Morning Notes – Monday, December 12, 2022

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; gradually drifting higher since 8:0 PM on Sunday; up more than 20poinst
  • The odds are for a sideways to up day from pre-open levels – watch for a break above 3983.50 and a break below 3962.25 for clarity
  • No major economic data report is due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3933.04, 3923.00, and 39006.54
  • Critical resistance levels for S&P 500 are 3956.68, 3977.02, and 4001.51
  • The key levels for E-mini futures: break above 3983.50, the high at 8:45 AM, and a break below 3962.25, the low of 3:45 AM


  • On Friday at 4:00 PM, S&P futures (March 2023) closed at 3968.25, and the index closed at 3934.38 – a spread of about +33.25 points; the futures closed at 3968.25; the fair value is +0.00
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +10.00, Dow by +67, and NASDAQ by +26.75

Markets Around The World

  • Markets in the East closed lower
  • European markets are mostly lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.529%, down -16.2 basis points from two weeks ago;
    • The 30-year is at 3.497%, down -25.4 basis points;
    • The 2-year yield is at 4.361%, down -11.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.832, down from -0.789
    • The 30-Year-&-10-Year spread is at -0.032, down from 0.060
  • VIX
    • At 24.26 @ 8:15 AM; up from the last close; above the 5-day SMA;
    • Recent high = 26.59 on November 10; low = 18.95 on December 2
    • Sentiment: Risk-Off

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

  • The week ending on December 2 was a red candle with almost no upper and lower shadows, forming a three-bar Evening Star pattern
    • Stochastic (9,1, 3): %K crossed below %D from above 90;
    • RSI-9 is around 50
  • The week was down -137.32 or -3.4%; the 5-week ATR  is 159.28
  • A down week, second in the last five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=3968.41, R1=4018.42, R2=4102.47; S1=3884.36, S2=3834.35; S1 pivot level was breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
  • A relatively small red candle with almost no lower shadow and an upper shadow equal to the real body
    • Stochastic (9, 1, 3): %K crossed below %D; below 20
    • RSI-9 is just below 45; below 8-day EMA;
  • Above 20-day EMA and 50-day EMA; at/above 100-day SMA; below 200-day SMA;
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Declining since 8:00 AM on Friday;
    • RSI-21 is around 50
    • Above EMA20 but below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Drifting up since 8:00 PM on Sunday
    • RSI-21 is moving up; around 50
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 10:00 PM
  • The Bollinger Band has been contracting a bit since 8:30 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Friday, December 9, in mostly higher volume. Dow Jones Transportation Average traded in lower volume. The major indices opened up and then traded sideways until the afternoon when there started to decline. The decline increased in the last half-hour of trading.

For the week, major indices closed up for the week. The markets in Asia were mostly up, and the European markets were mixed. The dollar index closed down; the energy futures were mixed; the precious and industrial metals closed up, and the soft commodities were mixed. The US Treasury yields were down.



For most of the session the main indices clung to narrow trading ranges near their flat lines with both buyers and sellers lacking conviction. Things deteriorated noticeably, however, with about 30 minutes left in the session when the S&P 500 cracked an intraday support zone in the 3955 area.


The 10-yr note yield rose eight basis points today to 3.57%. The 2-yr note yield, meanwhile, rose by two basis points to 4.34%.

The late afternoon sell off, which had the semblance of a sell program, left ten of the 11 S&P 500 sectors in negative territory.

  • Dow Jones Industrial Average: -7.9% YTD
  • S&P Midcap 400: -13.1% YTD
  • Russell 2000: -20.0% YTD
  • S&P 500: -17.5% YTD
  • Nasdaq Composite: -29.7% YTD
  • The Producer Price Index for final demand increased 0.3% month-over-month in November ( consensus +0.2%) following an upwardly revised 0.3% increase (from 0.2%) in October. The index for final demand, less foods and energy, increased 0.4% month-over-month ( consensus +0.2%) following an upwardly revised 0.1% increase (from 0.0%) in October.
  • On a year-over-year basis, the index for final demand was up 7.4%, versus 8.1% in October, and the index for final demand, less foods and energy, was up 6.2%, versus 6.8% in October.
  • […]
  • Wholesale Inventories fell to 0.5% in October from a revised 0.8% in September (from 0.6%).
  • The preliminary December University of Michigan Index of Consumer Sentiment checked in at 59.1 ( consensus 57.0) versus the final reading of 56.8 for November. In the same period a year ago, the index stood at 70.6.
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