Market Remarks

Morning Notes – Tuesday, January 24, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; futures are drifting lower since 12:30 AM – down more than 25 points; breaking below a horizontal channel – the 61.8% extension target is near 4001.50, and the 100% extension target is near 3992.00
  • The odds are for a down day with elevated volatility – watch for a break above 4027.25 and a break above 4041.50 for a change of sentiments.
  • The major economic data report is due during the day.
    • Flash Service PMI ( 45.3 est.; prev. 44.7) at 9:45 AM
    • Flash Manufacturing PMI ( 46.0 est.; prev. 46.2) at 9:45 AM
    • Richmond Manufacturing Index ( -5 est; prev. 1) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4000.83, 3989.95, and 3961.37
  • Critical resistance levels for S&P 500 are 3985.20, 3997.86=5, and 4014.16
  • The key levels for E-mini futures are a break above 4027.25, the high at 8:30 AM, and a break below 4013.00, the low at 8:15 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2023) closed at 4035.50, and the index closed at 4019.81 – a spread of about +15.75 points; the futures closed at 4036.50; the fair value is -1.00
  • Pre-NYSE session open, futures were lower – at 8:45 AM, S&P 500 futures were down by -20.00, Dow by -152, and NASDAQ by -86.50

Markets Around The World

  • Markets in the East closed higher – Shanghai, Hong Kong, Seoul, and Singapore were closed
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • Dollar index
  • USD/JPY
  • USD/CAD
  • 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 3.508, down -0.4 basis points from two weeks ago;
    • The 30-year is at 3.679%, up +2.9 basis points;
    • The 2-year yield is at 4.223%, up +0.7 basis points;
    • The 10-Year-&-2-Year spread is at -0.710, down from -0.699
    • The 30-Year-&-10-Year spread is at 0.166, up from 0.133
  • VIX
    • At 20.06 @ 8:30 AM; up from the last close; below 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 20 was a small red candle with a small upper shadow and a long lower shadow
    • Stochastic (9,1, 3): %K is above %D; just below 60;
    • RSI-9 is around 55
  • The week was up +104.01 or +2.7%; the 5-week ATR  is 142.86
  • A down week, third in the last five weeks, and sixth in the previous ten weeks;
  • The weekly pivot point=3957.85, R1=4030.15, R2=4087.70; S1=3900.30, S2=3828.00; S1 pivot level was breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Under Pressure
Daily
  • A relatively large green candle with almost a small upper shadow and almost no lower shadow; at the downtrend line from January 2022 high
    • Stochastic (9, 1, 3): %K is above %D;
    • RSI-9 is near 65; above 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Drifting sideways to down since 12:00 PM on Monday from a high of 4056.75
    • RSI-21 has declined to just above 60 from above 90
    • Above EMA20, which is above EMA10 of EMA50 
  • Bias:  Side-Up
30-Minute (E-mini futures)
  • Moving sideways to down since 2:00 PM on Monday between 4040.00 and 4016.00
    • RSI-21 has declined to 50 from above 80
    • Below EMA20, but above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways t down since 8:30 PM
  • The Bollinger Band has been expanding a bit since 4:00 AM with price mostly walking down the lower band
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Monday, January 23, in mostly lower volume. Major indices opened up and traded higher until the afternoon before giving up some gains. All S&P sectors closed up.

From Briefing.com:

Equities logged sizable gains today, building on Friday’s rally. Upside moves had the S&P 500 extend its position above its 200-day moving average (3,966) and close the session comfortably above the 4,000 level. […]

S&P 500 sector performance reflected mega cap leadership. The information technology (+2.3%), communication services (+1.8%), and consumer discretionary (+1.6%) sectors led the outperformers.

The energy sector, meanwhile, was alone in negative territory by the close with a 0.2% loss.

[…]

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average were up 1.7%, 2.4%, and 1.2%, respectively, at their highs of the day.

[…]
  • Nasdaq Composite: +8.6% YTD
  • Russell 2000: +7.4% YTD
  • S&P Midcap 400: +6.6% YTD
  • S&P 500: +4.7% YTD
  • Dow Jones Industrial Average: +1.5% YTD
[…]
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