Morning Notes – Thursday June 18, 2020

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down day with elevated volatility; – watch for break above 3120,00 for change of sentiments
  • Key economic data due:
    • Philly Fed Manufacturing Index (27.5 vs. -21.0 est.;prev. -43.1) at 8:30 AM
    • Unemployment Claims (1508K vs. 1300K est.; prev. 1566K) at 8:30 AM
    • CB Leading Index ( 2.4% est.; prev. -4.4%) at 10:00 AM

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-Down
  • 6-Min: Down-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 3120.35, 3141.16 and 3153.45
  • Key levels for E-mini futures: break above 3120.00, the high of 5:30 AM and break below 3073.75, the low of 8:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2020) closed at 3102.00 and the index closed at 3113.49 – a spread of about -11.50 points; futures closed at 3107.00 for the day; the fair value is -5.00
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -19.00; Dow by -203 and NASDAQ by -12.50

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Mumbai closed higher
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Copper
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.700%, down from June 17 close of 0.733;
    • 30-years is at 1.472%, down from 1.524%
    • 2-years yield is at 0.177% down from 0.197%
    • The 10-Year-&-2-Year spread is at 0.523 up from 0.500
  • VIX
    • Is at 35.02; up + 1.55 from June 17 close; above 5-day SMA;
    • Recent high 44.44 on June 15; low 23.54 on June 5
    • Sentiment: Risk-Off

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 small Bearish Engulfing candle over a Doji candle that had gapped up;
    • %K is above %D but turning down;
    • 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 sideways since 10:00 PM on Monday
    • RSI-21 trending down from around 75 to below 50
    • %K is crisscrossing %D around 50
  • At/below EMA10 of EMA50, which is below EMA20
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways since 10:30 PM on June 15;
    • RSI-21 moving between 50 and 40
    • %K is below %D;
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways to down since 5:00 AM on June 17
  • The Bollinger Band is expanding since 7:00 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 40
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly lower on Wednesday, June 17 in lower volume. NASDAQ Composite closed up. Most major indices made Bearish Engulfing candle formation. All S&P sectors closed lower.

From Briefing.com:

The S&P 500 declined 0.4% on Wednesday, falling for the first time in four sessions amid lingering angst about a U.S. recovery and equity valuations. The Dow Jones Industrial Average lost 0.7%, and the Russell 2000 lost 1.8%. The Nasdaq Composite, however, increased 0.2%.

[…]

The energy (-3.3%) and financials (-1.4%) sectors declined noticeably, while the communication services (+0.1%), consumer discretionary (+0.1%), and information technology (+0.03%) sectors barely finished higher.

[…]

U.S. Treasuries ended the session slightly higher after trading in a narrow range. The 2-yr yield declined two basis points to 0.19%, and the 10-yr yield declined two basis points to 0.73%. The U.S. Dollar Index increased 0.2% to 97.13. WTI crude declined 0.9% to $37.93/bbl amid an unexpected increase in weekly crude inventories.

[…]
  • Total housing starts increased 4.3% m/m in May to a seasonally adjusted annual rate of 974,000 units. That was well below the Briefing.com consensus estimate of 1.170 million and down 23.2% yr/yr.┬áTotal building permits increased 14.4% m/m to a seasonally adjusted annual rate of 1.220 million, which was just shy of the Briefing.com consensus estimate of 1.260 million.
    • The key takeaway from the report is that permits, which are a leading indicator, increased a solid 11.9% m/m for single-unit dwellings. Single-unit permits increased in all regions, too.
  • The weekly MBA Mortgage Applications Index rose 8.0% following a 9.3% spike in the prior week.
[…]
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