Morning Notes – Friday June 5, 2020

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up day with elevated volatility – watch for break below 3130.00 for change of fortune
  • Key economic data due:
    • Non-Farm Employment Change (2509K vs. -7750K est.; prev. -20537K) at 8:30 AM
    • Average Hourly Earnings (-1.0% vs. 1.0% est.; prev. 4.7) at 8:30 AM
    • Unemployment Rate (13.3% vs. 19.4% est.; prev. 14.7%) at 8:30 AM
    • Consumer Credit ( -20.0B est.; prev. -12.0B) at 3:00 PM
    • ECB Press Conference

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3130.94, 3115.83 and 3099.15
  • Critical resistance levels for S&P 500 are 3182.51, 3198.30 and 3213.73
  • Key levels for E-mini futures: break above 3112.75, the high of 7:30 AM and break below 3086.00, the low of 6:45 AM on Wednesday


  • On Thursday at 4:00 PM, S&P futures (June 2020) closed at 3110.00 and the index closed at 3112.35 – a spread of about -2.25 points; futures closed at 3110.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +47.00; Dow by +600 and NASDAQ by +24.00

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
    • EUR/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Cocoa
    • Copper
    • Palladium
    • Sugar
    • Coffee
    • Cotton
  • Bond
    • 10-yrs yield is at 0.754%, down from June 3 close of 0.761%;
    • 30-years is at 1.544%, down from 1.551%
    • 2-years yield is at 0.188% down from 0.200%
    • The 10-Year-&-2-Year spread is at 0.566 up from 0.561
  • VIX
    • Is at 24.97; down -0.84 from June 4 close; below 5-day SMA;
    • Recent high 39.28 on May 14; low 24.92 on March 3
    • Sentiment: Risk-On

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 small Harami Doji candle; near 3136.00, the high of March 4 and 78.6% Fibonacci retracement level
    • %K is crisscrossing above %D; above 80;
    • RSI-9 is near 70; above 8-day RSI;
  • Above 20-day EMA and 50-day EMA; above 100-day SMA; at /below 200-day SMA;
  • Uptrend since March 23
2-Hour (E-mini futures)
  • Moving up since 2:00 AM on May 22; bounced off 50-bar EMA on May 27 and on May 29; retracing from high of 3145.00
    • RSI-21 declined from near 70 to near 60 Potential Bearish Divergence
    • %K is below %D
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving up since 3:00 PM on Thursday; broke above a Double Bottom or a symmetrical triangle during Asian session on Tuesday and achieved the 61.8% extension target near 3146.00; the 100% extension target is near 3160.00
    • RSI-21 has declining from above 65 to near 40
    • %K is crisscrossing %D; near 10
  • Below EMA10 of EMA50, which is below EMA20
  • Bias: Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways since 4:15 AM
  • The Bollinger Band relative stable, but expanded, since 12:00 AM; price first walked up the upper band and then retraced to middle band
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up

Previous Session

Major U.S. indices closed mostly lower on Thursday, June 4 in mixed volume. Dow Jones Industrial Average and Dow Jones Transportation Average closed higher. DJT and NASDAQ Composite traded in higher volume. Most indices made Doji or similar indecisive candle. Four S&P sectors – Energy, Materials, Industrials and Financials closed up.


The S&P 500 declined 0.3% on Thursday in a mixed session to snap a four-session winning streak. The Dow Jones Industrial Average eked out a 0.1% gain, the Nasdaq Composite declined 0.7%, and the Russell 2000 closed flat.

Early in the session, the S&P 500 overcame a negative start, but failed to break above the 3130 level, which was yesterday’s high and the high from March 4. The Nasdaq 100 (-0.8%) even set a new all-time high before retracing gains alongside the broader market. Technical factors, then, appeared to have a role in calming this market down.

The information technology (-0.8%) and health care (-0.8%) sectors were influential laggards, but the rate-sensitive real estate (-1.8%) and utilities (-2.0%) sectors declined the most amid an increase in longer-dated Treasury yields. The 10-yr yield rose six basis points to 0.82%, while the 2-yr yield was flat at 0.19%.


• Initial claims for the week ending May 30 decreased by 249,000 to 1.877 million ( consensus 1.800 million). Continuing claims for the week ending May 23 increased by 649,000 to 21.487 million.
o The key takeaway from the report is twofold: (1) initial claims are still extremely high and (2) continuing claims didn’t continue to improve, denoting some slowness in rehiring activity.
• A revision reported by the BLS indicated nonfarm business sector labor productivity decreased 0.9% ( consensus -2.6%) in the first quarter versus an originally reported decrease of 2.5%. Unit labor costs, meanwhile, increased 5.1% versus an originally reported 4.8% increase.
o The key takeaway from the report is that productivity was better than expected in the first quarter, but it was still weak all the same.
• The U.S. trade deficit widened to $49.4 billion in April ( consensus -$49.8 billion) from an upwardly revised $42.3 billion (from -$44.4 billion) in March.
o The key takeaway from the report is that it was accented by a sizable decline in both exports and imports, which was a byproduct of reduced demand due to shutdown measures implemented around the globe to help contain the spread of COVID-19.

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