Morning Notes – Thursday, January 19, 2023

Sunil Sharma

2 years ago

Directional Bias For The Day:

S&P Futures are lower at 9:00 AM; futures drifting lower since 3:00 AM after a sideways move around the 3940.00 level;
The odds are for a down day with elevated volatility – watch for a break above 3944.50 for a change of sentiments
The major economic data report is due during the day:
- Philly Fed Manufacturing Index ( -8.9 vs. -10.9 est.; prev. -13.8) at 8:30 AM
- Unemployment Claims ( 190K vs. 214K est.; prev. 205K) at 8:30 AM
- Building Permits (1.33M vs. 1.37M est.; prev. 1.35M ) at 8:30 AM
- Housing Starts ( 1.38M vs. 1.36M est.; prev. 1.40M) at 8:30 AM

Directional Bias Before Open:

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

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

Key Levels:

Critical support levels for S&P 500 are 3901.89, 3877.29, and 3865.38
Critical resistance levels for S&P 500 are 3926.59, 3953.65, and 3984.57
The key levels for E-mini futures are a break above 3944.50, the high at 3:00 AM, and a break below 3907.25, the low at 8:30 AM

Pre-Open

On Wednesday at 4:00 PM, S&P futures (March 2023) closed at 3946.75, and the index closed at 3928.86 – a spread of about +18.00 points; the futures closed at 3945.75; the fair value is +1.00
Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -34.00, Dow by -265, and NASDAQ by -101.25

Markets Around The World

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

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

Commodities (Compared to two weeks ago):
- Energy futures are mixed
- Precious metals are mixed
- Industrial metals are mostly lower
- Soft commodities are mostly higher
Treasuries (Compared to two weeks ago)
- The 10-year yield closed at 3.408, down -30.1 basis points from two weeks ago;
- The 30-year is at 3.569%, down -25.1 basis points;
- The 2-year yield is at 4.199%, down -14.6 basis points;
- The 10-Year-&-2-Year spread is at -0.791, down from -0.636
- The 30-Year-&-10-Year spread is at 0.161, up from 0.111
VIX
- At 21.66 @ 8:45 AM; up from the last close; above the 5-day SMA;
- Recent high = 23.76 on January 3; low = 18.01 on January 13
- Sentiment: Risk-Off

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

Weekly:	The week ending on January 13 was a green candle with a small lower shadow and almost no upper shadow Stochastic (9,1, 3): %K is above %D; near 70; RSI-9 is above 55 The week was up +104.01 or +2.7%; the 5-week ATR is 142.86 An up week, second in the last five weeks, and fifth in the previous ten weeks; The weekly pivot point=3960.11, R1=4042.93, R2=4086.77; S1=3916.27, S2=3833.45; R1/R2 pivot levels were breached Above 10-week EMA and 39-week SMA; below 89-week SMA Under Pressure
*Daily*	A large Bullish Engulfing candle near the downtrend line from January 2022 high; Stochastic (9, 1, 3): %K crossed below %D; RSI-9 declined to just above 60; below 8-DMA Above 20-day EMA, 50-day EMA, and 100-day SMA; below 200-day SMA; In Confirmed Uptrend
*2-Hour (E-mini futures)*	Moving down since 10:00 AM on January 18, near a support level around 3890.00 RSI-21 declined to below 20 Below EMA20, which is below EMA10 of EMA50 Bias: Side-Down
*30-Minute (E-mini futures)*	Trending down since 10:00 Am on Wednesday; broke below the lower level of a week like sideways move RSI-21 is moving around 25 Below EMA20, which is below EMA10 of EMA50 Bias: Down
*15-Minute (E-mini futures)*	The Bollinger Band (20, 2.0) has been drifting down since 3:00 AM The Bollinger Band has been expanding since 3:00 AM, with the price walking down the lower band Bias: Down

Previous Session

Major U.S. indices closed lower on Wednesday, January 18, in higher volume. Most major indices made large BEarish Engulfing or similar bearish candles near their respective resistance levels.

The indices opened higher but turned around in the first four of trading and then traded lower for the rest of the day. All S&P sectors closed lower.

From Briefing.com:

The day started on an upbeat note for the stock market, but sentiment quickly shifted and the resulting retreat effort had the main indices close with a loss of at least 1.2%. […]
Today’s selling efforts had the S&P 500 take out support at its 200-day moving average (3,975) close near its worst level of the day. All 11 S&P 500 sectors registered losses ranging from 0.9% (communication services) to 2.7% (consumer staples).
[…]
The Invesco S&P 500 Equal Weight ETF (RSP) logged a 1.5% loss versus a 1.6% loss for the S&P 500 and a 1.2% loss in the Vanguard Mega Cap Growth ETF (MGK).
[…]
The 2-yr note yield fell 11 basis points to 4.09% and the 10-yr note yield fell 16 basis points to 3.38%.

Russell 2000: +5.3% YTD

S&P Midcap 400: +4.7% YTD

Nasdaq Composite: +4.7% YTD

S&P 500: +2.3% YTD

Dow Jones Industrial Average: +0.5% YTD

[…]

Weekly MBA Mortgage Applications Index 27.9%; Prior 1.2%

December PPI -0.5% (Briefing.com consensus -0.1%); Prior was revised to 0.2% from 0.3%; December Core PPI 0.1% (Briefing.com consensus 0.1%); Prior was revised to 0.2% from 0.4%

[…]

December Retail Sales -1.1% (Briefing.com consensus -0.8%); Prior was revised to -1.0% from -0.6%; December Retail Sales ex-auto -1.1% (Briefing.com consensus -0.5%); Prior was revised to -0.6% from -0.2%

[…]

December Industrial Production -0.7% (Briefing.com consensus -0.1%); Prior was revised to -0.6% from -0.2%; December Capacity Utilization 78.8% (Briefing.com consensus 79.6%); Prior was revised to 79.4% from 79.7%

[…]

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

January NAHB Housing Market 35 (Briefing.com consensus 31); Prior 31

[…]
Overseas:

Europe: DAX -0.0%, FTSE -0.3%, CAC +0.1%

Asia: Nikkei +2.5%, Hang Seng +0.5%, Shanghai -0.%

Commodities:

Crude Oil -0.74 @ 79.56

Nat Gas -0.12 @ 3.12

Gold -1.80 @ 1907.30

Silver -0.41 @ 23.65

Copper -0.01 @ 4.22