Market Remarks

Morning Notes – Wednesday, June 28, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM. Futures have been making a broadening pattern since 6:30 PM within a narrow range.
  • The odds are for a sideways to down day – watch for a break above 4416.75 and a break below 4406.50 for clarity
  • The major economic data reports due during the day:
    • Goods Trade Balance ( -91.1B vs. -93.6B est.; prev. -97.1B) at 8:30 AM
    • Prelim Wholesale Inventories ( -0.1% vs. -0.1% est.; prev. -0.1%) at 8:30 AM
    • Fed Chair Powell Speaks at 9:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4364.34, 4342.17, and 4335.00
  • Critical resistance levels for S&P 500 are 4384.42, 4396.66, and 4407.44
  • The key levels for E-mini futures are 4416.75, the high at 7:15 AM, and 4406.50, the low at 4:45 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2023) closed at 4418.00, and the index closed at 4378.41 – a spread of about +39.50 points; the futures closed at 4418.75; the fair value is -0.75
  • Pre-NYSE session open, futures were lower – at 8:45 AM, S&P 500 futures were down by -11.00, Dow by -26, and NASDAQ by -67.00

Markets Around The World

  • Markets in the East closed mostly higher – Shnaghi and Seoul closed lower
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • USD/CAD
  • Dollar index
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.768, down -7.1 basis points from two weeks ago;
    • The 30-year is at 3.840%, down -10.1 basis points;
    • The 2-year yield is at 4.887%, up +20.4 basis points;
    • The 10-Year-&-2-Year spread is at -1.119, down from -0.844
    • The 30-Year-&-10-Year spread is at 0.072, down from +0.102
  • VIX
    • At 13.76 @ 8:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 21.33 on May 4; low = 12.73 on June 22
    • Sentiment: Risk-Neutral-Off

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

Weekly:
  • The week ending on June 23 was a red Harami candle within a green candle that closed at the highest level since April 2022.
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 is just below 70
  • The week was down -61.26 or -1.4%; the 5-week ATR  is 102.56
  • A down week, first in the last five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=4363.27, R1=4385.21, R2=4422.08; S1=4326.40, S2=4304.46; No pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A relatively large green candle that almost erased the past three days’ decline. Bouncing up from a support level, a previous resistance level created by the high of August 16, 2022. The index has been declining gradually since June 16
    • Stochastic (9, 1, 3): %K crossed above the %D from near zero;
    • RSI-9 has turned up above 60; below 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Broke above a downtrend line from the June 16 high of 4493.75.
    • RSI-21 has declined to just above 60 from above 70
    • Above EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving sideways to down since 6:30 PM on Tuesday around 4410.00
    • RSI-21 has been moving around just below 60
    • At/above EMA 20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to up since 10:45 PM
  • The Bollinger Band has been expanding a little since 6:15 AM – the price has declined from the upper band to the lower band
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday, June 27, in mixed volume. Both Dow averages – Industrial and Transportation – traded in higher volume.

The major indices opened up and gradually drifted higher for the rest of the day. All but one S&P sector – Healthcare – closed higher.

From Briefing.com:

[…]

The Vanguard Mega Cap Growth ETF (MGK) rose 1.5%; the Invesco S&P 500 Equal Weight ETF (RSP) rose 1.2%; and the market-cap weighted S&P 500 rose 1.2%.

Gains in their respective mega cap components propelled the information technology (+2.0%) and consumer discretionary (+2.1%) sectors to first place on the leaderboard.

[…]

The SPDR S&P Homebuilder ETF (XHB) rose 2.9%. The PHLX Semiconductor Index rose 3.6%.

Other top performers included the economically-sensitive materials (+1.4%) and industrials (+1.3%) sectors.

The countercyclical health care (-0.2%), utilities (+0.3%), and consumer staples (+0.3%) sectors all underperformed,

[…]

The 2-yr note yield rose two basis points to 4.76% and the 10-yr note yield rose five basis points to 3.77%.

  • Nasdaq Composite: +29.5% YTD
  • S&P 500: +14.0% YTD
  • Russell 2000: +5.0% YTD
  • S&P Midcap 400: +6.0% YTD
  • Dow Jones Industrial Average: +2.4% YTD
[…]
  • Total durable goods orders were up 1.7% month-over-month in May (Briefing.com consensus -1.0%) following an upwardly revised 1.2% increase (from 1.1%) in April. Excluding transportation, durable goods orders increased 0.6% month-over-month (Briefing.com consensus 0.0%) following a downwardly revised 0.6% decline (from -0.2%) in April.
  • […]
  • The FHFA Housing Price Index rose 0.7% in April following a revised 0.5% increase in March (from 0.6%).
  • The S&P Case-Shiller Home Price Index fell 1.7% in April (Briefing.com consensus -2.5%) following a 1.1% decrease in March.
  • The Conference Board’s Consumer Confidence Index jumped to 109.7 in June (Briefing.com consensus 103.8) from an upwardly revised 102.5 (from 102.3) in May. In the same period a year ago, the index stood at 98.4.
  • […]
  • New home sales surged 12.2% month-over-month in May to a seasonally adjusted annual rate of 763,000 units (Briefing.com consensus 665,000) from a downwardly revised 680,000 (from 683,000) in April. On a year-over-year basis, new home sales were up 20.0%.
[…]

Overseas:

  • Europe: DAX +0.2%, FTSE +0.1%, CAC +0.4%
  • Asia: Nikkei -0.5%, Hang Seng +1.9%, Shanghai +1.2%

Commodities: 

  • Crude Oil -1.91 @ 67.58
  • Nat Gas -0.03 @ 2.77
  • Gold -10.40 @ 1922.20
  • Silver +0.06 @ 22.89
  • Copper +0.01 @ 3.79
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