Market Remarks

Morning Notes – Tuesday, June 28, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; forming a symmetrical triangle with a high point of 3937.75 and  a low point of 3908.00
  • The odds are for an up day with elevated volatility and with a good chance of sideways from pre-open levels  – watch for a break below 3908.00 for a change of sentiments
  • The key economic data report due during the day:
    • Goods Trade Balance ( -104.3B vs. -106.0B; prev. -106.7B ) at 8:30 AM
    • Prelim Wholesale Inventories ( 2.0% vs. 2.1% est.; prev. 2.2% ) at 8:30 AM
    • HPI ( 1.6% vs. 1.5% est.; prev. 1.6%) at 9:00 AM
    • S&P/CS Composite-20 HPI (21.2% vs. 21.5% est; prev. 21.2% ) at 9:00 AM
    • CB Consumer Confidence ( 100.0 est.; prev. 106.4) at 10:00 AM
    • Richmond Manufacturing Index ( -4 est.; prev. -9%) at 10:00 AM

Directional Bias Before Open:

  • Weekly: In Correction
  • Daily: Confirmed Uptrend
  • 120-Min: Side-Up
  • 30-Min: Up-Side
  • 15-Min: Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for S&P 500 are 3906.35, 3889.66, and 3880.60
  • Critical resistance levels for S&P 500 are 3927.72, 3937.65, and 3943.18
  • Key levels for E-mini futures: break above 3929.50, the high at 7:30 AM and a break below 3910.75, the low at 8:30 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2022) closed at 3905.50 and the index closed at 3900.11 – a spread of about +5.25 points; the futures closed at 3903.75; the fair value is +1.75
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +17.00, Dow by +160; and NASDAQ by +38.50

Markets Around The World

  • Markets in the East closed higher
  • European markets are mostly up – Switzerland is down
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • AUD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.217%, down -14.9 basis points from two weeks ago;
    • The 30-year is at 3.329%, down -3.9 basis points;
    • The 2-year yield is at 3.103%, down -25.5 basis points;
    • The 10-Year-&-2-Year spread is at 0.114, up from 0.008
    • The 30-Year-&-10-Year spread is at 0.112, up from 0.001
  • VIX
    • At 26.90 @ 9:00 AM; up from the last close; below the 5-day SMA;
    • Recent high = 35.05 on June 13; low = 24.94 on May 4
    • Sentiment: Risk-On-Neutral

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

Weekly:
  • The week ending on June 24 was a large green candle that opened near the middle of the previous week’s real body and closed above its high
    • Stochastic (9,1, 3): %K crossed above %D; above 40
    • RSI-9 is above 40 after making a Bullish Divergence
  • The week was up +236.90 or +6.4%; the 5-week ATR  is 231.69
  • An up week; second in the least five weeks and second  in the previous ten weeks; ten of the last twelve weeks were down
  • The weekly pivot point=3846.90, R1=3978.49, R2=4045.24; S1=3780.15, S2=3648.56; R1 pivot level was breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A small red candle near the high/close of the previous day
    • Stochastic (9, 1, 3): %K is above %D; near 100
    • RSI-9 is above 50; above 8-day EMA; Bullish Divergence on June 17
  • Above 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • The sequence of lower highs and lower lows since May 30 is broken; moving up since 10:00 AM on June 17; broke above an Inverse Head-&-Shoulders pattern – the 61;8% extension target near 3910.00 is achieved and the 100% extension target is near 3974.00
    • RSI-21 is moving above 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving sideways within a saucer pattern since 2:30 AM on Monday;
    • RSI-21 is moving up since 10:00 PM; above 50
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 6:30 AM
  • The Bollinger Band is relatively stable
  • Bias: Side

Previous Session

Major U.S. indices closed mostly lower on Monday, June 27, in lower volume. Russell 2000 and NYSE Composite closed higher. The day’s price-action was sideways within a narrow range.

From Briefing.com:

[…]

Of the 11 S&P 500 sectors, three closed in the green. Energy (+2.8%) was the leader by a decent margin followed by the defensive-oriented utilities (+0.8%) and health care (+0.4%) sectors.

The top laggards were the consumer discretionary (-1.1%), communication services (-1.1%), materials (-0.8%), and information technology (-0.6%) sectors.

Separately, Treasury note yields settled the session near their highs of the day after some relatively soft auction results for the 2-yr and 5-yr note yields. The 2-yr note yield rose six basis points to 3.12% while the 10-yr note yield rose seven basis points to 3.19%.

[…]
  • Total durable goods orders increased 0.7% month-over-month (Briefing.com consensus +0.1%) following an unrevised 0.4% increase in April. Excluding transportation, durable goods orders also increased 0.7% (Briefing.com consensus +0.4%) following a downwardly revised 0.2% increase (from 0.3%) in April.
  • […]
  • May Pending Home Sales 0.7% (Briefing.com consensus -3.5%); Prior was revised to -4.0% from -3.9%
[…]
  • Dow Jones Industrial Average: -13.5% YTD
  • S&P 500: -18.2% YTD
  • S&P 400: -17.7% YTD
  • Russell 2000: -21.1% YTD
  • Nasdaq Composite: -26.3% YTD

Overseas: 

  • Europe: DAX +0.5%, FTSE +0.7%, CAC -0.4%
  • Asia: Nikkei +1.4%, Hang Seng +2.4%, Shanghai +0.9%

Commodities: 

  • Crude Oil +1.69 @ 109.34
  • Nat Gas +0.30 @ 6.52
  • Gold -6.00 @ 1823.60
  • Silver +0.02 @ 21.13
  • Copper +0.01 @ 3.74
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