Market Remarks

Morning Notes – Thursday May 14, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower; broke below a symmetrical triangle at 7:30 AM on 30-minute chart
  • The odds are for a down day with elevated volatility – watch for break above 2811.00 for change of fortune
  • Key economic data due:
    • Unemployment Claims ( 2981K vs. 2500K est.; prev. 3176K) at 8:30 AM
    • Import Prices ( -2.6% vs. -3.1% est.; prev. -2.4%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2775.95, 2762.46, 2732.79 and 2727.10
  • Critical resistance levels for S&P 500 are 2797.85, 2823.91 and 2839.40
  • Key levels for E-mini futures: break above 2811.00, the high of 5:30 AM and break below 2777.00, the low of 8:30 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2020) closed at 2813.25 and the index closed at 2820.00 – a spread of about -6.25 points; futures closed at 2813.00 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -27.00; Dow by -284 and NASDAQ up -76.75

Markets Around The World

  • Markets in the East closed lower
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Sugar
    • Coffee
    • Cotton
    • Copper
    • Palladium
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.615%, down from May 13 close of 0.649%;
    • 30-years is at 1.293%, down from 1.341%
    • 2-years yield is at 0.161% unchanged
    • The 10-Year-&-2-Year spread is at 0.454 down from 0.488
  • VIX
    • Is at 37.21; up +1.93 from May 13 close; above 5-day SMA;
    • Down from all time high of 85.47 on March 18; recent high 47.77 on April 21, recent low 30.54 on April 28
    • Sentiment: Risk-Off

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

Monthly
  • Uptrend under pressure
  • April 2020 was a large green candle with small upper and lower shadows; index advanced +12.7% following a decline of 12.5% in March;
    • Stochastic %K is crossing above %D and near 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 lower band of the 120-month regression channel to middle of the band; only third break below since 2009 but first close below it
  • Sequence of higher highs and higher lows broken
Weekly:
  • The week ending on May 8 was a Bullish Engulfing candle with almost no upper shadow and small lower shadow;
    • Stochastic (9,1, 3): %K is above %D above 90
    • RSI (9) is turning up; above 50
  • The week was up +99.09 or +3.5%; the 5-week ATR is 180.60
  • The weekly week pivot point =2886.60, R1=2975.36, R2=3020.91; S1=2841.05, S2=2752.29; R1 pivot level was breached
  • An up week; third in last five weeks and fifth 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; below 39-week SMA, and 89-week SMA
  • In Correction
Daily
  • A relatively large red candle that opened lower than previous day’s low; the decline accelerated in late morning though it closed off the lows
    • %K is below %D;
    • RSI-9 is below 50 after moving between 50 and 65 since April 6; below 8-day RSI;
  • At/below 20-day EMA; at/below 50-day EMA; below 100-day SMA and 200-day SMA;
  • In Correction; uptrend since March 23
2-Hour (E-mini futures)
  • Moving down from 2947.00 at 8:00 PM on Sunday in steps; broke below a horizontal channel – between 2947.00 and 2823.00; 61.8% extension target is near 2747.00 and 100% extension target is near 2700.00;m next support levels are ear 2770.00 and 2720.00
  • Sequence of higher highs and higher lows since May 3 is broken
    • RSI-21 has fallen from above 75 to near 30
    • %K is below %D; below 40
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Broke below a symmetrical triangle at 7:30 AM in a downtrend; 61.8% extension target near 2780.00 is achieved; 100% extension target is near 2765.00 and 1.618% extension target is near 2740.00
    • RSI-21 declined from near 50 to below 40; potential Bullish Divergence
    • %K is below %D
  • Below EMA20; below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways 4:40 PM on Wednesday
  • The Bollinger Band expanding since 7:15 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D lower
  • Bias: Side-Down

Previous Session

Major U.S. indices closed lower on Wednesday, May 13 in higher volume. Market gapped down at the open and the mostly traded lower. Most indices have made new lows for May and broken below recent support levels. NASDAQ Composite is an exception and leading the market.

From Briefing.com:

The S&P 500 lost 1.8% on Wednesday in a broad-based decline, as investors respected some cautious commentary from Fed Chair Powell. The Dow Jones Industrial Average declined 2.2%, the Nasdaq Composite declined 1.6%, and the Russell 2000 declined 3.3%.

[…]

The S&P 500 did trade in positive territory for a moment after the open, but sellers quickly regained control with losses broadening out to all 11 S&P 500 sectors. The energy (-4.4%) and financials (-3.0%) sectors took the biggest hits, while the consumer staples (-0.9%) and utilities (-0.9%) sectors declined less than 1.0%.

[…]

U.S. Treasuries ended the session slightly higher. The 2-yr yield declined one basis point to 0.15%, and the 10-yr yield declined three basis points to 0.65%. The U.S. Dollar Index increased 0.3% to 100.25. WTI crude declined 1.6%, or $0.42, to $25.34/bbl.

[…]

• The Producer Price Index for final demand declined 1.3% m/m in April (Briefing.com consensus -0.5%), marking its biggest decrease since records began in December 2009. Most of that decline was attributed to a 3.3% drop in prices for final demand goods.
o The Producer Price Index for April may not be convincing enough to the Fed to go down the negative interest rate road, yet the key takeaway is that it will certainly keep it on the path at the lower bound.
• The weekly MBA Mortgage Applications Index increased 0.3% following a 0.1% increase in the prior week.

Exit mobile version