Morning Notes – Wednesday, February 1, 2023

Sunil Sharma

2 years ago

Directional Bias For The Day:

S&P Futures are down a bit at 8:30 AM, drifting sideways to down around 4080.00 since 6:00 PM ahead of the FOMC rate decision and the press conference at 2:30 PM
The odds are for a sideways to down day with elevated volatility – watch for a break above 4091.25 and a break below 4071.00 for clarity
The major economic data report is due during the day:
- ADP Non-Farm Employment Changce ( 106K vs. 176K est.; prev. 253K) at 8:15 AM
- Final Manufacturing PMI ( 46.8 est.; prev. 46.8) at 9:45 AM
- ISM Manufacturing PMI ( 48.0 est.; prev. 48.4) at 10:00 AM
- JOLTS Job Openings ( 10.28M est.; prev. 10.46M) at 10:00 AM
- Construction Spending ( 0.0% est.; prev. 0.2%) at 10:00 AM
- ISM Manufacturng Prices ( 40.6 est.; prev. 39.4) at 10:00 AM
- FOMC Statement at 2:00 PM
- Federal Funds Rate at 2:00 PM
- FOMCE Press Conference at 2:30 PM

Directional Bias Before Open:

Weekly: Uptrend
Daily: Uptrend
120-Min: Up

30-Min: Up-Side
15-Min: Side
6-Min: Side

Key Levels:

Critical support levels for S&P 500 are 4049.73, 4037.63, and 4015.55
Critical resistance levels for S&P 500 are 4076.83, 4094.21, and 4000.96
The key levels for E-mini futures are a break above 4084.50, the high at 3:30 AM, and a break below 4071.00, the low at 5:30 AM

Pre-Open

On Tuesday at 4:00 PM, S&P futures (March 2023) closed at 4090.25, and the index closed at 4076.60 – a spread of about +14.25 points; the futures closed at 4090.00; the fair value is -0.25
Pre-NYSE session open, futures were lower at 8:15 AM, S&P 500 futures were down by -10.25, Dow by -129, and NASDAQ by -4.50

Markets Around The World

Markets in the East closed higher
European markets are mostly higher – Italy is down
Currencies (Compared to two weeks ago):

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

Commodities (Compared to two weeks ago):
- Energy futures are lower
- 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 3.529, down -0.6 basis points from two weeks ago;
- The 30-year is at 3.661%, up +1.4 basis points;
- The 2-year yield is at 4.211%, unchanged;
- The 10-Year-&-2-Year spread is at -0.682, up from -0676
- The 30-Year-&-10-Year spread is at 0.132, up from 0.112
VIX
- At 19.60 @ 7:00 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-Neutral

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 green candle with almost no upper and lower shadows, just above a downtrend line from the high of January 4, 2022, and below a resistance level – the high of December 2022 Stochastic (9, 1, 3): %K crossed above%D; RSI-9 turned up to 65; above 8-DMA Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA; Uptrend
*2-Hour (E-mini futures)*	Moving up since 10:00 AM on January 19 making higher lows and higher highs; RSI-21 drifted down to just above 60 from above 70 on Tuesday Above EMA20, which is above EMA10 of EMA50 Bias: Up
*30-Minute (E-mini futures)*	Moving sideways to down since 4:00 PM on Tuesday; RSI-21 has drifted down to around 55 from above 70 At/above EMA20, which is above EMA10 of EMA50 Bias: Up-Side
*15-Minute (E-mini futures)*	The Bollinger Band (20, 2.0) has been moving sideways since 10:45 PM The Bollinger Band has been expanding a bit since 4:15 AM with price first walking down the lower band and the bouncing up to the upper band Bias: Side

Previous Session

Major U.S. indices closed higher Tuesday, January 31, in mostly higher volume. NASDAQ Composite traded in lower volume.

The major indices opened higher and traded higher for most of the day. All S&P sectors closed higher. Indices mostly erased Monday’s loss.

From Briefing.com:

[…]
The stock market closed out January on a decidedly positive note.
[…]
Russell 2000 rose 2.3% versus a 1.5% gain in the S&P 500 and a 1.7% gain in the Nasdaq Composite. The Invesco S&P High Beta ETF (SPHB) also rose 2.3%.
[…]
Aside from consumer discretionary, the top performers were the cyclical materials (+2.2%), real estate (+1.9%), and industrial (+1.7%) sectors. All 11 sectors were able to close with a gain, but the slimmest gains were registered by the defensive-oriented utilities (+0.7%) sector.
[…]
Advancers lead decliners by a greater than 5-to-1 margin at the NYSE and a greater than 3-to-1 margin at the Nasdaq.
[…]

Nasdaq Composite: +10.7% YTD

Russell 2000: +9.7% YTD

S&P Midcap 400: +9.1% YTD

S&P 500: +6.2% YTD

Dow Jones Industrial Average: +2.8% YTD

[…]

Q4 Employment Cost Index 1.0% (Briefing.com consensus 1.1%); Prior 1.2%

[…]

November FHFA Housing Price Index -0.1%; Prior 0.0%

November S&P Case-Shiller Home Price Index 6.8% (Briefing.com consensus 6.8%); Prior was revised to 8.7% from 8.6%

January Chicago PMI 44.3 (Briefing.com consensus 45.4); Prior was revised to 45.1 from 44.9

December Consumer Confidence 107.1 (Briefing.com consensus 108.1); Prior was revised to 109.0 from 108.3

[…]
Overseas:

Europe: DAX +0.0%, FTSE -0.2%, CAC market closed

Asia: Nikkei -0.4%, Hang Seng -1.0%, Shanghai -0.4%

Commodities:

Crude Oil +1.01 @ 78.95

Nat Gas unch @ 2.68

Gold +23.10 @ 1945.40

Silver +0.16 @ 23.85

Copper +0.03 @ 4.23