Market Remarks

Morning Notes – Thursday May 20, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for a sideways to an up day with elevated volatility
  • Key economic data report due during the day:
    • Philly Fed Manufacturing Index ( 31.5 vs. 40.8 est.; prev. 50.2) at 8:30 AM
    • Unemployment Claims ( 444K vs. 453K est.; prev. 473K) at 8:30 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Under Pressure
  • 120-Min: Side-Down
  • 30-Min: Down-Side
  • 15-Min: Down-Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for S&P 500 are 4083.84, 4061.85, and 4056.88
  • Critical resistance levels for S&P 500 are 4125.99, 4153.70, and 4167.54
  • Key levels for E-mini futures: break above 4114.25, the high of 1:00 AM and break below 4084.50, the low of 5:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2021) closed at 4111.50 and the index closed at 4115.68 – a spread of about -4.25 points; futures closed at 4111.50 for the day; the fair value is +0.0
  • Pre-NYSE session open, futures are mixed – at 9:00 AM, S&P 500 futures were up by +3.50; Dow down by -14, and NASDAQ up by +53.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai, and Seoul closed down; Tokyo, Sydney, and Singapore closed up
  • European markets are mostly higher – Spain is down
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mixed
    • Most soft commodities are mostly down
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.683%, up +9.9 basis points from two weeks ago;
    • 30-years is at 2.387%, up +12.8 basis points;
    • 2-years yield is at 0.161%, up +0.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.522, up from 1.427
  • VIX
    • At 22.30 @ 7:45 AM; higher from the last close; above 5-day SMA;
    • Recent high =  28.93 on May 13; low =  18.61 on May 14
    • Sentiment: Risk-Off-Neutral

The trend and patterns on various time frames for S&P 500:

Monthly
  • Confirmed Uptrend
  • March 2021 was a green candle with a small upper shadow and a lower shadow almost equal to the real body; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 75; broke above a downtrend line from January 2018
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows is resumed
Weekly:
  • The week ending on May 14 was a red candle resembling Bearish Engulfing with almost no upper shadow and a lower shadow almost twice the size of the real body
    • Stochastic (9,1, 3): %K has crossed above %D;
    • RSI (9) is above 75
  • The week was down -58.75 or -1.4%; the 5-week ATR is 97.03
  • A down week; second in the last five weeks, and third in the last ten weeks
  • The weekly week pivot point=4155.71, R1=4254.53, R2=4335.22; S1=4075.02, S2=3976.20; R1/R2 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green Hammer but not after a long decline; bouncing off 50-day EMA
    • %K is below %D
    • RSI-9 is just above 40; below 8-day EMA
  • Below 20-day EMA; at/above 50-day EMA; above 100-day, and 200-day SMA
  • Uptrend under Pressure
2-Hour (E-mini futures)
  • Moving down since 2:00 AM on May 18;
    • Broke below a Double Top pattern at 4:00 PM on May 18;  achieved the 161.8% extension target around 4068.00
    • RSI-21 just below 50 after making a Bearish Divergence at 2:00 AM on Tuesday
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Declining since 2:30 AM on Tuesday; broke below a Double Top pattern; bounced off lows of 4055.75 at 10:30 AM on Wednesday; within a horizontal channel between 4113.00 and 4084.50 since 12:00 PM on Wednesday
    • RSI-21 is at around 50
    • Above EMA20; at/below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 6:30 PM
  • The Bollinger Band is expanding since 4:15 AM; the price  walked down the lower band till 5:45 AM and then bounced up to the middle band
    • Stochastic (9, 1, 3): %K is crisscrossing %D above 90
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Wednesday, May 19 in higher volume. Major indices gapped down at the open. All but NASDAQ Composite did not close the gap even though they recovered a large portion of the earlier loss later in the trading session.

From Briefing.com:

The S&P 500 declined 0.3% on Wednesday, although it was down as much as 1.6% in early action and spent most of the session on the comeback trail. The Nasdaq Composite (-0.03%) closed relatively unchanged after being down 1.7% intraday. The Dow Jones Industrial Average (-0.5%) and Russell 2000 (-0.8%) underperformed but also closed off intraday lows. […]

Profit-taking efforts were mainly concentrated in the S&P 500 energy (-2.5%), materials (-1.5%), financials (-0.6%), and industrials (-0.6%) sectors. The information technology (+0.3%) and communication services (+0.1%) sectors, however, sneaked their way into positive territory on a closing basis. The Philadelphia Semiconductor Index rose 2.0%.

[…]

The 10-yr yield settled higher by four basis points to 1.68% while the 2-yr yield was unchanged at 0.15%. The U.S. Dollar Index rose 0.5% to 90.16. WTI crude futures fell 3.4%, or $2.20, to $63.31/bbl. The CBOE Volatility Index increased just 3.9% to 22.18 after touching 25.96 at its high.

[…]

Wednesday’s economic data was limited to the weekly MBA Mortgage Applications Index, which increased 1.2% following a 2.1% increase in the prior week.

[…]
  • Russell 2000 +11.1% YTD
  • Dow Jones Industrial Average +10.8% YTD
  • S&P 500 +9.6% YTD
  • Nasdaq Composite +3.2% YTD

Overseas: 

  • Europe: DAX -1.8%, FTSE -1.2%, CAC -1.4%
  • Asia: Nikkei -1.3%, Hang Seng closed for holiday, Shanghai -0.5%

Commodities: 

  • Crude Oil -2.31 @ 63.19
  • Nat Gas -0.04 @ 2.98
  • Gold +13.70 @ 1882.10
  • Silver -0.36 @ 28.00
  • Copper -0.16 @ 4.58
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