Market Remarks

Morning Notes – Wednesday June 2, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for a sideways to an up day – watch for a break below 4190.50 and a break above 4207.75 for clarity
  • Key economic data report due during the day:
    • Beige Book at 2:00 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4200.34, 4197.59, and 4191.10
  • Critical resistance levels for S&P 500 are 4209.21, 4220.32, and 4234.12
  • Key levels for E-mini futures: break above 4207.75, the high of 11:30 AM  on June 1 and break below 4190.75, the low of 7:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (June 2021) closed at 4199.25 and the index closed at 4202.04 – a spread of about -2.75 points; futures closed at 4198.50 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are slightly higher – at 8:00 AM, S&P 500 futures were up by +2.00; Dow by +30, and NASDAQ by +4.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai, and Singapore closed down; Tokyo, Sydney, and Seoul closed up;
  • European markets are mostly higher – Germany and Spain are down
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.615%, down -2.7 basis points from two weeks ago;
    • 30-years is at 2.296%, down -8.8 basis points;
    • 2-years yield is at 0.149%, down -0.8 basis points;
    • The 10-Year-&-2-Year spread is at 1.466, down from 1.485
  • VIX
    • At 17.94 @ 7:45 AM; higher from the last close; above 5-day SMA;
    • Recent high =  25.96 on May 19; low =  15.90 on May 28
    • Sentiment: Risk-Off-Neutral

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 relatively small Bearish Engulfing candle following a red candle;
    • %K is crossed below %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)
  • Moving sideways since 12:00 PM on May 24
    • RSI-21 is near 75
    • At EMA20, which is at EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways since 10:30 AM on June 1;
    • RSI-21 is moving around 50
    • Above EMA20 but below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 5:45 PM
  • The Bollinger Band is expanded slightly;
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Side

Previous Session

Major U.S. indices closed mostly higher on Tuesday, June 1, the day after Memorial Day weekend, in mixed volume. S&P 500 and NASDAQ Composite closed down. S&P 500 and Dow Jones Industrial Average traded in lower volume. The day’s range was small and the indices mostly made bearish or reversal candles.

From Briefing.com:

The S&P 500 declined 0.1% on Tuesday after starting with a 0.7% gain and finding resistance at its all-time highs from last month. The Dow Jones Industrial Average (+0.1%) and Nasdaq Composite (-0.1%) also closed little changed and off early highs, while the Russell 2000 rose 1.1%. […]

The S&P 500 energy sector (+3.9%) stood atop the sector leaderboard with a 4% gain, further supported by higher oil prices ($67.79/bbl, +1.47, +2.2%) and a decision from OPEC+ to gradually ease current supply cuts.

The real estate (+1.7%), materials (+1.4%), financials (+0.7%), and industrials (+0.4%) sectors also closed higher.

[…]

Conversely, the health care sector (-1.6%) underperformed with a 1.6% decline, yet it was the information technology sector (-0.4%) that exerted the influential weakness.

[…]

The 10-yr yield increased three basis points to 1.62% while the 2-yr yield increased one basis point to 0.15%. The U.S. Dollar Index decreased 0.2% to 89.89.

[…]
  • The ISM Manufacturing Index for May moved up to 61.2% (Briefing.com consensus 61.0%) from 60.7% in April. A number above 50.0% connotes an expansion in manufacturing activity. May marked the twelfth straight month of expansion.
  • […]
  • Total construction spending increased 0.2% m/m in April (Briefing.com consensus 0.5%) following an upwardly revised 1.0% increase (from 0.2%) in March. Total private construction rose 0.4% m/m while total public construction spending decreased 0.6%.
  • […]
  • The final IHS Market Manufacturing PMI for April checked in at 62.1%, up from 61.5% in the preliminary reading.
[…]
  • Russell 2000 +16.2% YTD
  • Dow Jones Industrial Average +13.0% YTD
  • S&P 500 +11.9% YTD
  • Nasdaq Composite +6.6% YTD

Overseas: 

  • Europe: DAX +1.0%, FTSE +0.8%, CAC +0.7%
  • Asia: Nikkei -0.2%, Hang Seng +1.2%, Shanghai +0.3%

Commodities: 

  • Crude Oil +1.53 @ 67.91
  • Nat Gas +0.12 @ 3.10
  • Gold +0.70 @ 1904.80
  • Silver +0.14 @ 28.11
  • Copper -0.03 @ 4.65
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