Directional Bias For The Day:
- S&P Futures are lower; moving sideways to up since 6:00 PM on Sunday after a gap down open for the week
- The odds are for a sideways to an up day with elevated volatility and substantial potential to reverse the bounce and resume downtrend
- Key economic data due:
- ISM Manufacturing PMI (est. 53.0; prev.52.8) at 10:00 AM
- Construction Spending (est. 0.5%; prev. -0.9%) at 10:00 AM
- ISM Manufacturing Prices (est. 51.5; prev. 50.0) at 10:00 AM
- Total Vehicle Sales (est. 16.8M; prev. 16.4M) All Day
Markets Around The World
- Markets in the East closed mixed – Shanghai, Hong Kog, Tokyo and Sydney were down; Mumbai, Seoul and Singapore were up
- European markets are lower
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.112%, down from May 31 close of 2.142%;
- 30-years is at 2.562%, down from 2.583%
- 2-years yield is at 1.892%, down from 1.940%
- The 10-Year-&-2-Year spread is at 0.220, down from 0.202
- Critical support levels for S&P 500 are 2747.61, 2744.13 and 2731.19
- Critical resistance levels for S&P 500 are 2760.69, 2764.36 and 2768.80
- Key levels for eMini futures: break above 2751.50, the low of 9:30 AM on May 31; break above 2759.00, the high of 3:30 PM on Friday; and break below 2741.25, the low of 6:30 AM
- On Friday, at 4:00 PM, S&P future (June contract) closed at 2752.00 and the index closed at 2752.06 – a spread of about -0.00 points; futures closed at 2752.50 for the day; the fair value is -0.50
- Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -4.25; Dow by -41 and NASDAQ by -22.50
Directional Bias Before Open
- Weekly: Uptrend under pressure
- Daily: Uptrend under pressure
- 120-Min: Down
- 30-Min: Down-Side
- 15-Min: Down-Side
- 6-Min: Side-Up
The trend and patterns on various time frames for S&P 500:
|2-Hour (e-mini future)||
|30-Minute (e-mini future)||
|15-Minute (e-mini future)||
Major U.S. indices closed sharply lower on Friday, May 31 in higher volume. Indices gapped down at the open and the mostly declined for the rest of the day. The down gap created a2-day hanging island, which is quite bearish.
For the week, the major indices decline in mostly lower volume. Dow Jones Transportation Average traded n higher volume during the week. Only Utility, Healthcare and Real Estate were up for the week.
U.S. stocks, Treasury yields, and oil prices all dropped on Friday after President Trump surprised the market by threatening to impose a 5% tariff rate on all goods imported from Mexico. Friday’s 1.3% decline in the S&P 500 sent it below its 200-day moving average (2776) and extended its weekly decline to 2.6%.
The Dow Jones Industrial Average (-1.4%), the Nasdaq Composite (-1.5%), and the Russell 2000 (-1.4%) extended their weekly losses to 3.0%, 2.4%, and 3.2%.
Global growth concerns were transparent by the 5.2% drop in WTI crude ($53.48/bbl, -$2.92) and by investors seeking safety in a crowded U.S. Treasury market. The 2-yr yield dropped 12 basis points to 1.94%, and the 10-yr yield dropped nine basis points to 2.14%. The U.S. Dollar Index fell 0.4% to 97.76.
• Personal income increased 0.5% in April (Briefing.com consensus 0.3%) on top of a 0.1% increase in March. Personal spending rose 0.3% (Briefing.com consensus 0.2%) on top of an upwardly revised 1.1% increase (from 0.9%) in March. The PCE Price Index was up 0.3% m/m, as expected, while the core PCE Price Index, which excludes food and energy, jumped 0.2%, as expected.
o The key takeaway from the report is that real PCE was unchanged in April. That will be another data point that leads to forecasts calling for much slower real GDP growth in the second quarter than the 3.1% real GDP growth seen in the first quarter.
• The final May reading for the University of Michigan Index of Consumer Sentiment checked in at 100.0 (Briefing.com consensus 101.5) versus the preliminary reading of 97.2.
o The key takeaway from the report was the acknowledgment that “confidence significantly eroded in the last two weeks of May” on account of concerns about the tariff actions.
• The Chicago PMI for May increased to 54.2 from 52.6 in April.