Morning Notes – Thursday, December 15, 2022

Directional Bias For The Day:

• S&P Futures are lower at 9:00 AM; they broke below an upsloping flag on the intraday chart at 8:15 AM
• The odds are for a down day with elevated volatility – watch for a break above 3995.25 for a change of sentiments
• The major economic data report is due during the day:
  • BOE Bank Rate & Policy Summary at 7:00 AM
  • ECB Monetary Statement at 8:15 AM
  • Retail Sales ( -0.6% vs. -0.2% est.; prev. 1.3%) at 8:30 AM
  • Core Retail Sales ( -0.2% vs. 0.2% est.; prev. 1.2%) at 8:30 AM
  • Empire State Manufacturing PMI ( -11.2 vs. -1.1 est.; prev. 4.5) at 8:30 AM
  • Philly Fed Manufacturing PMI ( -13.8 vs. -10.0 est.;p rev. -19.4) at 8:30 AM
  • Unemployment Claims (211K vs. 230K est.; prev. 231K) at 8:30 AM
  • ECB Press Conference at 8:45 AM

Directional Bias Before Open:

Key Levels:

• Critical support levels for S&P 500 are 3939.42, 3822.04, and 3918.39
• Critical resistance levels for S&P 500 are 3965.65, 3978.56, and 4009.40
• The key levels for E-mini futures are a break above 3995.50, the high at 7:45 AM, and a break below 3969.25, the low at 8:45 AM

Pre-Open

• On Wednesday at 4:00 PM, S&P futures (March 2023) closed at 4029.25, and the index closed at 3995.32 – a spread of about +34.00 points; the futures closed at 4030.75; the fair value is -1.50
• Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -54.50, Dow by -377, and NASDAQ by -200.75

Markets Around The World

• Markets in the East closed lower
• European markets are lower
• Currencies (Compared to two weeks ago):

• Commodities (Compared to two weeks ago):
  • Energy futures are lower
  • Precious metals are higher
  • Industrial metals are mostly higher
  • Soft commodities are mixed
• Treasuries (Compared to two weeks ago)
  • The 10-year yield closed at 3.470, down -23.3 basis points from two weeks ago;
  • The 30-year is at 3.513%, down -30.9 basis points;
  • The 2-year yield is at 4.223%, down -11.2 basis points;
  • The 10-Year-&-2-Year spread is at -0.753, down from -0.632
  • The 30-Year-&-10-Year spread is at 0.043, down from 0.119
• VIX
  • At 21.41 @ 8:15 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-Off

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

Previous Session

Major U.S. indices closed mostly lower on Wednesday, December 14, in lower volume. Dow Jones Transportation Average closed higher. Major indices opened up and traded higher until the FOMC statement at 2:00 PM. They then declined in volatile trading. All S&P sectors except Healthcare declined.

From Briefing.com:

[…] Today’s trade started on a more upbeat note as market participants awaited the FOMC decision at 2:00 p.m. ET and Fed Chair Powell’s press conference at 2:30 p.m. ET. A range-bound trade had the main indices modestly higher with the S&P 500 pushing past its 200-day moving average (4,032). […] Things deteriorated quickly, however, in the wake of the decision to raise the target range for the fed funds rate by 50 basis points to 4.25-4.50% and the indication in the Summary of Economic Projections that the median estimate for the terminal rate in 2023 had been raised to 5.10% versus the September projection of 4.60%. […] The 2-yr note yield, which jumped to 4.33% (from 4.19%), settled the session at 4.26%. The 10-yr note yield, which jumped to 3.55% (from 3.51%), settled the session at 3.50%. The U.S. Dollar Index fell 0.4% settling back to levels it was trading at right before the announcement. […] Only one of the 11 S&P 500 sectors — health care (+0.1%) — closed in positive territory. The financial (-1.3%), materials (-1.1%), and real estate (-1.0%) sectors were at the bottom of today’s leadership pack along with the information technology sector (-0.9%). Energy complex futures settled mixed. WTI crude oil futures rose 2.5% to $77.44/bbl and natural gas futures fell 7.9% to $6.40/mmbtu. Dow Jones Industrial Average: -6.5% YTD S&P Midcap 400: -12.1% YTD Russell 2000: -18.9% YTD S&P 500: -16.2% YTD Nasdaq Composite: -28.6% YTD […] Weekly MBA Mortgage Applications Index rose 3.2% following a 1.9% decline last week, with purchase applications up 4.0% and refinancing applications up 3.0% Import prices fell 0.6% in November after a revised 0.4% decline in October (from -0.2%). Import prices, excluding oil, fell 0.4% following a 0.1% decline in October. Export prices fell 0.3% in November following a revised 0.4% decline in October (from -0.3%). Export prices, excluding agriculture, fell 0.6% after a 0.3% decline in October. Weekly EIA Crude Oil Inventories showed a 10.23 million barrel build after last week’s draw of 5.19 million barrels. […] Overseas:  Europe: DAX -0.3%, FTSE -0.1%, CAC -0.2% Asia: Nikkei +0.8%, Hang Seng +0.4%, Shanghai +0.0% Commodities:  Crude Oil +1.87 @ 77.44 Nat Gas -0.55 @ 6.40 Gold -7.30 @ 1815.60 Silver -0.01 @ 23.94 Copper 0.00 @ 3.84