Market Remarks

Morning Notes – Thursday, December 8, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM; moving up since 8:15 AM; up more than 40 points from around 3915.00 to near 3955.00
  • The odds are for an up day with elevated volatility – watch for a break below 3937.50  for a change of sentiments
  • The key economic data report is due during the day:
    • Unemployment Claims ( 230K est.; prev. 225K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3936.27, 3923.00, and 3918.39
  • Critical resistance levels for S&P 500 are 3957.57, 3975.97, and 4001.51
  • The key levels for E-mini futures: break above 3961.00, the high at 11:00 AM on Wednesday, and a break below 3937.50, the low of 5:45 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2022) closed at 3936.25, and the index closed at 3933.92 – a spread of about +2.25 points; the futures closed at 3936.75; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +15.00, Dow by +109, and NASDAQ by +47.00

Markets Around The World

  • Markets in the East closed mixed
  • European markets are closed lower
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • NZD/USD
  • USD/CAD
  • INR/USD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • 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 3.408%, down -29.8 basis points from two weeks ago;
    • The 30-year is at 3.415%, down -32.4 basis points;
    • The 2-year yield is at 4.270%, down -23.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.862, down from -0.803
    • The 30-Year-&-10-Year spread is at 0.007, down from 0.033
  • VIX
    • At 22.84 @ 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-On

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 small Doji-like red with a smaller lower shadow than the upper shadow; the real body was within the previous day’s lower shadow;
    • Stochastic (9, 1, 3): %K is below %D; below 20
    • 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 sideways to up since 12:00 PM on December 6 following a downtrend starting on November 30 following a rally of more than hundred forty points within a day
    • RSI-21 is around 55 from nearly 13 on December 6 and after a Bullish Divergence on December 7
    • Below EMA20, but above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving sideways to up  since 12:30 PM on Tuesday after declining from a high of 4110.00 on December 1 to around 3915.00
    • RSI-21 is trending up since Tuesday, near 60 from 20, and after making Bullish Divergence
    • 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 9:00 PM.
  • The Bollinger Band has been expanding a bit since 7:00 AM, with the price walking up the upper band.
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mainly lower on Wednesday, December 7, in mostly lower volume. Dow Jones Industrial Average closed up, and Dow Jones Transportation Average traded in higher volume.

Most indices made Doji or similarly indecisive candles with the real body within their previous day’s lower shadows.

From Briefing.com:

[…]

The 2-yr note yield fell 11 basis points to 4.24% and the 10-yr note yield fell 11 basis points to 3.41%.

[…]

S&P 500 sector performance reflected the sluggish nature of today’s trade. There wasn’t a single sector that finished the day up or down more than 0.9%. Health care (+0.9%) and consumer staples (+0.4%) led the outperformers while communication services (-0.9%), information technology (-0.5%), and consumer discretionary (-0.5%) brought up the rear, weighed down by their lagging mega cap components.

[…]
  • Dow Jones Industrial Average: -7.5% YTD
  • S&P Midcap 400: -12.8% YTD
  • Russell 2000: -19.5% YTD
  • S&P 500: -17.5% YTD
  • Nasdaq Composite: -30.0% YTD
[…]
  • Weekly MBA Mortgage Application Index fell 1.9% versus a 0.8% decline last week
  • Nonfarm business sector labor productivity increased 0.8% in the third quarter (Briefing.com consensus +0.3%) versus the preliminary estimate of 0.3%. Unit labor costs, meanwhile, were up 2.4% versus the preliminary estimate of 3.5%.
[…]

Overseas: 

  • Europe: DAX -0.6%, FTSE -0.4%, CAC -0.4%
  • Asia: Nikkei -0.7%, Hang Seng -3.2%, Shanghai -0.4%

Commodities: 

  • Crude Oil -2.15 @ 72.29
  • Nat Gas +0.31 @ 5.74
  • Gold +19.40 @ 1800.10
  • Silver +0.66 @ 22.89
  • Copper +0.05 @ 3.86
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