Market Remarks

Morning Notes – Monday June 21, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with elevated volatility – watch for a break below 4160.50 for a change of sentiments
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4164.40, 4151.72, and 4121.97
  • Critical resistance levels for S&P 500 are 4185.30, 4188.65, and 4204.78
  • Key levels for E-mini futures: break above 4177.50, the high of 5:15 AM and break below 4160.50, the low of 4:00 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2021) closed at 4154.75 and the index closed at 4166.45 – a spread of about -11.75 points; futures closed at 4153.50 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +14.50; Dow by +183, and NASDAQ by +24.25

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Mumbai closed higher
  • European markets are mostly higher – Spain is down
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.460%, down -10.0 basis points from two weeks ago;
    • 30-years is at 2.058%, down -18.1 basis points;
    • 2-years yield is at 0.206%, up +10.1 basis points;
    • The 10-Year-&-2-Year spread is at 1.206, down from 1.407
  • VIX
    • At 20.50 @ 7:45 AM; down from the last close; above 5-day SMA;
    • Recent high =  25.96 on May 19; low =  15.04 on June 14
    • 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 June 18 was a Bearish Engulfing candle at all-time highs with almost no lower shadow and a small upper shadow
    • Stochastic (9,1, 3): %K crossed below %D;
    • RSI (9) is just below 60
  • The week was down -80.99 or -1.9%; the 5-week ATR is 78.02
  • A down week; second in the last five weeks, and fourth in the last ten weeks
  • The weekly week pivot point=4196.00, R1=4227.61, R2=4288.76; S1=4134.85, S2=4103.24; S1/S2/S3 pivot levels were breached
  • Below 10-week EMA; above 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A relatively large red candle with almost no upper shadow and lower shadows;
    • %K is below %D; near 0
    • RSI-9 declined to just above 30; below 8-day EMA
  • Below 20-day EMA and above 50-day EMA; above 100-day and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Declining since 2:00 AM on June 15 from the all-time high in steps; bouncing up from a low 4126.75 at 10:00 PM on  June 20;
    • RSI-21 bounced above 50 after making a Bullish Divergence at 10:00 PM
    • At/below EMA20; which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Bouncing up since 11:00 PM on Sunday from a low of 4126.75; drifting sideways-to-down since 5:00 AM
    • RSI-21 is around 55
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is rising up since 3:15 AM
  • The Bollinger Band is contracting slightly since 7:45 AM with price declining to the middle band from the upper band
    • Stochastic (9, 1, 3): %K is above %D since 7:30 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Friday, June 18 in mostly higher volume. NASDAQ Composite traded in lower volume. All S&P 500 sectors closed lower.

For the week, major US indices closed lower in higher volume. Asian markets closed mixed and European markets closed mostly lower. The dollar index was up and most commodities were down for the week. The US Treasury yields declined and all but one S&P sector – Technology – closed lower for the week.

From Briefing.com:

The S&P 500 declined 1.3% on this quadruple witching-options expiration Friday, as the market continued to reprice the reflation narrative while investors digested some hawkish-sounding Fed comments. The Russell 2000 fell 2.2%, the Dow Jones Industrial Average fell 1.6%, and the Nasdaq Composite fell 0.9%. […]

In turn, the inflation-sensitive 10-yr yield fell six basis points to 1.45%, while the fed-funds-sensitive 2-yr yield rose four basis points to 1.27%.

This curve-flattening activity was a major headwind for the S&P 500 financials sector (-2.5%), which was joined by the energy (-2.9%) and utilities (-2.6%) sectors as laggards with declines over 2.0%. The consumer discretionary sector (-0.5%) outperformed on a relative basis with a 0.5% decline.

[…]

The U.S. Dollar Index increased 0.4% to 92.26. WTI crude futures rose 0.8%, or $0.60, to $71.67/bbl.

[…]
  • Russell 2000 +13.3% YTD
  • S&P 500 +10.9% YTD
  • Nasdaq Composite +8.9% YTD
  • Dow Jones Industrial Average +8.8% YTD
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