Market Remarks

Morning Notes – Tuesday, January 31, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are down a bit at 8:00 AM; bounced up almost 20 points since 6:30 AM
  • The odds are for a down day with an equal chance of an up move from the pre-open levels around 4025.00 with elevated volatility – watch for a break above 4041.50 for a change of sentiments
  • The major economic data report is due during the day:
    • Employment Cost Index ( 1.1% est.; prev. 1.2%) at 8:30 AM
    • S&P/CS Composite-20 HPI ( 6.8% est.; prev. 8.6%) at 9:00 AM
    • HPI ( -0.4% est.; prev. 0.0%) at 9:00 AM
    • Chicago PMI ( 45.1 est.; prev. 44.9) at 9:45 AM
    • CB Consumer Confidence ( 109.1 est.; prev. 108.3) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Down
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min:  Down

Key Levels:

  • Critical support levels for S&P 500 are 4005.28, 3984.20, and 3978.27
  • Critical resistance levels for S&P 500 are 4015.55, 4029.80, and 4042.26
  • The key levels for E-mini futures are a break above 4041.50, the high at 3:00 AM, and a break below 4007.50, the low at 6:30 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (March 2023) closed at 4033.25, and the index closed at 4017.77 – a spread of about +15.75 points; the futures closed at 4032.50; the fair value is +0.75
  • Pre-NYSE session open, futures were lower at 8:00 AM, S&P 500 futures were down by -4.75, Dow by -50, and NASDAQ by -32.50

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai closed up
  • European markets are mostly lower – Italy is up
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • Dollar index
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are mixed
    • Industrial metals are lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.551, up +1.6 basis points from two weeks ago;
    • The 30-year is at 3.660%, up +1.3 basis points;
    • The 2-year yield is at 4.253%, up +4.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.702, up from -0676
    • The 30-Year-&-10-Year spread is at 0.109, down from 0.112
  • VIX
    • At 20.61 @ 6:45 AM; up from the last close; above the 5-day SMA;
    • Recent high = 23.76 on January 3; low = 17.97 on January 27
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on January 2 was a Bullish Engulfing candle following a small red Harami candle breaking above the downtrend line from an all-time high made in the last week of December 2021
    • Stochastic (9,1, 3): %K is above %D;
    • RSI-9 is around 60
  • The week was up +104.01 or +2.7%; the 5-week ATR  is 142.86
  • An up week, third in the last five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4037.94, R1=4126.83, R2=4183.09; S1=3981.68, S2=3892.79; R1/R2 pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend Resumed
Daily
  • A red candle with a small upper shadow and almost no lower shadow, a three-day Evening Star pattern is emerging just above a downtrend line from the high of January 4, 2022, 
    • Stochastic (9, 1, 3): %K crossed below %D;
    • RSI-9 declined to below 60 from above 70; below 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving down since 4:00 PM on January 27 – declined  almost 100 points from a high near 4110.00;
    • RSI-21 drifted down to just above 30 from 75 and after making a Bearish Divergence
    • Below EMA20, which is below EMA10 of EMA50 
  • Bias:  Down
30-Minute (E-mini futures)
  • Moving down since 3:00 PM on Friday;
    • RSI-21 has declined to below 40 from near 65
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 7:45 PM on Sunday
  • The Bollinger Band has been expanding since 3:15 AM with price walking down the lower band
  • Bias: Down

Previous Session

Major U.S. indices closed mostly lower Monday, January 30, in mostly lower volume. S&P 500 traded in higher volume.

The major indices gapped down at the open and traded lower for most of the day. All but one S&P sector – Consumer Staples – closed lower.

From Briefing.com:

[…]

Investors took a more cautious approach today in front of policy decisions from the Fed, the ECB, and the Bank of England later this week.

[…]

The information technology (-1.9%), communication services (-1.8%), and consumer discretionary (-1.7%) sectors were among the worst performers today.

Energy (-2.3%) was the top laggard for the 11 sectors as oil prices faded ahead of the OPEC+ meeting later this week. WTI crude oil futures fell 1.9% to $77.94/bbl.

Only one sector — consumer staples (+0.1%) — was able to maintain a slim gain by the close.

  • Nasdaq Composite: +8.9% YTD
  • Russell 2000: +7.3% YTD
  • S&P Midcap 400: +6.8% YTD
  • S&P 500: +4.6% YTD
  • Dow Jones Industrial Average: +1.7% YTD
[…]

Overseas: 

  • Europe: DAX -0.2%, FTSE +0.3%, CAC -0.2%
  • Asia: Nikkei +0.2%, Hang Seng -2.7%, Shanghai +0.1%

Commodities: 

  • Crude Oil -1.51 @ 77.94
  • Nat Gas -0.17 @ 2.68
  • Gold -7.30 @ 1922.30
  • Silver +0.08 @ 23.69
  • Copper -0.02 @ 4.20
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