Morning Notes – Friday, February 17, 2023

Directional Bias For The Day:

• S&P Futures are lower at 7:00 AM; trending down since 2:30 PM on Thursday – down more than 80 points
• The odds are for a down day with elevated volatility – watch for a break above 4083.50 for a change in sentiments
• The major economic data report is due during the day:
  • Import Prices ( -0.1% est.; prev. 0.4% ) 8:30 AM
  • CB Leading Index ( -0.3% est.; prev. 0.8%) at 10:00 AM

Directional Bias Before Open:

Key Levels:

• Critical support levels for S&P 500 are 4060.79, 4037.20, and 4015.55
• Critical resistance levels for S&P 500 are 4091.07, 4102.46, and 4130.60
• The key levels for E-mini futures are a break above 4083.50, the high at 2:30 AM, and a break below 4063.25, the low at 3:30 AM

Pre-Open

• On Thursday at 4:00 PM, S&P futures (March 2023) closed at 4099.75, and the index closed at 490.41 – a spread of about +9.25 points; the futures closed at 4099.75; the fair value is 0.0
• Pre-NYSE session open, futures were lower – at 6:45 AM, S&P 500 futures were down by -29.75, Dow by -176, and NASDAQ by -119.25

Markets Around The World

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

• Commodities (Compared to two weeks ago):
  • Energy futures are mixed
  • Precious metals are lower
  • Industrial metals are mostly lower
  • Soft commodities are mixed
• Treasuries (Compared to two weeks ago)
  • The 10-year yield closed at 3.843, up +44.7 basis points from two weeks ago;
  • The 30-year is at 3.904%, up +34.9 basis points;
  • The 2-year yield is at 4.665%, up +55.7 basis points;
  • The 10-Year-&-2-Year spread is at -0.822, down from -0.712
  • The 30-Year-&-10-Year spread is at 0.061, down from 0.159
• VIX
  • At 21.05 @ 6:30 AM; up from the last close; above 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:

Previous Session

Major U.S. indices closed lower on Thursday, February 16, in higher volume. The major indices gapped down at the open but turned around and rose steadily until the last hour of trading, when they gave up the ghost and declined sharply, closing at the low for the day. All S&P sectors closed lower.

From Briefing.com:

[…] The stock market started, and ended, today’s session on a decidedly downbeat note. […] The main indices sank shortly after the open, but there was a fairly strong recovery effort taking place throughout most of the session. […] There was a sharp reversal in the last hour of trading that had the major indices close the session at or near their worst levels of the day, which took the S&P 500 below 4,100 again. […] Declining issues outpaced advancing issues by a nearly 3-to-1 margin at the NYSE and a 2-to-1 margin at the Nasdaq. All 11 S&P 500 sectors registered losses that ranged from 0.8% (consumer staples) to 2.2% (consumer discretionary). […] The 2-yr note yield, which stood at 4.60% before today’s data was released, settled the session up three basis points at 4.63% after hitting 4.68% immediately following this morning’s releases. Similarly, the 10-yr note yield went from 3.79% to 3.86% following the data and settled the session up three basis points at 3.84%. Yields continued to creep higher following today’s settlement and stood at 4.67% and 3.86%, respectively, as of this writing. Nasdaq Composite: +13.3% YTD Russell 2000: +10.3% YTD S&P Midcap 400: +9.9% YTD S&P 500: +6.5% YTD Dow Jones Industrial Average: +1.7% YTD […] January Housing Starts 1.309 mln (Briefing.com consensus 1.355 mln); Prior was revised to 1.371 mln from 1.382 mln; January Building Permits 1.339 mln (Briefing.com consensus 1.350 mln); Prior was revised to 1.337 mln from 1.330 mln […] January PPI 0.7% (Briefing.com consensus 0.4%); Prior was revised to -0.2% from -0.5%; January Core PPI 0.5% (Briefing.com consensus 0.3%); Prior was revised to 0.3% from 0.1% […] Weekly Initial Claims 194K (Briefing.com consensus 203K); Prior was revised to 195K from 196K; Weekly Continuing Claims 1.696 mln; Prior was revised to 1.680 mln from 1.688 mln […] February Philadelphia Fed Index -24.3 (Briefing.com consensus -8.0); Prior -8.9 […] Overseas:  Europe: DAX +0.2%, FTSE +0.2%, CAC +0.9% Asia: Nikkei +0.7%, Hang Seng +0.8%, Shanghai -1.0% Commodities:  Crude Oil -0.08 @ 78.48 Nat Gas -0.05 @ 2.40 Gold +6.50 @ 1852.00 Silver +0.09 @ 21.70 Copper +0.12 @ 4.14