Market Remarks

Morning Notes – Wednesday, February 22, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; bounced up more than 20 points  from a low of 3995.50 and 6:L30 AM after breaking a support level around 3998.00
  • The odds are for a down day with a good chance of a sideways move from the pre-open levels around 4010.00 – watch for a break above 4020.50 and a break below 3995.50 for clarity
  • The major economic data report is due during the day:
    • FOMC Meeting Minutes at 2:00 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3989.79, 3973.75, and 3949.06
  • Critical resistance levels for S&P 500 are 4007.86, 4016.06, and 4035.40
  • The key levels for E-mini futures are a break above 4020.75, the high at 7:30 AM, and a break below 3995.50, the low at 6:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (March 2023) closed at 4006.25, and the index closed at 3997.34 – a spread of about +9.00 points; the futures closed at 4005.75; the fair value is +0.50
  • Pre-NYSE session open, futures were higher – at 8:30 AM, S&P 500 futures were up by +6.75, Dow by +36, and NASDAQ by +28.75

Markets Around The World

  • Markets in the East closed down
  • European markets are lower – Switzerland is higher
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • EUR/USD
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.943, up +26.9 basis points from two weeks ago;
    • The 30-year is at 3.966%, up +26.1 basis points;
    • The 2-year yield is at 4.695%, up +22.4 basis points;
    • The 10-Year-&-2-Year spread is at -0.752, up from -0.797
    • The 30-Year-&-10-Year spread is at 0.023, down from 0.031
  • VIX
    • At 23.16 @ 8:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 25.84 on December 13, 2022; low = 18.11 on February 15
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on February 17 was a small red candle that looked like a Doji with a small lower shadow and a relatively large upper shadow.
    • Stochastic (9,1, 3): %K crossed below the %D;
    • RSI-9 is just below 60
  • The week was down -11.37 or 0.3%; the 5-week ATR  is 136.49
  • A down week, third in the last five weeks, and sixth  in the previous ten weeks;
  • The weekly pivot point=4095.60, R1=4143.26, R2=4207.26; S1=4031.44, S2=3983.78; R1 pivot level was breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A relatively large red candle with almost no upper shadow that gapped down at the open
    • Stochastic (9, 1, 3): %K is below %D; below 20
    • RSI-9 is below 40; below 8-DMA
  • Below 20-day EMA and 50-day EMA; above 100-day SMA and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Trending down since the high of 4208.50 reached at 2:00 PM on February 2 – lower lows and lower highs – breaking the uptrend that started on January 19; broke below a symmetrical triangle – the 100% extension target near 3990.00 is almost achieved and the 161.8% extension target is near 3898.00
    • RSI-21 has bounced up from around 15; to above 35
    • Below EMA20, which is below EMA10 of EMA50
  • Bias:  Down
30-Minute (E-mini futures)
  • Trending down since 9:00 PM on February 15; moving sideways since 1:00 PM on Tuesday between 4016.00 and 3995.00
    • RSI-21 has bounced up to around 45 from below 25 and after a Bullish Divergence
    • Above EMA20, but below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 7:15 PM\
  • The Bollinger Band has been expanding a little since 3:30 AM – the price first walked down the lower band, bounced up to the upper band, and then declined to the middle band.
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Tuesday, February 21, in mixed volume. S&P 500 and NASDAQ Composite traded in lower volume.

The major indices gapped down at the open and traded lower for the rest of the day, closing at the lows. All S&P sectors closed lower.

From Briefing.com:

[…]

Including today’s losses, the Dow Jones Industrial Average has given back all of its 2023 gains, down 0.1% on the year. The S&P 500 for its part closed the session just a whisker shy of the 4,000 level.

The 2-yr note yield rose 12 basis points today to 4.73% and the 10-yr note yield rose 13 basis points to 3.96%.

[…]

All 11 sectors closed with a loss, but energy (-0.3%) and consumer staples (-0.3%) were the only sectors to decline less than 1.0%.

[…]
  • Nasdaq Composite: +9.8% YTD
  • Russell 2000: +7.2% YTD
  • S&P Midcap 400: +7.0% YTD
  • S&P 500: +4.1% YTD
  • Dow Jones Industrial Average: -0.1% YTD

Reviewing today’s economic data:

  • February IHS Markit Manufacturing PMI – Prelim 47.8; Prior 46.9
  • February IHS Markit Services PMI – Prelim 50.5; Prior 46.8
  • January Existing Home Sales 4.00 mln (Briefing.com consensus 4.12 mln); Prior was revised to 4.03 mln from 4.02 mln
[…]

Overseas: 

  • Europe: DAX -0.5%, FTSE -0.5%, CAC -0.4%
  • Asia: Nikkei -0.2%, Hang Seng -1.7%, Shanghai +0.5%

Commodities: 

  • Crude Oil -0.28 @ 76.29
  • Nat Gas -0.22 @ 2.07
  • Gold -10.00 @ 1841.30
  • Silver +0.13 @ 21.87
  • Copper +0.10 @ 4.21
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