Morning Notes – Thursday June 11, 2020

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down day with good chance of sideways to up move from pre-open levels near 3100.00;  elevated volatility – watch for break above 3144.75 for change of sentiments
  • Key economic data due:
    • Core PPI (-0.1% vs. -0.1% est.; prev. -0.3%) at 8:30 AM
    • PPI (0.4% vs. 0.1% est.; prev. -1.3%) at 8:30 AM
    • Unemployment Claims (1542K vs. 1550K est.; prev. 1877K) at 8:30 AM

Directional Bias Before Open:

  • Weekly: Uptrend since March 23
  • Daily: Uptrend since March 23
  • 120-Min: Up-Side
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for S&P 500 are 3090.41, 3080.95 and 3060.76
  • Critical resistance levels for S&P 500 are 3130.94, 3163.84 and 3181.49
  • Key levels for E-mini futures: break above 3120.00, the low of 4:30 AM and break below 3087.50, the low of 2:00 PM on June 4


  • On Wednesday at 4:00 PM, S&P futures (June 2020) closed at 3188.00 and the index closed at 3190.14 – a spread of about -2.25 points; futures closed at 3186.00 for the day; the fair value is +2.00
  • Pre-NYSE session open, futures are lower- at 8:45 AM, S&P 500 futures were down by -80.50; Dow by -890 and NASDAQ by -152.00

Markets Around The World

  • Markets in the East closed lower
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Palladium
    • Crude Oil
    • Copper
    • Platinum
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.682%, down from June 10 close of 0.748%;
    • 30-years is at 1.441%, down from 1.520%
    • 2-years yield is at 0.185% up from 0.181%
    • The 10-Year-&-2-Year spread is at 0.497 down from 0.567
  • VIX
    • Is at 32.14; up +4.57 from June 10 close; above 5-day SMA;
    • Recent high 39.28 on May 14; low 23.54 on June 5
    • Sentiment: Risk-Off

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

  • Uptrend under pressure
  • May 2020 was a green candle with small upper shadow and a lower shadows that was one third of the real body;
    • Stochastic %K is above %D and above 60; %K Bearish Divergence in January
    • RSI-9 turning up after declining to 34.91, the lowest level since April 2009, from above 75 in January and Bearish Divergence
    • Regaining the middle band of the 120-month regression channel after only third break of channel since 2009 and first close below it
  • Sequence of higher highs and higher lows broken
  • The week ending on May 29 was a green spinning top candle breaking away from a congestion area;
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI (9) is above 50
  • The week was up +88.86 or +3.0%; the 5-week ATR is 135.31
  • The weekly week pivot point =3027.58, R1=3085.40, R2=3126.50; S1=2986.48, S2=2928.66; R1/R2/R2 pivot level were breached
  • An up week; third in last five weeks and sixth in last ten weeks
  • All time high of 3393.52, the last swing high, was during the week of February 17; broke below the low of the week of December 24, 2018; support near 2193.81, the high during the week of August 15, 2016; sequence of higher highs and higher lows broken
  • Above 10-week EMA; at/below 39-week SMA; above 89-week SMA
  • Uptrend since March 23
  • A Bearish Engulfing candle over a small Harami Doji; broke below June 8 candle, which was the highest since February 25 and near a resistance level
    • %K is crisscrossing %D;
    • RSI-9 declined to near 70 from above 80; below 8-day RSI;
  • Above, in order, 20-day EMA, 200-day SMA, 50-day EMA and 100-day
  • Uptrend since March 23
2-Hour (E-mini futures)
  • Moving down since 4:00 PM on June 8 after Bearish Divergence; broke below a symmetrical triangle;
    • RSI-21 declined from above 85 on June 5 to near 20
    • %K is crisscrossing %D below 20
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Broke below a symmetrical triangle / trading range at 3:30 PM on Wednesday; near 3100.00, which was a congestion zone in early June
    • RSI-21 has declined from above 75 to below 30
    • %K is below %D; near 10
  • Below EMA20, which is below EMA10 of EMA50
  • Bias:Down
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving down since 6:00 AM on Wednesday
  • The Bollinger Band was relative stable, but large, from 5:30 AM to 8:00 AM; expanding since with price mostly walked down the lower
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Down

Previous Session

Major U.S. indices closed mostly lower on Wednesday, June 10 in higher volume. Most indices are making Evening Star pattern, albeit spread over more than three days. NASDAQ Composite closed higher but made a doji. Most indices are also near resistance zones. NASDAQ is leading the market and made all time high on Wednesday.


The S&P 500 declined 0.5% on Wednesday in a volatile session following the June FOMC statement, while the Nasdaq Composite rose 0.7% to close at another record high. The Dow Jones Industrial Average (-1.0%) and Russell 2000 (-2.6%) continued to pull back from recent gains.


After the release of the policy directive, the S&P 500 erased prior losses and gained as much as 0.5%, but stocks quickly retraced those gains during Fed Chair Powell’s press conference. Mr. Powell didn’t say anything particularly new, reiterating the Fed’s commitment to supporting the economy, but he did subtly urge Congress to do more.


Within the S&P 500 sectors, the information technology sector was in a league of its own, rising 1.7% while no other sector finished higher.

The energy (-4.9%) and financials (-3.8%) sectors were hit relatively hard, with the financials space pressured by the Fed’s acknowledgement of low rates for a while longer.


In the Treasury market, longer-dated maturities saw greater demand following the FOMC statement. The 2-yr yield declined three basis points to 0.17%, and the 10-yr yield declined eight basis points to 0.75%. The U.S. Dollar Index declined 0.3% to 96.02. WTI crude gained 1.6%, or $0.62, to $39.54/bbl.


• The Consumer Price Index for May declined 0.1% m/m ( consensus 0.0%) following a 0.8% decline in April. Core CPI, which excludes food and energy, also declined 0.1% ( consensus 0.0%). That was the third straight monthly decline in core CPI, which is something that has never happened before.
o The key takeaway from the report is that it shows a trend of disinflation that will keep the Fed favoring easy monetary policy and asset purchases for some time.
• The weekly MBA Mortgage Applications Index rose 9.3% following a 3.9% decline in the prior week.

Print Friendly, PDF & Email