Morning Notes – Monday, February 7, 2022

Directional Bias For The Day:

  • S&P Futures are higher at 8:45 AM; moved up 30 points since 4:45 AM
  • The odds are for an up day with elevated volatility; watch for a break above 4472.50 for a change of sentiments
  • No key economic data report due during the day:

Directional Bias Before Open:

  • Weekly: Correction
  • Daily: Confirmed Uptrend
  • 120-Min: Down-Side
  • 30-Min: Up-Side
  • 15-Min: Down-Side
  • 6-Min: Side-Up

Key Levels:

  • Critical support levels for S&P 500 are 4499.81, 4477.80, and 4451.50\
  • Critical resistance levels for S&P 500 are 4538.07, 4583.41, and 4595.31
  • Key levels for E-mini futures: break above 4507.50, the high of 8:15 AM and break below 4472.50, the low of 3:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (March 2022) closed at 4491.25 and the index closed at 4500.53 – a spread of about -9.25 points; futures closed at 4492.50 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +8.00; Dow by +-28; and NASDAQ by +33.50

Markets Around The World

  • Markets in the East closed mostly lower – Hong Kong and Singapore closed up; Shanghai was closed
  • European markets are mostly higher – Spain and Italy are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • Dollar index
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.930%, up +18.3 basis points from two weeks ago;
    • 30-years is at 2.233%, up +16.9 basis points;
    • 2-years yield is at 1.316%, up +30.0 basis points;
    • The 10-Year-&-2-Year spread is at 0.614, down from 0.731
    • The 30-Year-&-10-Year spread is at 0.303, down from 0.317
  • VIX
    • At 23.54 @ 8:15 AM; up from the last close; above the 5-day SMA;
    • Recent high = 38.9 on January 24; low = 20.46 on February 2
    • Sentiment: Risk-On

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

Monthly
  • December 2021 was a green candle that opened above the previous week’s real-body and closed higher with a small upper shadow and a slightly longer lower shadow; at all-time highs
    • Stochastic (9, 1, 3): %K crossed above %D; above 90;
    • RSI-9 is turning up from above 75;
    • Above the upper band of a 120-month regression channel;
  • Confirmed Uptrend: sequence of higher highs and higher lows
Weekly:
  • The week ending on February 2 was a green candle¬† with a long upper shadow and almost no lower shadow
    • Stochastic (9,1, 3): %K is crossing above %D from near zero
    • RSI-9 has turned up; just below 40
  • The week was up +33.91 or +1.5%; the 5-week ATR¬† is 200.38
  • An up week; second in the last five weeks, and fifth in the previous ten weeks
  • The weekly pivot point=4504.29, R1=4592.55, R2=4684.58; S1=4411.26, S2=4322.00; R1 pivot level was breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • A green spinning top indecisive candle;
    • Stochastic (9, 1, 3): %K is below %D
    • RSI-9 is turning up just below 50; above 8-day EMA;
  • Below 20-day EMA, 50-day EMA, and 100-day SMA; above 200-day SMA
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Moving down since 12:00 PM on February 2 from a resistance level at the downtrend line from the all-time highs; downtrend since January 4 – lower lows and lower highs;
    • RSI-21 moved up from below 40 to 50
    • At/below EMA 20, at/above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving sideways to up since 12:00 PM on February 3 with an 80-point range
    • RSI-21 is moving up; just above 50
    • Above EMA20, which is at/below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting sideways since 9:30 PM
  • The Bollinger Band is expanded but stable
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mostly higher on Friday, February 4, in mixed volume. Dow Jones Industrial Average and Dow Jones Transportation Average closed lower. S&P 500 and Dow Transports traded in higher volume.

For the week, the major US indices closed higher in lower volume. The markets in Asia closed up but European bourses closed mostly lower. The dollar index was down, energy futures were mixed, and metals and soft commodities were mostly up. The US Treasury yields closed up.

From Briefing.com:

The S&P 500 gained 0.5% on Friday in a session featuring earnings relief from Amazon.com (AMZN 3152.79, +375.88, +13.5%) and Snap (SNAP 38.75, +14.25, +58.2%), a surprising January employment report, rising Treasury yields, and uncomfortably high oil prices ($92.30/bbl, +2.08, +2.3%).

The Russell 2000 (+0.6%) kept pace with the benchmark index while the Nasdaq Composite (+1.6%) outperformed and the Dow Jones Industrial Average (-0.1%) closed lower. The market was contending with dueling trading narratives throughout the day.

[…]

Amazon carried the S&P 500 consumer discretionary sector (+3.7%) to the top of the sector leaderboard. The financials (+1.7%) and energy (+1.6%) sectors followed suit, while the materials (-1.7%), consumer staples (-1.2%), and industrials (-1.1%) sectors were among six sectors that closed lower.

[…]

Accordingly, the 2-yr yield rose 13 basis points to 1.32%, and the 10-yr yield rose ten basis points to 1.93%. The U.S. Dollar Index increased 0.1% to 95.44.

[…]
  • January nonfarm payrolls increased by 467,000 (Briefing.com consensus 180,000). December nonfarm payrolls revised to 510,000 from 199,000.
  • […]
  • January unemployment rate was 4.0% (Briefing.com consensus 3.9%), versus 3.9% in December.
  • January average hourly earnings increased 0.7% (Briefing.com consensus 0.5%) versus a downwardly revised 0.5% increase (from 0.6%) in December.
[…]
  • Dow Jones Industrial Average -3.4% YTD
  • S&P 500 -5.6% YTD
  • Nasdaq Composite -9.9% YTD
  • Russell 2000 -10.8% YTD
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