Market Remarks

Morning Notes – Tuesday June 16, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up with elevated volatility; good chance of sideways to down move from pre-open levels around 3165.00 – watch for break below 3091,25 for change of sentiments
  • Key economic data due:
    • Retail Sales ( 17.7% vs. 7.9% est.; prev. -14.7%) at 8:30 AM
    • Core Retail Sales (12.4% vs. 5.5% est.; prev. -15.2%) at 8:30 AM
    • Capacity Utilization Rate ( 64.88% vs. 66.8% est.; prev. 64.0%) at 9:15 AM
    • Industrial Production ( 1.4% vs. 3.0% est.; prev. -12.5%) at 9:15 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3123.93, 3088.42 and 3079.38
  • Critical resistance levels for S&P 500 are 3163.84, 3199.21 and 3213.79
  • Key levels for E-mini futures: break above 3167.75, the high of 9:00 AM and break below 3091.25, the low of 4:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2020) closed at 3055.75 and the index closed at 3066.59. – a spread of about +0.25 points; futures closed at 3062.00 for the day; the fair value is -4.75
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +86.50; Dow by +930 and NASDAQ by +200.50

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • EUR/USD
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
      Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • NatGas
  • Bond
    • 10-yrs yield is at 0.774%, up from June 15 close of 0.702;
    • 30-years is at 1.566%, up from 1.448%
    • 2-years yield is at 0.209% up from 0.201%
    • The 10-Year-&-2-Year spread is at 0.565 up from 0.501
  • VIX
    • Is at 32.42; down -1.98 from June 15 close; above 5-day SMA;
    • Recent high 44.44 on June 15; low 23.54 on June 5
    • 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 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 green Bullish Engulfing that gapped down at the open; small lower shadow and smaller upper shadow
    • %K is crossing above %D; up from near 0;
    • RSI-9 turning up from near 40 to near 50; below 8-day RSI;
  • At/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)
  • Moving up from 2923.75 at 2:00 AM on Monday to near 3150.00
    • RSI-21 is above 75 after making a Bullish Divergence at 12:00 AM on Monday
    • %K is crisscrossing %D above 80
  • Above EMA10 of EMA50, which is above EMA20
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Trending up since 2:00 AM on June 15;
    • RSI-21 is moving along 65
    • %K is crisscrossing %D above 80;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving up since 10:00 AM on Monday
  • The Bollinger Band was narrowed from 1:30 AM to 7:45 AM; expanding since with price walking up the upper band
    • Stochastic (9, 1, 3): %K is below %D since 8:30 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Monday, June 15 in lower volume. Major indices gapped down at the open and made the lows in first hour of trading before reversing and trading higher for the rest of the day and closing near the highs. Most made Bullish Engulfing pattern and bounced off 50-day EMA. NASDAQ Composite found support at 20-day EMA. All S&P sectors closed higher.

From Briefing.com:

The S&P 500 gained 0.8% on Monday to overcome an early 2.5% decline, as the market brushed aside coronavirus concerns and welcomed another aggressive policy update from the Fed. The Dow Jones Industrial Average swung nearly 1000 points from its bottom to close 0.6% higher. The Nasdaq Composite (+1.4%) and Russell 2000 (+2.3%) outperformed.

[…]

All 11 S&P 500 sectors traded sharply lower, but buyers gradually returned to buy the dip, which contributed to a steady rebound off early lows. Then, at 2:00 p.m. ET, the rebounding market received a noticeable pop into positive territory after the Fed announced it will start buying individual corporate bonds through its Secondary Market Corporate Credit Facility.

[…]

The financials sector (+1.4%) outperformed, even as banks noted a steady pace of net credit losses in May, followed by the consumer staples sector (+1.1%). The health care (+0.2%) and energy (+0.1%) sectors eked out small gains.

[…]

U.S. Treasuries exhibited an early flight-to-safety trade, which then unraveled with the rebound in equities. The 2-yr yield and the 10-yr yield ended the session unchanged at 0.18% and 0.70%, respectively.

The U.S. Dollar Index declined 0.6% to 96.71. WTI crude futures rose 1.9%, or $0.68, to $36.94/bbl.

Monday’s economic data was limited to the Empire State Manufacturing Survey for June, which improved to -0.2 (Briefing.com consensus -25.0) from -48.5 in May.

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