Market Remarks

Morning Notes – Wednesday, June 29, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a bit higher at 9:00 AM; moving sideways since 2:15 PM between 3840.00 and 3812.00;
  • The odds are for a sideways to an up day with elevated volatility – watch for a break below 3912.00 for a change of sentiments
  • The key economic data report due during the day:
    • Final GDP ( -1.6% vs. -1.5%; prev. -1.5% ) at 8:30 AM
    • Final GDP Price Index ( 8.2% vs. 8.1% est.; prev. 8.1% ) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3820.14, 3802.58, and 3784.07
  • Critical resistance levels for S&P 500 are 3832.09, 3867.30, and 3889.78
  • Key levels for E-mini futures: break above 3840.00, the high at 8:00 AM and a break below 3812.00, the low at 3:45 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2022) closed at 3925.25 and the index closed at 3921.55 – a spread of about +3.75 points; the futures closed at 3925.50; the fair value is +1.75
  • Pre-NYSE session open, futures are mixed – at 9:00 AM, S&P 500 futures were up by +3.75, Dow up by +76; and NASDAQ down by -3.75

Markets Around The World

  • Markets in the East closed lower
  • European markets are down
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are mostly lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.206%, down -27.7 basis points from two weeks ago;
    • The 30-year is at 3.310%, down -12.2 basis points;
    • The 2-year yield is at 3.103%, down -28.8 basis points;
    • The 10-Year-&-2-Year spread is at 0.072, up from 0.061
    • The 30-Year-&-10-Year spread is at 0.104, up from -0.051
  • VIX
    • At 28.81 @ 9:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 35.05 on June 13; low = 24.94 on May 4
    • Sentiment: Risk-Off

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 large red candle that is forming a three-day Evening Star pattern after a small rally
    • Stochastic (9, 1, 3): %K crossed below %D;
    • RSI-9 is near 45; above 8-day EMA;
  • Belo 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Broke below a Double Top pattern at 10:00 AM on Tuesday – the 100% extension target near 3824.00 is achieved and the 161;8% extension target is near 3787.00
    • RSI-21 bounced up to above 35 from below 25
    • Below EMA20, which is at/above EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Moving sideways since 2:30 PM near the lows after declining during most of the Tuesday
    • RSI-21 is around 40
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 8:00 PM
  • The Bollinger Band is relatively stable and narrow
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Tuesday, June 28, in mixed volume. Dow Jones Industrial Average and Dow Jones Transportation Average traded in lower volume. Major indices opened higher but turned around in the first hour of trading and then traded lower for most of the day.

From Briefing.com:

[…]

The three main indices couldn’t keep the bounce effort going and sold off steadily after that, ultimately finishing near their worst levels of the day. The S&P 500 for its part closed a fraction below Friday’s low.

[…]

The Vanguard Mega Cap Growth ETF (MGK) closed down 3.4% versus the Invesco S&P 500 Equal Weight ETF (RSP) which closed down by 1.5%. The Russell 2000 was down 1.9% and S&P Mid Cap 400 was down 1.4%.

[…]

Earlier, advancers led decliners at the NYSE by a 2-to-1 margin. By the close, decliners led advancers by a greater than 2-to-1 margin at the NYSE and the Nasdaq.

Ten of the 11 S&P 500 sectors closed in the red with losses ranging from 0.4% (utilities) to 4.0% (consumer discretionary). The lone holdout in the green was energy, up 2.7%.

[…]
  • The Conference Board’s Consumer Confidence Index dropped to 98.7 in June (Briefing.com consensus 101.0) from a downwardly revised 103.2 (from 106.4) in May. This is the lowest reading since February 2021 and compares to 128.9 in the same period a year ago.
  • […]
  • The Advance report for International Trade in Goods in May showed a deficit of $104.3 billion, versus a revised $106.7 billion (from $105.9 billion) in April. The Advance report for Retail Inventories in May rose 1.1% versus the prior month’s increase of 0.7%. The Advance report for Wholesale Inventories in May rose 2.0% versus April’s revised increased of 2.3% (from 2.1%).
  • The S&P Case-Shiller Home Price Index for April was 21.2% (Briefing.com consensus 21.1%) compared to the prior revised reading of 21.1% (from 21.2%). The FHFA Housing Price Index for April was 1.6% compared to the prior revised reading of 1.6% (from 1.5%).
[…]
  • Dow Jones Industrial Average: -14.8% YTD
  • S&P 500: -19.8% YTD
  • S&P 400: -18.8% YTD
  • Russell 2000: -22.6% YTD
  • Nasdaq Composite: -28.5% YTD

Overseas: 

  • Europe: DAX +0.4%, FTSE +0.9%, CAC +0.6%
  • Asia: Nikkei +0.7%, Hang Seng +0.9%, Shanghai +0.9%

Commodities: 

  • Crude Oil +2.62 @ 111.96
  • Nat Gas -0.01 @ 6.51
  • Gold -1.70 @ 1821.90
  • Silver -0.34 @ 20.79
  • Copper +0.02 @ 3.76
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