 or +1.1%; the 5-week ATR  is 171.35
  • An up week, third in the last five weeks, and sixth in the previous ten weeks;
  • The weekly pivot point=4036.62, R1=4135.59, R2=4199.48; S1=3972.73, S2=3873.76; R1/R2/S1 pivot levels were breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A red  candle with a small lower shadow and almost no upper shadow at the uptrend line from October 13 lows
    • Stochastic (9, 1, 3): %K is below %D; near 10
    • RSI-9 is around 45; below 8-day EMA;
  • Above 20-day EMA, 50-day EMA, and 100-day SMA;
  • below 200-day SMA;
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Drifting lower since 4:00 PM on November 30 after rising more than hundred forty points during the day
    • RSI-21 is around 20 from near 90
    • Below EMA20, but above EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Moving sideways to down since 12L:30 PM on Tuesday after declining from a high of 4110.00 on December 1 to around 3940.00
    • RSI-21 is just above 30
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting sideways since 9:30 PM.
  • The Bollinger Band has been expanding a bit since 3:00 AM, with the price walking down the lower band.
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Tuesday, December 6, in mixed volume. S&P 500 and NASDAQ Composite traded in higher volume.

The major indices opened lower and then declined more for the rest of the day.

From Briefing.com:

[…]

Today’s sell-off saw the S&P 500 get rejected at the 4,000 level and give back all the post-Powell speech gains.

[…]

The 10-yr note yield, which is more sensitive to inflation, fell nine basis points to 3.51%.

[…]

Today’s sell off was orderly in nature, but fairly broad based. Declining issues outpaced advancing issues by a greater than 2-to-1 margin at both the NYSE and the Nasdaq.

Ten of the 11 S&P 500 sectors suffered losses today that ranged from 0.7% (consumer staples) to 2.7% (energy). Utilities (+0.7%), meanwhile, was the lone sector in positive territory.

[…]
  • Dow Jones Industrial Average: -7.6% YTD
  • S&P Midcap 400: -12.7% YTD
  • Russell 2000: -19.3% YTD
  • S&P 500: -17.3% YTD
  • Nasdaq Composite: -29.6% YTD
[…]

Overseas: 

  • Europe: DAX -0.7%, FTSE -0.6%, CAC -0.1%
  • Asia: Nikkei +0.2%, Hang Seng -0.4%, Shanghai +0.0%

Commodities: 

  • Crude Oil -2.88 @ 74.44
  • Nat Gas -0.19 @ 5.43
  • Gold +1.10 @ 1780.70
  • Silver -0.15 @ 22.23
  • Copper +0.03 @ 3.81
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