Morning Notes – Monday, May 2, 2022

Directional Bias For The Day:

• S&P Futures are a bit higher at 9:15 AM; moving sideways to down since 4:00 PM on Friday in large swings
• The odds are for a down day with a good chance of staying within a range with elevated volatility – watch for a break above 4150.00 and a break below 4110.75 for clarity
• Key economic data report due during the day:
  • Final Manufacturing PMI ( 59.7 est.; prev. 59.7) at 9:45 AM
  • ISM Manufacturing PMI ( 57.5 est.; prev. 57.1) at 10:00 AM
  • Construction Spending ( 0.8% est.; prev. 0.5%) at 10:00 AM
  • ISM Manufacturing Price ( 87.6 est.; prev. 87.1) at 10:00 AM

Directional Bias Before Open:

Key Levels:

• Critical support levels for S&P 500 are 4114.65, 4083.84, and 4061.41 (May 2021)
• Critical resistance levels for S&P 500 are 4162.52, 4208.43, and 4232.00
• Key levels for E-mini futures: break above 4150.00, the high at 5:30 AM and a break below 4110.75, the low at 8:45 AM

Pre-Open

• On Friday at 4:00 PM, S&P futures (June 2022) closed at 4127.75 and the index closed at 4131.93 – a spread of about -4.25 points; futures closed at 4127.50 for the day; the fair value is -0.25
• Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +4.25; Dow by +90; and NASDAQ by +10.25

Markets Around The World

• Markets in the East closed lower – Shanghai, Hong Kong, and Singapore were closed for trading
• European markets are lower
• Currencies (Compared to two weeks ago):
  

  Up	Down
  Dollar index USD/JPY USD/CHF USD/CAD INR/USD	EUR/USD GBP/USD AUD/USD NZD/USD

• Commodities (Compared to two weeks ago):
  • Energy futures are lower
  • Precious metals are lower
  • Industrial metals are lower
  • Soft commodities are mostly lower
• Treasuries (Compared to two weeks ago)
  • 10-years yield closed at 2.963%, up +13.5 basis points from two weeks ago;
  • 30-years is at 3.028%, up +10.9 basis points;
  • 2-years yield is at 2.572%, up +11.7 basis points;
  • The 10-Year-&-2-Year spread is at 0.244, down from 0.373
  • The 30-Year-&-10-Year spread is at 0.065, down from 0.091
• VIX
  • At 34.40 @ 8:30 AM; up from the last close; above the 5-day SMA;
  • Recent high = 37.52 on March 8; low = 19.75 on April 20
  • Sentiment: Risk-Off

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

Previous Session

Major U.S. indices closed lower on Friday, April 29, in mixed volume. Dow Transportation Average and NASDAQ Composite traded in lower volume. and Major indices gapped down a bit in hr morning and the for the rest of the day traded lower, closing near the lows and challenging the lows for the year.

For the week, the major indices closed lower in higher volume. Markets in Asia closed mostly lower. The European markets were down. The dollar index was up, the energy futures were up, the precious metals were down, the industrial metals were mostly down and most soft commodities were down too. The US Treasury yields ticked higher. All S&Psectors closed lower for the week.

From Briefing.com:

The S&P 500 dropped 3.6% on Friday in an orderly retreat fueled by disappointing earnings news and sticky inflation pressures. The Dow Jones Industrial Average (-2.8%) and Russell 2000 (-2.9%) both declined 2.8% while the Nasdaq Composite underperformed with a 4.2% decline. The losses were widespread: all 11 S&P 500 sectors closed lower with losses ranging from 2.0% (materials) to 5.9% (consumer discretionary); 28 of the 30 Dow components closed lower; and declining issues outnumbered advancing issues by a 4:1 margin at the NYSE and a 5:2 margin at the Nasdaq. […] These expectations were also evident in the Treasury market, where the 2-yr yield increased five basis points to 2.69% and the 10-yr yield increased two basis points to 2.89%. The U.S. Dollar Index decreased 0.4% to 103.20. WTI crude futures decreased 0.3%, or $0.28, to $105.03/bbl. […] Personal income increased 0.5% month-over-month (Briefing.com consensus 0.4%) following an upwardly revised 0.7% increase (from 0.5%) in February. Personal spending jumped 1.1% month-over-month (Briefing.com consensus 0.6%) following an upwardly revised 0.6% increase (from 0.2%) in February. The PCE Price Index surged 0.9% month-over-month, which took the year-over-year rate to 6.6% from 6.3% in February. The core PCE Price Index, which excludes food and energy, was up a more modest 0.3%, as expected, leaving the year-over-year increase at 5.2% versus 5.3% in February. […] The Q1 Employment Cost Index increased 1.4% (Briefing.com consensus 1.1%) on a seasonally adjusted basis for the three-month period ending in March. Wages and salaries, which account for about 70% of compensation costs, increased 1.2% and benefit costs, which make up the remainder of compensation costs, increased 1.8% for civilian workers. […] The final University of Michigan Index of Consumer Sentiment for April dropped to 65.2 (Briefing.com consensus 65.7) from the preliminary reading of 65.7. The final reading for March was 59.4. The April uptick was nice to see, although the April reading is one of the lowest readings over the last 10 years. […] The Chicago PMI for April decreased to 58.5 (Briefing.com consensus 62.0) from 62.9 in March. […] Dow Jones Industrial Average -9.3% YTD S&P 500 -13.3% YTD Russell 2000 -17.0% YTD Nasdaq Composite -21.2% YTD