Morning Notes – Wednesday June 3, 2020

/ June 3, 2020

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up day – watch for break below 3084.50
  • Key economic data due:
    • ADP Non-Farm Employment Change ( -2760K vs. -9000K est.; prev. -1957K) at 8:15 AM
    • Final Services PMI (37.5 vs. 37.2 est.; prev. 36.9) at 9:45 AM
    • ISM Non-Manufacturing PMI ( 44.2 ext.; prev. 41.8% ) at 10:00 AM
    • Factory Orders ( -13.7% est.; prev. -10.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3080.95, 3061.20 and 3051.64
  • Critical resistance levels for S&P 500 are 3099.52,3107.47 and 3130.97
  • Key levels for E-mini futures: break above 3103.50, the high of 12:00 AM on March 5 and break below 3084.75, the low of 3:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (June 2020) closed at 3078.00 and the index closed at 3080.82 – a spread of about -2.75 points; futures closed at 3077.00 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 +19.75; Dow by +255 and NASDAQ by +23.75

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • Dollar index
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Copper
    • Sugar
    • Coffee
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.726%, up from June 2 close of 0.680%;
    • 30-years is at 1.530%, up from 1.479%
    • 2-years yield is at 0.184% up from 0.176%
    • The 10-Year-&-2-Year spread is at 0.542 up from 0.504
  • VIX
    • Is at 26.64; down -0.20 from June 2 close; below 5-day SMA;
    • Recent 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:

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 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
Daily
  • A green top candle with almost no upper shadow and small lower shadow; next resistance 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;
    • RSI-21 rising above 70; Potential Bearish Divergence
    • %K is crisscrossing %D higher
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving up since 6:00 PM on Sunday; broke above a symmetrical triangle; 61.8% extension target is near 3100.00 and 100% extension target is near 3124.00
    • RSI-21 is rising from below 50 to above 65
    • %K is crisscrossing %D above 80
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways to up since 00:15 AM
  • The Bollinger Band is expanding since 8:00 AM
    • Stochastic (9, 1, 3): %K is crisscrossing %D above 80
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Tuesday, June 2 in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in lower volume. All S&P sectors  were up. Indices are mostly rising after making a low at 12:30 PM on May 29.

From Briefing.com:

The S&P 500 increased 0.8% on Tuesday, paced higher by all 11 of its sectors in a “pain trade” to the upside. The Dow Jones Industrial Average increased 1.1%, the Nasdaq Composite increased 0.6%, and the Russell 2000 increased 0.9%.

Cyclical sectors that stand to benefit directly from an increase in economic activity, such as the S&P 500 energy (+2.7%), materials (+1.8%), and industrials (+1.3%) sectors, saw the biggest gains today. A strong finish into the close also lifted the consumer staples (+0.2%) and communication services (+0.5%) sectors into positive territory.

[…]

U.S. Treasuries ended the session on a lower note, pushing yields slightly higher. The 2-yr yield increased two basis points to 0.16%, and the 10-yr yield increased two basis points to 0.68%. The U.S. Dollar Index declined 0.1% to 97.72. WTI crude rose 3.8%, or $1.35, to $36.80/bbl.

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