Market Remarks

Morning Notes – Tuesday, December 13, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:45 AM; more than 140 points rise within minutes following the release of the CPI report at 8:30 AM
  • The odds are for an up day with elevated volatility – watch for a break above 4180.25 and a break below 4100.25
  • The major economic data report is due during the day:
    • NFIB Small Business Index ( 91.9 vs. 90.4 est.; prev. 01.3) at 6:00 AM
    • CPI m/m ( 0.3% est.; prev. 0.4%) at 8:30 AM
    • CPI y/y ( 7.3% est.; prev. 7.7%) at 8:30 AM
    • Core CPI m/m ( 0.3% est.; prev/ 0.3%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4080.48, 4041.80, and 4026.63
  • Critical resistance levels for S&P 500 are 4119.97, 4153.39, and 4201.68
  • The key levels for E-mini futures: break above 4180.25, the high of 8:30 AM, and a break below 4100.25, the low of 8:36 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2023) closed at 4025.75, and the index closed at 3990.56 – a spread of about +35.25 points; the futures closed at 4025.00; the fair value is -0.75
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +104.00, Dow by +708, and NASDAQ by +423.00

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Seoul closed lower.
  • European markets are higher
  • 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 higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.611%, down -9.2 basis points from two weeks ago;
    • The 30-year is at 3.576%, down -17.4 basis points;
    • The 2-year yield is at 4.394%, down -4.8 basis points;
    • The 10-Year-&-2-Year spread is at -0.782, down from -0.739
    • The 30-Year-&-10-Year spread is at -0.035, down from 0.047
  • VIX
    • At 22.38 @ 8:45 AM; down 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 red candle with almost no upper and lower shadows, forming a three-bar Evening Star pattern
    • Stochastic (9,1, 3): %K crossed below %D from above 90;
    • RSI-9 is around 50
  • The week was down -137.32 or -3.4%; the 5-week ATR  is 159.28
  • A down week, second in the last five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=3968.41, R1=4018.42, R2=4102.47; S1=3884.36, S2=3834.35; S1 pivot level was breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • A relatively large green candle with almost no lower and upper shadows
    • Stochastic (9, 1, 3): %K crossed above %D; from below 10
    • RSI-9 is just below 45; below 8-day EMA;
  • Above 20-day EMA and 50-day EMA; at/above 100-day SMA; below 200-day SMA;
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Trending up since 6:00 AM on December 7 in waves;
    • RSI-21 is near 80
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 8:00 PM on December 11
    • RSI-21 is moving around 75
    • Above EMA20 of EMA50, which is above EMA20
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 11:30 PM
  • The Bollinger Band has been expanding since 5:15 AM, with price walking up the upper band
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Monday, December 12, in mixed volume. S&P 500 and NASDAQ Composite traded in lower volume. The major indices opened up, gradually drifted higher until 2:30 PM, and then rallied up even more.

From Briefing.com:

[…]

The S&P 500 faded back to test Friday’s closing level (3,934.8) shortly after the open, but buyers showed up and defended that line.

The main indices oscillated around a narrow trading range for most of the day before taking a noticeable turn higher with about an hour left in the session. Every sector participated in the move, suggesting it could be some type of buy program.

[…]

Every S&P 500 sector came along for the late upside ride, led by energy (+2.5%), information technology (+2.2%), and utilities (+2.3%). The consumer discretionary (+0.4%) and communication services (+0.7%) sectors showed the slimmest gains, but joined in on the rally effort.

The 2-yr Treasury note yield rose five basis points today to 4.39% and the 10-yr note yield rose four basis points to 3.61%

[…]
  • Dow Jones Industrial Average: -6.4% YTD
  • S&P Midcap 400: -12.2% YTD
  • Russell 2000: -19.0% YTD
  • S&P 500: -16.3% YTD
  • Nasdaq Composite: -28.8% YTD
[…]

Overseas: 

  • Europe: DAX -0.5%, FTSE -0.4%, CAC -0.4%
  • Asia: Nikkei -0.2%, Hang Seng -2.2%, Shanghai -0.9%

Commodities: 

  • Crude Oil +1.64 @ 73.10
  • Nat Gas +0.31 @ 6.60
  • Gold -20.10 @ 1790.90
  • Silver -0.31 @ 23.46
  • Copper -0.06 @ 3.80
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