Morning Notes – Wednesday, February 15, 2023

Sunil Sharma

2 years ago

Directional Bias For The Day:

S&P Futures are lower at 8:30 AM; moving sideways to downs with large up-down moves
The odds are for a down day with elevated volatility – watch for a break above 4141.75 for a change in sentiments
The major economic data report is due during the day:
- Retail Sales ( 3.0% vs. 1.9% est.; prev. -1.1% ) 8:30 AM
- Core Retail Sales ( 2.3% vs. 0.9% est.; prev. -0.9%) at 8:30 AM
- Empire State Manufacturing PMI (-5.8 vs. -18.2 est.; prev. -32.9 ) at 8:30 AM
- Capacity Utilization ( 79.1% est.; prev. 78.8%) at 9:15 AM
- Industrial Production ( 0.5% est.; -0.7%) at 9:15 AM
- NAHB Housing Market Index ( 37 est.; prev. 35) at 10:00 AM
- Business Inventories ( 0.3% est.; 0.4%) at 10:00 AM

Directional Bias Before Open:

Weekly: Uptrend
Daily: Uptrend
120-Min: Up-Side

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

Key Levels:

Critical support levels for S&P 500 are 4122.47, 4095.01, and 4072.54
Critical resistance levels for S&P 500 are 4145.96, 4159.77, and 4176.54
The key levels for E-mini futures are a break above 4141.75, the high at 7:00 AM, and a break below 4120.00, the low at 3:15 AM

Pre-Open

On Tuesday at 4:00 PM, S&P futures (March 2023) closed at 4146.25, and the index closed at 4136.13 – a spread of about +10.00 points; the futures closed at 4145.50; the fair value is +0.75
Pre-NYSE session open, futures were lower – at 8:15 AM, S&P 500 futures were down by -18.25, Dow by -109, and NASDAQ by -57.25

Markets Around The World

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

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

Commodities (Compared to two weeks ago):
- Energy futures are mixed
- Precious metals are lower
- Industrial metals are lower
- Soft commodities are mixed
Treasuries (Compared to two weeks ago)
- The 10-year yield closed at 3.761, up +23.2 basis points from two weeks ago;
- The 30-year is at 3.802%, up +14.1 basis points;
- The 2-year yield is at 4.643%, up +43.2 basis points;
- The 10-Year-&-2-Year spread is at -0.882, down from -0.682
- The 30-Year-&-10-Year spread is at 0.041, down from 0.132
VIX
- At 19.09 @ 8:15 AM; up from the last close; below the 5-day SMA;
- Recent high = 23.76 on January 3; low = 17.06 on February 2
- Sentiment: Risk-Off

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

Weekly:	The week ending on February 10 was a Spinning Top red Harami candle near a resistance created by the gap-down move of the week of August 22, 2022 Stochastic (9,1, 3): %K crossed below the %D; RSI-9 is around 60 The week was down -46.02 or 11.1%; the 5-week ATR is 139.46 A down week, second in the last five weeks, and sixth in the previous ten weeks; The weekly pivot point=4109.26, R1=4157.74, R2=4225.01; S1=4041.99, S2=3993.51; No pivot levels were breached Above 10-week EMA and 39-week SMA; below 89-week SMA Uptrend
*Daily*	A small green Doji-like Harami candle near the top of the previous day’s cadnle; Stochastic (9, 1, 3): %K is above %D but turning down; RSI-9 is around 60; above 8-DMA Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA; Uptrend
*2-Hour (E-mini futures)*	The uptrend since January 19, with higher highs and higher lows, was tested on Friday, when the futures came close to the last higher low of 4048.50; a symmetrical triangle is emerging with the price near the lower bound. RSI-21 has dropped below 50 from above 75 At EMA20, which is at EMA10 of EMA50 Bias: Up-Side
*30-Minute (E-mini futures)*	Effectively unchanged from 10:30 AM on February 13 after wildly swinging between 4185.00 and 4100.00 on Tuesday; RSI-21 is moving just below 50 At EMA20, which is At/below EMA10 of EMA50 Bias: Side
*15-Minute (E-mini futures)*	The Bollinger Band (20, 2.0) has been moving sideways to up since 1:30 AM The Bollinger Band has been expanding a bit since 3:15 AM with price walking up the upper band Bias: Side

Previous Session

Major U.S. indices closed mixed on Tuesday, February 14, in mixed volume. NASDAQ Composite Dow Jones Transportation Average, and Wilshire 5000 Total Market Index closed higher. S&P 500, NASDAQ, and Russell 2000 traded in higher volume. Many major indices made Harami or Doji candles. NASDAQ and Transports made relatively large green candles. The Day’s trading was choppy and volatile.

From Briefing.com:

[…]
The 2-yr note yield, which stood at 4.50% just before the report, surged to 4.66% before settling the session at 4.63%. The 10-yr note yield, at 3.68% before the report, surged to 3.79% before settling the session at 3.76%.
[…]
The Nasdaq closed with a decent gain today thanks to an upside pull from several mega cap stocks.
[…]
Most of the S&P 500 sectors registered a decline with real estate (-1.0%) and consumer staples (-0.9%) sinking the bottom of the pack. The heavily weighted information technology (+0.4%) and consumer discretionary (+1.2%) sectors led the outperformers.
[…]

Nasdaq Composite: +14.3% YTD

Russell 2000: +10.1% YTD

S&P Midcap 400: +9.9% YTD

S&P 500: +7.7% YTD

Dow Jones Industrial Average: +2.8% YTD

[…]

Total CPI increased 0.5% month-over-month (Briefing.com consensus 0.5%) following last month’s upwardly revised 0.1% increase (from -0.1%) and core-CPI, which excludes food and energy, increased 0.4% month-over-month (Briefing.com consensus 0.4%) on top of last month’s upwardly revised 0.4% increase (from 0.3%). The index for shelter accounted for nearly half of the monthly all items increase.

On a year-over-year basis, total CPI was up 6.4% — the smallest 12-month increase since the period ending October 2021 — and core-CPI was up 5.6% — the smallest 12-month increase since December 2021. Still, the year-over-year levels were not as low as expected.

[…]
Overseas:

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

Asia: Nikkei +0.6%, Hang Seng -0.2%, Shanghai +0.3%

Commodities:

Crude Oil -0.99 @ 79.11

Nat Gas +0.16 @ 2.57

Gold +2.40 @ 1866.10

Silver +0.02 @ 21.90

Copper +0.02 @ 4.09