Market Remarks

Morning Notes – Wednesday June 24, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a sideways to down day with elevated volatility; – watch for break above 3126,00 for change of sentiments
  • Key economic data due:
    • HPI ( 0.3% est.; prev. 0.1%) at 9:00 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-Down
  • 15-Min: Side-Down
  • 6-Min:Down-Side

Key Levels:

  • Critical support levels for S&P 500 are 3120.87, 3104.09 and 3089.81
  • Critical resistance levels for S&P 500 are 3127.12, 314116 and 3154.90
  • Key levels for E-mini futures: break above 3126.00, the high of 12:30 AM and break below 3081.00, the low of 5:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2020) closed at 3119.75 and the index closed at 3131.29 – a spread of about -11.50 points; futures closed at 3118.50 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are lower – at 8:00 AM, S&P 500 futures were down by -22.00; Dow by -224 and NASDAQ by -28.50

Markets Around The World

  • Markets in East closed mixed – Shanghai, Sydney and Seoul closed up
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CAD
    • INR/USD
    • EUR/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Gold
    • Cotton
    • Cocoa
    • Crude Oil
    • NatGas
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
  • Bond
    • 10-yrs yield closed at 0.709%, up from June 22 close of 0.704;
    • 30-years is at 1.489% up from 1.461%
    • 2-years yield is at 0.199% up from 0.193%
    • The 10-Year-&-2-Year spread is at 0.516 up from 0.514
  • VIX
    • Is at 33.14; up +1.77 from June 23 close; above 5-day SMA;
    • Recent high 44.44 on June 15; 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 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 gapped up with small upper shadow and no lower shadow within a congestion area
    • %K is above %D above 80;
    • RSI-9 is near 60; 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; declining to the lower bound
    • RSI-21 declined to below 40 from near 70
    • %K is crisscrossing %D lower
  • Below EMA10 of EMA50, which is below EMA20
  • Bias: Side
30-Minute (E-mini futures)
  • Moving down since 8:00 AM on Tuesday from 3145.75 to 3095.00; within a horizontal channel – between 3147.00 and 3064.00 – since June 15;
    • RSI-21 declining from above 60 to below 40
    • %K is above %D;
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving down since 6:30 PM
  • The Bollinger Band expanded from 3:15 AM to 8:00 AM; contracting slightly since
    • Stochastic (9, 1, 3): %K is above %D
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Tuesday, June 23 in mixed volume. S&P 500 and Russell 2000 traded in lower volume. Indices opened higher and made highs for the day in the morning session before declining in the afternoon session. NASDAQ Composite made all time high. All but four S&P sectors – Consumer Staples, Utilities, Real Estate and Telecom – closed higher.

From Briefing.com:

The S&P 500 gained 0.4% on Tuesday amid more indications of an economic recovery, while the Nasdaq Composite (+0.7%) pulled ahead to close at another record high for its eighth straight advance. The Dow Jones Industrial Average (+0.5%) and Russell 2000 (+0.4%) also posted modest gains, but the market did close near session lows. […]

Elsewhere, U.S. Treasuries finished near their flat lines in another lackluster session in the bond market, while gold futures rose 0.9% to $1782.00/ozt. 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 0.3% to 96.72. WTI crude declined 0.5% to $40.38/bbl.

[…]
  • New home sales increased sharply in May, rising 16.6% m/m to a seasonally adjusted annual rate of 676,000 (Briefing.com consensus 635,000). The increase came on the heels of a sharp downward revision for April to 580,000 from 623,000.
    • The key takeaway from the report is that sales activity bounced back smartly in May, reflecting a welcome pickup in contract signings as COVID-19 shutdown pressures lessened. This understanding should foster expectations that sales activity will continue to improve in coming months given the tight supply of existing homes for sale, low mortgage rates, and pent-up demand.
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