Market Remarks

Morning Notes – Wednesday, December 14, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a bit lower at 9:00 AM; they are moving sideways to down since 1:30 PM on Tuesday around the 4050.00 level; awaiting the FOMC decision and the press conference later in the afternoon
  • The odds are for a sideways day until the FOMC event  up – watch for a break above 4072.25 and a break below 4026.25 for clarity
  • The major economic data report is due during the day:
    • Import Prices ( -0.6% vs. -0.5% est.; prev. -0.4%) at 8:30 AM
    • Fed Funds Rate ( 4.50% est.; prev. 4.00% at 2:00 PM
    • FOMC Statement and Economic Projections at 2:00 PM
    • FOMC Press Conference at 2:30 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4000.89, 3993.03, and 3979.98
  • Critical resistance levels for S&P 500 are 4032.69, 4059.11, and 4096.09
  • The key levels for E-mini futures are a break above 4072.25, the high of 10:45 PM, and a break below 4026.25, the low of 12:45 PM on Tuesday

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2023) closed at 4056.25, and the index closed at 4019.65 – a spread of about +36.25 points; the futures closed at 4055.25; the fair value is -1.00
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -3.50, Dow by -3, and NASDAQ by -21.00

Markets Around The World

  • Markets in the East closed higher
  • European markets are mostly lower
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • 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 3.501, down -24.7 basis points from two weeks ago;
    • The 30-year is at 3.528%, down -27.5 basis points;
    • The 2-year yield is at 4.219%, down -25.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.718, up from -0.723
    • The 30-Year-&-10-Year spread is at 0.027, down from 0.055
  • VIX
    • At 22.62 @ 8:45 AM; up from the last close; below the 5-day SMA;
    • Recent high = 26.59 on November 10; low = 18.95 on December 2
    • Sentiment: Risk-Neutral-Off

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 red spinning top candle at a resistance formed by the downtrend line from the all-time high
    • Stochastic (9, 1, 3): %K is above %D; around 55
    • RSI-9 is just below 60; above 8-day EMA;
  • Above 20-day EMA and 50-day EMA, and 100-day SMA; at/below 200-day SMA;
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Trending up since 6:00 AM on December 7 in waves;
    • RSI-21 declined to just above 50 from near 80
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways since 3:00 PM on Tuesday
    • RSI-21 is moving around 50
    • At/below EMA10 of EMA50, which is below EMA20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 8:45 PM.
  • The Bollinger Band is relatively narrow and stable
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday, December 13, in higher volume. Major indices gapped up at the open but found resistance and then declined for the rest of the day.

From Briefing.com:

[…]

The main indices all registered sizable gains shortly after the open. Specifically, the Dow Jones Industrial Average was up 707 points or 2.1%, the Nasdaq Composite was up 428 points or 3.8%, and the S&P 500, which gapped above resistance at its 200-day moving average (4,034), was up 110 points or 2.8%.

[…]

Things started to deteriorate, however, after the S&P 500 was met with resistance at the 4,100 level around 10:00 a.m. ET. The main indices steadily eroded from there, relinquishing a large chunk of the opening gains by the time of the closing bell. In the process, the S&P 500 fell back below its 200-day moving average.

[…]

Still, ten of the 11 S&P 500 sectors logged gains today led by real estate (+2.0%) and energy (+1.8%). The consumer staples sector (-0.2%) was the lone laggard in negative territory.

The 2-yr Treasury note yield fell 18 basis points to 4.21% and the 10-yr note yield fell 11 basis points to 3.50%. The U.S. Dollar Index was down 1.0% to 104.04.

  • Dow Jones Industrial Average: -6.1% YTD
  • S&P Midcap 400: -11.6% YTD
  • Russell 2000: -18.4% YTD
  • S&P 500: -15.7% YTD
  • Nasdaq Composite: -28.1% YTD
[…]
  • November NFIB Small Business Optimism survey rose to 91.9 from 91.3 in October
  • Total CPI was up 0.1% month-over-month (Briefing.com consensus +0.3%) and core-CPI, which excludes food and energy, was up 0.2% month-over-month (Briefing.com consensus +0.3%).
  • On a year-over-year basis, total CPI was up “only” 7.1%, versus 7.7% in October, and core-CPI was up “only” 6.0%, versus 6.3% in October.
[…]

Overseas: 

  • Europe: DAX +1.3%, FTSE +0.8%, CAC +1.4%
  • Asia: Nikkei +0.4%, Hang Seng +0.7%, Shanghai -0.1%

Commodities: 

  • Crude Oil +2.47 @ 75.57
  • Nat Gas +0.35 @ 6.95
  • Gold +32.00 @ 1822.90
  • Silver +0.49 @ 23.95
  • Copper +0.04 @ 3.84
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