Morning Notes – Friday, December 16, 2022

Sunil Sharma

2 years ago

Directional Bias For The Day:

S&P Futures are lower at 9:00 AM; drifting sideways to up since 3:45 AM around 3885.00
The odds are for a down day with a good chance of a bounce from the pre-open levels around 3885.00; elevated volatility – watch for a break above 3896.50 or a break below 3871.25 for clarity
The major economic data report is due during the day:
- Flash Service PMI ( 46.5 est.; prev. 46.2) at 10:00 AM
- Flash Manufacturing PMI ( 47.7 est.; prev. 47.7) at 10:00 AM

Directional Bias Before Open:

Weekly: Uptrend
Daily: Uptrend Under Pressure
120-Min: Down

30-Min: Down
15-Min: Down
6-Min: Down-Side

Key Levels:

Critical support levels for S&P 500 are 3859.89, 3849.00, and 3818.20
Critical resistance levels for S&P 500 are 3879.45, 3907.70, and 3919.27
The key levels for E-mini futures are a break above 3896.50, the high at 8:00 AM, and a break below 3871.25, the low at 5:45 AM

Pre-Open

On Thursday at 4:00 PM, S&P futures (March 2023) closed at 3927.00, and the index closed at 3895.75 – a spread of about +31.25 points; the futures closed at 3927.25; the fair value is -0.25
Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -43.25, Dow by -388, and NASDAQ by -72.25

Markets Around The World

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

Up	Down
EUR/USD USD/JPY USD/CAD INR/USD	Dollar index GBP/USD USD/CHF AUD/USD NZD/USD

Commodities (Compared to two weeks ago):
- Energy futures are mixed
- Precious metals are mixed
- Industrial metals are lower
- Soft commodities are mixed
Treasuries (Compared to two weeks ago)
- The 10-year yield closed at 3.513, down -1.6 basis points from two weeks ago;
- The 30-year is at 3.556%, down -8.0 basis points;
- The 2-year yield is at 4.268%, up +4.8 basis points;
- The 10-Year-&-2-Year spread is at -0.755, down from -0.691
- The 30-Year-&-10-Year spread is at 0.043, down from 0.107
VIX
- At 23.52 @ 8:15 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 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 large red candle with a gap down and with almost no upper shadow, and a small lower shaodw Stochastic (9, 1, 3): %K is below %D; below ten and Bearish Divergence on December 13 RSI-9 is below 40 50; below 8-day EMA; Below 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA; Confirmed Uptrend
*2-Hour (E-mini futures)*	Moving down since 10:00 AM on December 13; down more than 300 points at 9:00 AM on December 16; lower lows and lower highs. RSI-21 has been rising since 12:00 Pm on Thursday; Bullish Divergence at 4:00 AM Below EMA20, which is at/above EMA10 of EMA50 Bias: Down
*30-Minute (E-mini futures)*	Trending down since 1:30 PM on Wednesday RSI-21 is below 40′ Bullish Divergence at 5:00 AM Below EMA20, which is below EMA10 of EMA50 Bias: Down
*15-Minute (E-mini futures)*	The Bollinger Band (20, 2.0) has been moving sideways since 8:00 AM after moving down since 8:15 PM on December 14 The Bollinger Band has contracted a bit Bias: Down

Previous Session

Major U.S. indices closed lower on Thursday, December 15, in mixed volume. Dow Jones Transportation Average and NASDAQ COmposite traded in lower volume. Major indices gapped down at the open and traded lower for the rest of the day, with a small bounce near the end.

From Briefing.com:

[…]
It was a trend-down day for the stock market amid growing recession concerns.
[…]
Since yesterday’s close, the ECB, Bank of England, Swiss National Bank, and Hong Kong Monetary Authority all raised their benchmark rates by 50 basis points. The Norges Bank raised its benchmark rate by 25 basis points.
[…]
The broad based retreat brought the S&P 500 below the 3,900 level after the index reached 4,100 on Tuesday. All 11 S&P 500 sectors closed in the red with losses ranging from 0.5% (energy) to 3.8% (communication services). The information technology sector (-3.8%) was another influential laggard.
[…]
The 2-yr Treasury note yield fell one basis point to 4.25% and the 10-yr note yield fell five basis points to 3.45%. The U.S. Dollar Index jumped 0.8% to 104.64.

Dow Jones Industrial Average: -8.6% YTD

S&P Midcap 400: -14.1% YTD

Russell 2000: -21.0% YTD

S&P 500: -18.3% YTD

Nasdaq Composite: -30.9% YTD

[…]

November Retail Sales -0.6% (Briefing.com consensus -0.1%); Prior 1.3%; November Retail Sales ex-auto -0.2% (Briefing.com consensus 0.2%); Prior was revised to 1.2% from 1.3%

[…]

Weekly Initial Claims 211K (Briefing.com consensus 227K); Prior was revised to 231K from 230K; Weekly Continuing Claims 1.671 mln; Prior was revised to 1.670 mln from 1.671 mln

[…]

December Philadelphia Fed Index -13.8 (Briefing.com consensus -10.0); Prior -19.4

December Empire State Manufacturing -11.2 (Briefing.com consensus -1.0); Prior 4.5

November Industrial Production -0.2% (Briefing.com consensus 0.1%); Prior -0.1%; November Capacity Utilization 79.7% (Briefing.com consensus 80.0%); Prior 79.9%

[…]

October Business Inventories 0.3% (Briefing.com consensus 0.4%); Prior was revised to 0.2% from 0.4%

Weekly EIA Natural Gas Inventories showed a draw of 50 bcf versus a draw of 21 bcf last week

[…]
Overseas:

Europe: DAX -3.3%, FTSE -0.9%, CAC -3.1%

Asia: Nikkei -0.4%, Hang Seng -1.6%, Shanghai -0.3%

Commodities:

Crude Oil -1.30 @ 76.14

Nat Gas +0.45 @ 6.85

Gold -26.80 @ 1788.80

Silver -0.64 @ 23.30

Copper -0.07 @ 3.77