Morning Notes – Monday, June 6, 2022

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; moving sideways to up since 3:45 AM
  • The odds are for an up with a good chance of sideways to down move from the pre-open levels around 4150.00; elevated volatility – watch for a break above 4156.50 and a break below 4144.25 for clarity
  • No key economic data report due during the day:

Directional Bias Before Open:

  • Weekly: In Correction
  • Daily: Uptrend
  • 120-Min: Up-Side
  • 30-Min: Side-Up
  • 15-Min: Side-Up
  • 6-Min: Up

Key Levels:

  • Critical support levels for S&P 500 are 4134.75, 4101.51, and 4098.67
  • Critical resistance levels for S&P 500 are 4155.88, 4177.51, and 4195.15
  • Key levels for E-mini futures: break above 4156.50, the high at 4:30 AM and a break below 4144.25, the low at 5:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2022) closed at 4108.00 and the index closed at 4108.54 – a spread of about -0.50 points; futures closed at 4107.00 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +44.75; Dow by +267; and NASDAQ by +207.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, and Tokyo closed higher; Sydney, Mumbai, and Singapore closed lower; Seoul was closed
  • European markets are higher – Switzerland is closed
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • GBP/USD
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.961%, up +17.4 basis points from two weeks ago;
    • 30-years is at 3.117%, up +12.1 basis points;
    • 2-years yield is at 2.683%, up +7.1 basis points;
    • The 10-Year-&-2-Year spread is at 0.278, up from 0.175
    • The 30-Year-&-10-Year spread is at 0.156, up from 0.209
  • VIX
    • At 25.12 @ 8:30 AM; down from the last close; below the 5-day SMA;
    • Recent high = 35.48 on May 9; low = 24.94 on May 4
    • Sentiment: Risk-On
    • Broke below a symmetrical triangle

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

Weekly:
  • The week ending on June 3 was a small red Harami candle near the close of the previous week;
    • Stochastic (9,1, 3): %K is above %D following a Bullish Divergence
    • RSI-9 is just above 40
  • The week was down -49.70 or -1.2%; the 5-week ATR  is 235.41
  • A down week; fourth in the least five weeks and eight in the previous ten weeks
  • The weekly pivot point=4119.97, R1=4166.08, R2=4223.63; S1=4062.42, S2=4016.31; No pivot levels were breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A red Harami candle following a Bullish Engulfing candle; the past four days’ price-action is sideways; finding resistance at around 4160.00, the lows of June 18, 2021
    • Stochastic (9, 1, 3): %K crossed below %D; above 70
    • RSI-9 declined to near 50 from above 60; above 8-day EMA;
  • Above 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Broke the sequence of lower highs and lower lows since March 29; moving sideways after breaking above a Horizontal channel bounded between 4055.00 and 3856.00 – the 61.8% extension target is near 4195.00 and the 100% extension target is near 4275.00
    • RSI-21 has risen above 60 after declining to near 30
    • At/above EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving up since 3:30 PM on Friday after making a Double Bottom around 4100.00
    • RSI-21 is just below 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 8:30 PM
  • The Bollinger Band is contracting a bit since 8:45 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Friday, June 3, in mixed volume. Dow Jones Transportation Average and NASDAQ Composite traded in lower volume. The major indices opened lower and then declined some more before moving sideways for the rest of the day. Most indices made a small Harami candle within a large green candle.

For the week, the major indices closed lower in lower volume. European markets closed down but the Asian exchanges closed up. The dollar index was up, the energy futures were mixed, the precious metals were down, the industrial metals were mostly up, and the soft commodities were mostly lower. The US Treasury yields closed higher. All but two – Energy and Industrials – S&P sectors closed lower for the week.

From Briefing.com:

The stock market retreated on Friday, sending the major averages back into negative territory for the week. The Nasdaq (-2.5%) underperformed throughout the session, surrendering 1.0% for the week, while the S&P 500 (-1.6%) and Dow (-1.1%) lost a respective 1.2% and 0.9% since last Friday. Small caps held up a bit better with the Russell 2000 (-0.8%) giving back 0.3% this week.

[…]

Ten out of eleven sectors finished the day in negative territory with cyclical groups like consumer discretionary (-2.9%), technology (-2.5%), and communication services (-2.4%) spending the day at the bottom of the leaderboard.

[…]

Treasuries finished a down week on a lower note with the 10-yr yield rising four basis points to 2.96%. The 2s10s spread ended the week at 28 bps, unchanged from last Friday as yields on the 2-yr note and the 10-yr note increased by 22 bps during the abbreviated week.

[…]
  • May nonfarm payrolls increased by 390,000 (Briefing.com consensus 325,000). The 3-month average for total nonfarm payrolls decreased to 408,000 from 516,000. April nonfarm payrolls revised to 436,000 from 428,000. March nonfarm payrolls revised to 398,000 from 424,000.
  • […]
  • The ISM Non-Manufacturing Index for May decreased to 55.9% (Briefing.com consensus 56.6%) from 57.1% in April. The dividing line between expansion and contraction is 50.0%. The May reading marks the 24th straight month of growth for the services sector, but it is the lowest reading since February 2021.
  • […]
  • The IHS Markit Services PMI dipped to 53.4 in the final reading for May from 53.5 in the preliminary reading.
[…]
  • Dow Jones Industrial Average -9.5% YTD
  • S&P 400 -11.2% YTD
  • S&P 500 -13.8% YTD
  • Russell 2000 -16.1% YTD
  • Nasdaq Composite -23.2% YTD
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