Morning Notes – Tuesday June 23, 2020

/ June 23, 2020

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for a sideways to up day with elevated volatility; – watch for break below 3100,00 for change of sentiments
  • Key economic data due:
    • Flash Manufacturing PMI ( 50.0 est.; prev. 39.8) at 9:45 AM
    • Flash Services PMI ( 46.9 est.; prev. 37.5) at 9:45 AM
    • New Home Sales ( 637K est.; prev. 623K) at 10:00 AM
    • Richmond Manufacturing PMI (-3 est.; prev. -27) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3104.09, 3089.81 and 3079.39
  • Critical resistance levels for S&P 500 are 3139.67, 3143.18 and 3155.53
  • Key levels for E-mini futures: break above 3144.00, the high of 9:30 AM on June 19 and break below 3100.75, the low of 2:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2020) closed at 3106.00 and the index closed at 3117.86 – a spread of about -12.00 points; futures closed at 3110.75 for the day; the fair value is -4.75
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +26.25; Dow by +255 and NASDAQ by +64.75

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • Dollar index
    • GBP/USD
    • USD/CHF
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Coffee
    • Cocoa
    • NatGas
    • Palladium
    • Sugar
    • Cotton
  • Bond
    • 10-yrs yield closed at 0.704%, up from June 19 close of 0.697;
    • 30-years is at 1.461% down from 1.470%
    • 2-years yield is at 0.190% down from 0.198%
    • The 10-Year-&-2-Year spread is at 0.514 up from 0.499
  • VIX
    • Is at 30.85; down -0.92 from June 22 close; below 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 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 small green candle that opened lower but then closed near the mid-point of previous day’s Bearish Engulfing candle
    • %K is crisscrossing %D around 50;
    • RSI-9 is just above 50; above 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 since 10:00 PM on June 15 between 3150.00 and 3060.00; nearing the upper bound
    • RSI-21 near 70 after moving up from below 30
    • %K is above %D
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Moving up since 6:00 PM on Sunday from 3127.00 to 3130.00; within a horizontal channel – between 3147.00 and 3064.00 – since June 15;
    • RSI-21 rising since 9:00 PM from near 40 to just near 60
    • %K is crisscrossing %D lower;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving up since 9:45 PM on Sunday
  • The Bollinger Band is expanding since 3:15 AM with price first walking up the upper bound and then retracing to mid-band
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly higher on Monday, June 22 in lower volume. Dow Jones Transportation Average closed lower. Major indices are trading within a narrow band for the past 5-6 days. All but three S&P sectors – Consumer Discretionary, Technology and Utilities – closed lower.

From Briefing.com:

The S&P 500 gained 0.7% on Monday, but it was the Nasdaq Composite (+1.1%) that continued to steal the spotlight. The tech-sensitive index closed at another record high and rose for the seventh straight day amid strength in the mega-cap technology stocks. The Dow Jones Industrial Average increased 0.6%, and the Russell 2000 increased 1.1%.

[…[

U.S. Treasuries finished little changed after starting the session with small gains. The 2-yr yield was unchanged at 0.19%, and the 10-yr yield increased one basis point to 0.71%. The U.S. Dollar Index declined 0.6% to 97.09. WTI crude futures rose 2.2%, or $0.86, to $40.60/bbl.

[…]
  • Existing home sales declined 9.7% m/m in May to a seasonally adjusted annual rate of 3.91 million (Briefing.com consensus 3.98 million). May marked the third straight month of a decline in sales.
    • The key takeaway from the report is that closed sales in May reflect most contract signings completed in March and April, which is when the brunt of the COVID-19 shutdown effects were felt. Accordingly, the disappointment over weak sales in May should be mitigated by a belief that coming months will feature stronger sales activity.
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