Market Remarks

Morning Notes – Tuesday June 1, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up with a good chance of sideways  to down move from pre-open levels around 4225.99 – watch for a break below 4214.00 for a change of fortune
  • Key economic data report due during the day:
    • Final Manufacturing PMI ( 61.5 est.; prev. 61.5) at 9:45 AM
    • ISM Manufacturing PMI ( 60;.8 est.; prev. 60.7 ) at 10:00 AM
    • Construction Spending ( 0.5% est.; prev. 0.2%) at 10:00 AM
    • ISM Manufacturing Prices ( 88.9 est.; prev. 89.6) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4218.36, 4203.57, and 4197.78
  • Critical resistance levels for S&P 500 are 4225.01, 4238.04, and 4245.74
  • Key levels for E-mini futures: break above 4228.25, the high of 7:15 AM  on Wednesday and break below 4214.25, the low of 4:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2021) closed at 4203.50 and the index closed at 4204.11 – a spread of about -0.75 points; futures closed at 4202.50 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +19.50; Dow by +258, and NASDAQ by +48.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Seoul, and Singapore closed up; Tokyo, Sydney, and Mumbai closed down;
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • NZD/USD
    • Dollar index
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.632%, down -0.8 basis points from two weeks ago;
    • 30-years is at 2.313%, down -4.2 basis points;
    • 2-years yield is at 0.141%, down -0.8 basis points;
    • The 10-Year-&-2-Year spread is at 1.487, down from 1.491
  • VIX
    • At 17.10 @ 8:30 AM; lower from the last close; below 5-day SMA;
    • Recent high =  25.96 on May 19; low =  15.90 on May 28
    • Sentiment: Risk-On

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

Monthly
  • Confirmed Uptrend
  • May 2021 was a Doji with a small upper shadow and a long lower shadow; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 80; 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
Weekly:
  • The week ending on May 28 was a green candle with almost no lower shadow and small upper shadow;
    • Stochastic (9,1, 3): %K is crossing above %D;
    • RSI (9) is just below 70
  • The week was up +48.25 or +1.2%; the 5-week ATR is 104.54
  • An up week; third in the last five weeks, and seventh in the last ten weeks
  • The weekly week pivot point=4197.54, R1=4224.93, R2=4245.74; S1=4176.73, S2=4149.34; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small red candle looking like a doji;
    • %K is above %D
    • RSI-9 is just below 60; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend under Pressure – moving sideways
2-Hour (E-mini futures)
  • Breaking above a sideways move after testing EMA50
    • RSI-21 is near 75
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 12:00 PM on May 31;
    • RSI-21 is above 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 1:45 AM
  • The Bollinger Band is expanded; price is retracing from  the upper band to the middle band
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Friday, May 28, the day before Memorial Day weekend, in mixed volume. Russell 2000 closed down. S&P 500 and NASDAQ Composite traded in higher volume. The day’s range was small and the indices are mostly trading sideways for the past few days.

For the week, the major US indices closed higher in most lower volume. Markets in Asia and Europe closed higher. The dollar index was down, energy and metals were up for the week but the soft commodities were mixed. The US Treasury yields closed down.

From Briefing.com:

The S&P 500 eked out a 0.1% gain on Friday, as equity investors were comforted by the Treasury market’s calm demeanor to further evidence of inflationary pressures. The market, however, did close near session lows due to a flush of selling interest without a news catalyst into the close.

The Nasdaq Composite (+0.1%), Dow Jones Industrial Average (+0.2%), and Russell 2000 (-0.2%) gave up modest gains and closed little changed like the benchmark index.

On inflation, PCE Price Index — the Fed’s preferred inflation gauge — rose 0.6% m/m in April and was up 3.6% yr/yr. The expected year-ahead inflation rate was a record 4.6% in the final May reading for the University of Michigan Index of Consumer Sentiment.

[…][

The real estate sector (+0.7%) was the top-performing sector in the S&P 500, though, and the last-minute selling took the communication services (-0.3%), consumer discretionary (-0.2%), materials (-0.2%), and industrials (-0.1%) sectors into the red on a closing basis.

[…]

The 2-yr yield was flat at 0.14%. The U.S. Dollar Index increased 0.1% to 90.07. WTI crude futures decreased 0.8%, or $0.54, to $66.32/bbl.

[…]
  • Russell 2000 +14.9% YTD
  • Dow Jones Industrial Average +12.8% YTD
  • S&P 500 +11.9% YTD
  • Nasdaq Composite +6.7% YTD
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