Market Remarks

Morning Notes – Monday June 15, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down day with elevated volatility; good chance of sideways to down move from pre-open levels around 2975.00 – watch for break above 2992.75 for change of sentiments
  • No key economic data due:

Directional Bias Before Open:

  • Weekly: Uptrend since March 23 under pressure
  • Daily: Uptrend since March 23 under pressure
  • 120-Min: Side-Down
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min: Down-Side

Key Levels:

  • Critical support levels for S&P 500 are 3023.93, 2999.49 and 2969.75
  • Critical resistance levels for S&P 500 are 3090.41, 3123.53 and 3130.94
  • Key levels for E-mini futures: break above 3081.25, the high of 11:00 AM on Thursday and break below 3048.50, the low of 3:00 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2020) closed at 3039.00 and the index closed at 3041.31. – a spread of about -2.25 points; futures closed at 3023.75 for the day; the fair value is +5.25
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -60.00; Dow by -603 and NASDAQ by -123.00

Markets Around The World

  • Markets in the East closed lower
  • European markets are mostly lower – Switzerland is up
  • Currencies:
    Up Down
    • GBP/USD
    • USD/JPY
    • USD/CAD
    • INR/USD
    • Dollar index
    • EUR/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
      Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.672%, down from June 12 close of 0.699;
    • 30-years is at 1.410%, down from 1.450%
    • 2-years yield is at 0.185% down from 0.205%
    • The 10-Year-&-2-Year spread is at 0.487 down from 0.494
  • VIX
    • Is at 41.77; up +5.68 from June 12 close; above 5-day SMA;
    • Recent high 47.77 on April 21; low 23.54 on June 5
    • Sentiment: Risk-Off

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 June 12 was a large red candle that could pass as an almost Bearish Engulfing formation; small upper and lower shadows but in comparison to the real body
    • Stochastic (9,1, 3): %K is below %D;
    • RSI (9) turned down to near 50
  • The week was down -152.62 or -4.8%; the 5-week ATR is 167.57
  • The weekly week pivot point =3086.30, R1=3188.14, R2=3334.96; S1=2939.48, S2=2837.65; S1 pivot level was breached
  • A down week; second in last five weeks and fourth 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 is under pressure
Daily
  • A red Harami candle within a Bearish Engulfing candle; the low of Friday breached the low of Thursday but not the high
    • %K is below %D turning up from near 0;
    • RSI-9 turning up from near 40 after declining from above 80; below 8-day RSI;
  • Below 20-day EMA; at/above 200-day SMA, above 50-day EMA and 100-day
  • Uptrend since March 23 is under pressure
2-Hour (E-mini futures)
  • Bouncing up from 2923.75 after breaking a support near 3000.00; next support is 2903.75 and resistance near 3000.00
    • RSI-21 is moving between 50 and 40 since midnight on Friday
    • %K is above %D from near 20
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Trending down since 4:00 PM on June 8; bouncing off from the lower Bollinger band
    • RSI-21 is bouncing up from near 30 to near 45
    • %K is below %D;
  • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways to down since 2:15 AM
  • The Bollinger Band is narrowing since 8:30 AM
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 30
  • Bias: Down

Previous Session

Major U.S. indices closed higher on Friday, June 12 in lower volume. Most indices made red Harami formation within a large red candle. Break of highs and lows of Friday will be critical.

For the week, major U.S. indices closed lower on mostly higher volume. Dow Jones Transportation Average traded in lower volume. All S&P sectors closed lower. Asian and European markets also closed lower. Dollar and Yen gained. Crude oil and natural were down but gold, silver and copper were up.  Treasury yields declined for the week.

From Briefing.com:

The S&P 500 gained 1.3% on Friday to reclaim some of yesterday’s sharp decline, although it was up as much as 2.9% early in the session. The Dow Jones Industrial Average (+1.9%), Nasdaq Composite (+1.0%), and Russell 2000 (+2.3%) also bounced back but closed off session highs.

[…]

The S&P 500 sectors were able to finish mostly higher, with cyclical sectors assuming the leadership. The financials (+3.0%), energy (+2.7%), and industrials (+2.0%) sectors rose at least 2.0%, but it was the real estate sector (+3.2%) that advanced the most. The utilities (-0.2%) and consumer staples (-0.2%) sectors closed lower.

[…]

U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield increased two basis points to 0.18%, and the 10-yr yield increased five basis points to 0.70%. The U.S. Dollar Index increased 0.4% to 97.11. WTI crude declined 0.5%, or $0.17, to $36.24/bbl.

[…]

• The preliminary University of Michigan Index of Consumer Sentiment for June showed an improvement to 78.9 (Briefing.com consensus 75.8) from the final reading of 72.3 for May.
o The key takeaway from the report is that the uptick was driven by renewed gains in employment and an expectation for a decline in the unemployment rate; however, most consumers were not anticipating the reestablishment of favorable financial conditions anytime soon.
• Import prices increased 1.0% in May, and prices, excluding oil, increased 0.1%. Export prices increased 0.5% in May, and prices, excluding agriculture, increased 0.6%.

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