Morning Notes – Friday, March 18, 2022

/ March 18, 2022

Directional Bias For The Day:

  • S&P Futures are lower at 8:45 AM; down more than 20 points since 2:30 Am and down more than 30 points since 4:00 PM
  • The odds are for a down day with elevated volatility; watch for a break above 4382.50 for a change of sentiments;
  • Key economic data report due during the day:
    • Existing Home Sales ( 6.10M est.; prev. 6.50M) at 10:00 AM
    • CB Leading Index (0.5% est.; prev. -0.3% ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4373.81, 4355.15, and 4343.98
  • Critical resistance levels for S&P 500 are 4384.89, 4410.46, and 4416.78
  • Key levels for E-mini futures: break above 4382.50, the high of 5:30 AM on Monday and break below 4364.50, the low of 7:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (June 2022) closed at 4405.00 and the index closed at 4411.67 – a spread of about -6.75 points; futures closed at 4402.00 for the day; the fair value is +3.00
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -26.50; Dow by -170; and NASDAQ by -94.50

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong closed lower; Mumbai was closed
  • European markets are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • INR/USD
    • GBP/USD
    • AUD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.160%, up +31.6 basis points from two weeks ago;
    • 30-years is at 2.447%, up +22.0 basis points;
    • 2-years yield is at 1.922%, up +38.2 basis points;
    • The 10-Year-&-2-Year spread is at 0.238, down from 0.304
    • The 30-Year-&-10-Year spread is at 0.287, down from 0.383
  • VIX
    • At 26.54 @ 8:00 AM; up from the last close; below the 5-day SMA;
    • Recent high = 37.52 on March 8; low = 23.88 on February 16
    • Sentiment: Risk-Neutral-Off

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 March 11 was a large red candle with almost no upper shadow and a small lower shadow;
    • Stochastic (9,1, 3): %K crossed below %D; below 30;
    • RSI-9 is just above 30
  • The week was down -124.56 or -2.9%; the 5-week ATR  is 185.98
  • A down week; fourth in the last five weeks, and seventh in the previous ten weeks
  • The weekly pivot point=4229.73, R1=4301.59, R2=4398.87; S1=4132.45, S2=4060.59; S1/S2 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • In Correction
Daily
  • A green candle with a small lower shadow and almost no upper shadow; broke above a downtrend line from the all-time highs; the sequence of lower lows and lower highs is broken;
    • Stochastic (9, 1, 3): %K is above %D; near 100
    • RSI-9 is above 60; above 8-day EMA;
  • Above 20-day EMA; below 50-day EMA, 100-day SMA, 200-day SMA
  • In Confirmed Uptrend
2-Hour (E-mini futures)
  • Retreating to a broken downtrend line from the all-time highs; completed a Double Bottom pattern – the 61.8% extension target is near 4445.00 and the 100% extension target is near 4515.00;
    • RSI-21 has declined from 85 at 10:00 AM on Wednesday to just above 50 and after making a Bearish Divergence
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Drifting down since 4:00 PM on Thursday; just above a support level around 4368.00; broke above a Horizontal Channel on Thursday – the 61.8% extension target near 4397.00 is achieved; the 100% extension target is near 4415.00
    • RSI-21 is declining since 3:30 PM to just below 50
    • At/below EMA10 of EMA50, which is below EMA20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 4:15 PM
  • The Bollinger Band is expanding slightly since 1:15 AM; price first walked up the upper band, then walked down the lower band, and then bounced up to the middle band
    • Stochastic (9, 1, 3): %K is crossing below %D at 8:45 AM;
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Thursday, March 17, in lower volume. Major indices opened up and then mostly traded higher for the rest of the day.

From Briefing.com:

The S&P 500 rose 1.2% on Thursday, extending its rebound rally to a third straight day. The Dow Jones Industrial Average (+1.2%) and Nasdaq Composite (+1.3%) kept pace with the benchmark index while the Russell 2000 (+1.7%) pulled ahead of its large-cap peers.

All 11 S&P 500 sectors closed in positive territory with gains ranging from 0.5% (utilities) to 3.5% (energy). Advancing issues outpaced declining issues by roughly a 4:1 margin at the NYSE and a 3:1 margin at the Nasdaq.

[…]

Stocks appeared to key off the price action in the 10-yr Treasury note yield, which settled unchanged at 2.19% after dipping below 2.11% overnight.

[…]

The 2-yr yield fell four basis points to 1.94%. The U.S. Dollar Index fell 0.7% to 97.97

[…]

With today’s advance, the S&P 500 finished 5.7% above Monday’s close, versus 8.2% and 6.4% gains in the Nasdaq Composite and Russell 2000, respectively. Over the same three-day period, the CBOE Volatility Index (25.67, -1.00, -3.8%) has dropped 19%.

[…]
  • February housing starts increased 6.8% month-over-month to a seasonally adjusted annual rate of 1.769 million (Briefing.com consensus 1.700 million) and building permits slipped 1.9% to a seasonally adjusted annual rate of 1.859 million (Briefing.com consensus 1.860 million).
  • […]
  • Initial jobless claims for the week ending March 12 decreased by 15,000 to 214,000 (Briefing.com consensus 224,000) and continuing claims for the week ending March 5 decreased by 71,000 to 1.419 million, hitting their lowest level since February 21, 1970.
  • […]
  • Total industrial production increased 0.5% month-over-month in February (Briefing.com consensus 0.5%) following an unrevised 1.4% increase in January. The capacity utilization rate rose to 77.6% (Briefing.com consensus 77.9%) from a downwardly revised 77.3% (from 77.6%) in January.
  • […]
  • The Philadelphia Fed Index for March increased to 27.4 (Briefing.com consensus 14.0) from 16.0 in February.
[…]
  • Dow Jones Industrial Average -5.1% YTD
  • S&P 500 -7.4% YTD
  • Russell 2000 -8.0% YTD
  • Nasdaq Composite -13.0% YTD

Overseas: 

  • Europe: DAX -0.4%, FTSE +1.3%, CAC +0.4%
  • Asia: Nikkei +3.5%, Hang Seng +7.0%, Shanghai +1.4%

Commodities: 

  • Crude Oil +8.01 @ 103.43
  • Nat Gas +0.21 @ 5.01
  • Gold +32.00 @ 1941.40
  • Silver +0.76 @ 25.44
  • Copper +0.11 @ 4.71
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