Directional Bias For The Day:
- S&P Futures are higher; fluctuating between 2886.00 and 2865.00 since 1:00 AM
- Double Top on 30-Minute and 15-Minute chart
- The odds are for a sideways to down day, from pre-open levels around 2875.00, with elevated volatility – watch for break above 2886.25 for change of fortune
- Key economic data due:
- ADP Non-Farm Employment Change ( -20236K vs. -20500K est.; prev. -149K ) at 8:15 AM
Directional Bias Before Open:
- Critical support levels for S&P 500 are 2863.55, 2844.24 and 2817.12
- Critical resistance levels for S&P 500 are 2887.51, 2897.84 and 2917.80
- Key levels for eMini futures: break above 2886.25, the high of 6:00 AM and break below 2865.25, the low of 8:30 AM
- On Tuesday at 4:00 PM, S&P future (June 2020) closed at 2858.75 and the index closed at 2868.44 – a spread of about -9.75 points; futures closed at 2858.25 for the day; the fair value is +0.50
- Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +8.25; Dow by +68 and NASDAQ by +36.75
Markets Around The World
- Markets in the East were mostly up – Sydney was down; Tokyo was closed for trading
- European markets are mixed – U.K., Italy, Switzerland and STOXX 600 are up Germany, France and Spain are down
- Dollar index
- Crude Oil
- 10-yrs yield is at 0.698%, up from May 5 close of 0.657%;
- 30-years is at 1.375%, up from 1.330%
- 2-years yield is at 0.196% up from 0.176%
- The 10-Year-&-2-Year spread is at 0.502 up from 0.481
- Is at 32.33 down -1.28 from May 5 close; above 5-day SMA;
- Down from all time high of 85.47 on March 18; recent high 47.77 on April 21, recent low 30.54 on April 28
- Sentiment: Risk-On
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 higher on Tuesday, May 5 in mixed volume. Dow Jones Transportation Average and S&P 500 traded in lower volume. Indices gapped higher at the open and then moved higher. However, they gave a major portion of gain in the last hour of trading and closed near the lows.
The S&P 500 rallied as much as 2.0% on Tuesday, as investors continued to buy into the reopening narrative, but stocks pared gains late in the day to leave the benchmark index up 0.9% for the session. The Nasdaq Composite increased 1.1%, the Dow Jones Industrial Average increased 0.6%, and the Russell 2000 increased 0.8%.[…]
The S&P 500 financials sector (-0.1%) slipped into negative territory amid the late-session decline, while the health care sector (+2.2%) was minimally affected. The reopening enthusiasm still buoyed oil prices ($24.53/bbl, +4.16, +20.4%) by 20% amid expectations for a demand recovery.[…]
U.S. Treasuries ended the session little changed. The 2-yr yield was unchanged at 0.17%, and the 10-yr yield increased two basis points to 0.66%. The U.S. Dollar Index increased 0.3% to 99.78.[…]
• The ISM Non-Manufacturing Index for April dropped to 41.8% (Briefing.com consensus 38.5%) from 52.5% in March. A number below 50.0% is indicative of contraction. The April reading was the lowest reading for the index since March 2009.
o The key takeaway from the report is that, like the ISM Manufacturing Index, it was not as “good” as the headline number suggests given that there was a spike in the Supplier Deliveries Index (to all-time high 78.3% from 62.1%), which is largely indicative of supply problems due to the COVID-19 impact.
• The Trade Balance report for March showed a widening in the deficit to $44.4 billion (Briefing.com consensus -$44.2 billion) from an upwardly revised $39.8 billion (from -$39.9 billion) for February. Exports were down $20.0 billion from February while imports were down $15.4 billion.
o The widening in the deficit was the result of exports declining more than imports, yet the key takeaway is that the large declines in both reflect weak trade activity in the wake of COVID-19 shutdown issues that only got worse in April.