Morning Notes – Monday June 22, 2020

/ June 22, 2020

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for a sideways to down day with elevated volatility; – watch for break above 3104,75 for change of sentiments
  • Key economic data due:
    • Existing Home Sales ( 4.15M est.; prev. 4.33M) at 10:00 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
  • 15-Min: Side-Down
  • 6-Min: Down-Up

Key Levels:

  • Critical support levels for S&P 500 are 3083.11, 3076.06 and 3043.61
  • Critical resistance levels for S&P 500 are 3115.75, 3128.02 and 3144.09
  • Key levels for E-mini futures: break above 3096.75, the high of 5:00 AM and break below 3062.25, the low of 2:00 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2020) closed at 3084.50 and the index closed at 3097.74 – a spread of about -13.25 points; futures closed at 3059.50 for the day; the fair value is +25.00
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +24.25; Dow by +174 and NASDAQ by +87.00

Markets Around The World

  • Markets in the East closed mostly lower – Sydney and Mumbai were up
  • European markets are lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Crude Oil
    • Sugar
    • Cotton
    • Cocoa
    • Coffee
  • Bond
    • 10-yrs yield is at 0.689%, down from June 19 close of 0.697;
    • 30-years is at 1.448% down from 1.470%
    • 2-years yield is at 0.194% down from 0.198%
    • The 10-Year-&-2-Year spread is at 0.495 down  from 0.499
  • VIX
    • Is at 34.44; down -0.68 from June 19 close; above 5-day SMA;
    • Recent high 44.44 on June 15; low 23.54 on June 5
    • Sentiment: Risk-Neutral

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 19 was a green candle that closed below the mid-point of previous week’s real body after gapping down at the open;
    • Stochastic (9,1, 3): %K is below %D;
    • RSI (9) is near 60
  • The week was up +56.43 or +1.9%; the 5-week ATR is 169.70
  • The weekly week pivot point =3072.98, R1=3180.29, R2=3262.85; S1=2990.42, S2=2883.11; No pivot levels were breached
  • An up week; fourth 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/above 39-week SMA; above 89-week SMA
  • Uptrend since March 23 is under pressure
Daily
  • A Bearish Engulfing candle in a congestion area of four days
  • %K is crossing below %D;
    • RSI-9 is just above 50; at/below 8-day RSI;
  • Above 20-day EMA; above 200-day SMA, above 50-day EMA and 100-day
  • Uptrend since March 23 is under pressure
2-Hour (E-mini futures)
  • Moving sideways to down since 10:00 PM on June 15
    • RSI-21 has moved up from below 30 to just below 50
    • %K is above %D
  • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving up since 6:00 PM on Sunday within a horizontal channel – between 3147.00 and 3064.00 – since June 15;
    • RSI-21 rising since 6:00 PM from near 30 to just above 50
    • %K is crisscrossing %D lower;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving up since 9:45 PM
  • The Bollinger Band is relatively stable; price near mid-band
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly lower on Friday, June 19 in higher volume. NASDAQ Composite closed up. Indices gapped up at the open and traded down for the rest of the day. Most indices made Bearish Engulfing type of candlestick formation. NASDAQ is still leading the market.

For the week, major U.S indices closed mostly higher in lower volume. Dow Jones Transportation Average closed lower. Markets in Asia and Europe also close up. U.S. Dollar and Yen closed up along with Crude Oil and gold. Treasury yields were down. All but three S&P sectors – Energy, Utility and Real Estate – were up for the week.

From Briefing.com:

The S&P 500 declined 0.6% on this quadruple-witching expiration Friday, as renewed concerns about a recovery and the coronavirus tempered the market’s early enthusiasm. The Dow Jones Industrial Average lost 0.8%, and the Russell 2000 lost 0.6%. The Nasdaq Composite (+0.03%), however, eked out an incremental gain.

[…]

The market closed off its lows, but most sectors still finished lower, including the S&P 500 utilities (-3.1%) and energy (-1.7%) sectors at the bottom of the standings. The health care sector (+0.9%) was the lone sector in the green amid gains in its biotech components. The iShares NASDAQ Biotechnology ETF (IBB 137.85, +4.36) rose 3.3%.

[…]

U.S. Treasuries ended the session near their flat lines after trading lower in early action. The 2-yr yield and the 10-yield remained unchanged at 0.19% and 0.70%, respectively. The U.S. Dollar Index increased 0.3% to 97.67. WTI crude rose 2.5% (+$0.95) to $39.74/bbl.

[…]
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