Morning Notes – Friday June 26, 2020

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a sideways to up day with elevated volatility; – watch for break below 3048.75 for change of sentiments
  • Key economic data due:
    • Core PCE Price Index ( 0.1% vs. 0.0% est.; prev. -0.4%) at 8:30 AM
    • Personal Spending ( 8.2% s. 8.9% est.; prev. -13.6%) at 8:30 AM
    • Personal Income ( -4.2% vs. -6.00% est.; prev. 10.5%) at 8:30 AM
    • Revised UoM Consumer Sentiment (79.1 est. prev. 78.9) at 10:00 AM
    • Revised UoM Inflation Expectation ( prev. 3.0%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3054.72, 3036.27 and 3024.01
  • Critical resistance levels for S&P 500 are 3086.25, 3093.60 and 3115.01
  • Key levels for E-mini futures: break above 3082.00, the high of 12:00 AM and break below 3048.75, the low of 4:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2020) closed at 3072.50 and the index closed at 3083.76 – a spread of about -11.25 points; futures closed at 3070.75 for the day; the fair value is +1.75
  • Pre-NYSE session open, futures are lower – at 8:00 AM, S&P 500 futures were down by -7.00; Dow by -138 and NASDAQ by -9.75

Markets Around The World

  • Markets in East closed mostly higher – Hong Kong was down; Shanghai was closed
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Crude Oil
    • NatGas
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield closed at 0.674%, down from June 24 close of 0.684;
    • 30-years is at 1.418% down from 1.445%
    • 2-years yield is at 0.196% up from 0.187%
    • The 10-Year-&-2-Year spread is at 0.478 down from 0.497
  • VIX
    • Is at 32.45; up +.23 from June 25 close; at/below 5-day SMA;
    • Recent high 44.44 on June 15; low 29.26 on June 23
    • 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 19 was a green candle that closed below the mid-point of previous week’s real body after gapping down at the open;
    • Stochastic (9,1, 3): %K is below %D;
    • RSI (9) is near 60
  • The week was up +56.43 or +1.9%; the 5-week ATR is 169.70
  • The weekly week pivot point =3072.98, R1=3180.29, R2=3262.85; S1=2990.42, S2=2883.11; No pivot levels were breached
  • An up week; fourth 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/above 39-week SMA; above 89-week SMA
  • Uptrend since March 23 is under pressure
Daily
  • A green Piercing candle with almost no upper shadow and small lower shadow; within a congestion area; next support near 2965.66
    • %K is below %D; turning up;
    • RSI-9 turning up to near 50; below 8-day RSI;
  • At/below 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 June 15; broke below a horizontal trading range between 3160.00 and 3000.00; bounced from lower bound to 3060.00
    • RSI-21 rising since 10:00 AM on Wednesday after making a Bullish Divergence at 2:00 AM on Thursday
    • %K is crisscrossing %D
  • At/above EMA20; at/below EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Moving down since 8:00 AM on Tuesday from 3145.75 to 3005.00 by 3:00 AM; broke below a horizontal channel – between 3147.00 and 3064.00 – since June 15;
    • RSI-21 rising since 11:30 AM on Wednesday; Bullish Divergence at 3:00 AM; below 40
    • %K is below %D;
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways since 9:15 PM
  • The Bollinger Band expanding since 6:30 AM; price walking up the upper band
    • Stochastic (9, 1, 3): %K is above %D
  • Bias: Down-Side

Previous Session

Major U.S. indices closed higher on Thursday, June 25 in higher volume. Most indices made Piercing candlestick formation within a congestion area. All S&P sectors but Utilities closed higher.

From Briefing.com:

The S&P 500 gained 1.1% on Thursday, recouping some of yesterday’s decline, amid solid leadership from the financials sector (+2.7%). The Dow Jones Industrial Average (+1.2%) and Nasdaq Composite (+1.1%) kept pace with the benchmark index, while the Russell 2000 (+1.7%) outperformed.

[…]

U.S. Treasuries posted modest gains for the second straight session. The 2-yr yield declined two basis points to 0.16%, and the 10-yr yield declined one basis point to 0.67%. The U.S. Dollar Index increased 0.2% to 97.35. WTI crude increased 2.0%, or $0.75, to $38.75/bbl.

[…]
  • Initial claims for the week ending June 20 decreased 60,000 to a still-high 1.480 million (Briefing.com consensus 1.250 million).¬†Continuing claims for the week ending June 13 plunged by 767,000 to 19.522 million.
    • The key takeaway from the report is that, while it was nice to see the big drop in continuing claims, it remains alarming still to see such high levels of initial claims, particularly since the reacceleration in coronavirus case counts and a rethink of reopening efforts are going to trigger worries about another wave of layoffs.
  • Durable Goods Orders for May increased 15.8% (Briefing.com consensus 11.6%) on the heels of a downwardly revised 18.1% decline (from -17.7%) in April.¬†Excluding transportation, orders rose 4.0% (Briefing.com consensus 2.1%) following a downwardly revised 8.2% decline (from -7.7%) in April.
    • The key takeaway from the report is that order activity clearly rebounded in May, yet new order levels year to date are 13.6% lower than the same period a year ago on a not seasonally adjusted basis.
  • The third estimate for Q1 GDP was unchanged at -5.0% (Briefing.com consensus -5.0%) while the GDP Price Deflator was unchanged at 1.4% (Briefing.com consensus 1.4%).
    • The key takeaway from this report is that it is insignificant for the market given its dated nature.Personal consumption expenditures growth was unchanged from the second estimate at -6.8%.
  • The advance goods trade deficit totaled $74.3 bln in May following a $70.7 bln deficit in April. Advance retail inventories declined 6.1% in May after decreasing 3.8% in April. Advance wholesale inventories decreased 1.2% in May after increasing 0.2% in April.
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