Morning Notes – Wednesday June 17, 2020

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up to sideways day with elevated volatility; good chance of sideways to down move from pre-open levels around 3125.00 – watch for break below 3096,50 for change of sentiments
  • Key economic data due:
    • Building Permits ( 1.22M vs. 1.23M est.; prev. 1.07M) at 8:30 AM
    • Housing Starts Core Retail Sales (12.4% vs. 5.5% est.; prev. -15.2%) at 8:30 AM
    • Fed Chair Testimony at 12:00 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3104.49, 3076.06 and 3043.61
  • Critical resistance levels for S&P 500 are 3140.15, 3153.45 and 3199.21
  • Key levels for E-mini futures: break above 3147.00, the high of 4:00 AM and break below 3096.50, the low of 10:30 PM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2020) closed at 3115.75 and the index closed at 3124.74 – a spread of about -3.00 points; futures closed at 3118.25 for the day; the fair value is -2.50
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +11.25; Dow by +77 and NASDAQ by +53.25

Markets Around The World

  • Markets in the East closed mostly higher – Tokyo and Mumbai closed lower
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • NatGas
    • Silver
    • Copper
    • Coffee
    • Cotton
    • Cocoa
    • Crude Oil
    • Gold
    • Platinum
    • Palladium
    • Sugar
  • Bond
    • 10-yrs yield is at 0.745%, down from June 16 close of 0.756;
    • 30-years is at 1.537%, down from 1.539%
    • 2-years yield is at 0.197% down from 0.217%
    • The 10-Year-&-2-Year spread is at 0.548 up from 0.539
  • VIX
    • Is at 33.02; down -0.65 from June 16 close; below 5-day SMA;
    • Recent high 44.44 on June 15; low 23.54 on June 5
    • Sentiment: Risk-Neutral

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

Monthly
  • 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
Weekly:
  • The week ending on June 12 was a large red candle that could pass as an almost Bearish Engulfing formation; small upper and lower shadows but in comparison to the real body
    • Stochastic (9,1, 3): %K is below %D;
    • RSI (9) turned down to near 50
  • The week was down -152.62 or -4.8%; the 5-week ATR is 167.57
  • The weekly week pivot point =3086.30, R1=3188.14, R2=3334.96; S1=2939.48, S2=2837.65; S1 pivot level was breached
  • A down week; second in last five weeks and fourth 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 is under pressure
Daily
  • A Doji candle that gapped up at the open;
    • %K is above %D;
    • RSI-9 is above 50; below 8-day RSI;
  • Above 20-day EMA; above 200-day SMA, above 50-day EMA and 100-day
  • Uptrend since March 23 is under pressure
2-Hour (E-mini futures)
  • Moving up from 2923.75 at 2:00 AM on Monday to near 3150.00; moving sideways since 10:00 PM on Monday
    • RSI-21 moving around 65
    • %K is crisscrossing %D around 70
  • Above EMA10 of EMA50, which is above EMA20
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways since 10:30 PM on June 15;
    • RSI-21 is above 50
    • %K is crisscrossing %D lower;
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways to up since 12:00 AM on Tuesday
  • The Bollinger Band relatively stable
    • Stochastic (9, 1, 3): %K is below %D since 8:30 AM
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Tuesday, June 16 in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in lower volume.┬áMajor indices gapped up at the open and made day’s high in the first hour of trading. They decline and plateaued after 10:30 AM. Most made Doji like candlestick formations. All S&P sectors closed higher.

From Briefing.com:

The S&P 500 gained 1.9% on Tuesday, paced higher by all 11 of its sectors amid positive-sounding media reports and encouraging retail sales data. The Dow Jones Industrial Average (+2.0%) and Nasdaq Composite (+1.8%) performed comparably to the benchmark index, while the Russell 2000 (+2.3%) outperformed.

[…]

All 11 S&P 500 sectors were up big.

[…]

Five sectors increased by at least 2.0%, including the energy (+2.8%) and health care (+2.4%) sectors at the top. The utilities sector (+0.5%) lagged.

[…]

U.S. Treasuries ended the session with losses that caused some curve-steepening activity. The 2-yr yield increased two basis points to 0.21%, and the 10-yr yield increased five basis points to 0.76%. The U.S. Dollar Index increased 0.4% to 97.05. WTI crude rose 3.2%, or $1.20, to $38.56/bbl.

[…]
  • [Retail sales for May in the U.S. surged 17.7% m/m (Briefing.com consensus 9.0%) following an upwardly revised 14.7% decline in April (from -16.4%). Excluding autos, retail sales jumped 12.4% m/m (Briefing.com consensus 5.2%) following an upwardly revised 15.2% decline for April (from -17.2%).
    • The key takeaway from the Retail Sales report is that it reflects pent-up demand that was unleashed as reopening efforts took root. Granted the April base was severely depressed and sales were still down 6.1% yr/yr, yet this market is thriving right now on hopeful sequential comparisons; hence, this was seen as very encouraging news.
  • Total industrial production increased 1.4% m/m in May (Briefing.com consensus 3.0%) on the heels of a downwardly revised 12.5% decline (from -11.2%) in April.┬áThe capacity utilization rate was 64.8% (Briefing.com consensus 67.9%) versus a downwardly revised 64.0% (from 64.9%) in April.
    • The key takeaway from the report is that the improvement was all manufacturing-based thanks largely to an uptick in the output of motor vehicles and parts.
  • The NAHB Housing Market Index for June increased to 58 (Briefing.com consensus 45) from 37 in May.
  • Business Inventories declined 1.3% in April (Briefing.com consensus -0.4%) following a revised 0.3% decline in March (from -0.2%).
[…]
Print Friendly, PDF & Email