Morning Notes – Thursday, May 4, 2023

Sunil Sharma

2 years ago

Directional Bias For The Day:

S&P Futures are lower at 9:00 AM – moving down since 12:30 AM – down more than 32 points
The odds are for a down day with elevated volatility – watch for a break above 4118.00 for a change of sentiments
The major economic data reports due during the day:
- ECB Main Refinancing Rate ( 3.75% vs. 3.75% est.; prev. 3.5%) at 8:15 AM
- Unemployment Claims ( 242K vs. 239K est.; prev. 229K) at 8:30 AM
- Prelim Nonfarm Productivity ( -2.7% vs. -1.7% est.; prev. 1.7%) at 8:30 AM
- Prelim Unit Labor Costs ( 6.3% vs. 5.6% est.; prev. 3.2% ) at 8:30 AM
- Trade Balance ( -64.2B vs. -63.7B est.; prev. –70.5B ) at 8:30 AM
- ECB Press Conference at 8:45 AM

Directional Bias Before Open:

Weekly: Uptrend Resumed
Daily: Uptrend Under Pressure
120-Min: Side-Down

30-Min: Down-Side
15-Min: Side-Down
6-Min: Down

Key Levels:

Critical support levels for S&P 500 are 4075.29, 4049.35, and 4032.10
Critical resistance levels for S&P 500 are 4100.77, 4116.56, and 4140.45
The key levels for E-mini futures are a break above 4115.75, the high at 3:45 AM, and a break below 4075.50, the low at 6:00 PM on Wednesday

Pre-Open

On Wednesday at 4:00 PM, S&P futures (June 2023) closed at 4107.50, and the index closed at 4090.75 – a spread of about +16.75 points; the futures closed at 4107.50; the fair value is +0.00
Pre-NYSE session open, futures were lower – at 9:00 AM, S&P 500 futures were down by -9.50, Dow by -54, and NASDAQ by -6.25

Markets Around The World

Markets in the East closed mostly higher – Sydney and Seoul closed lower; Tokyo was closed
European markets are lower
Currencies (Compared to two weeks ago):

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

Commodities (Compared to two weeks ago):
- Energy futures are lower
- Precious metals are higher
- Industrial metals are lower
- Soft commodities are mostly lower
Treasuries (Compared to two weeks ago)
- The 10-year yield closed at 3.403, down -19.9 basis points from two weeks ago;
- The 30-year is at 3.715%, down -7.4 basis points;
- The 2-year yield is at 3.838%, down -40.8 basis points;
- The 10-Year-&-2-Year spread is at -0.435, up from -0.644
- The 30-Year-&-10-Year spread is at 0.312, up from +0.187
VIX
- At 19.26 @ 9:00 AM; up from the last close; above the 5-day SMA;
- Recent high = 25.21 on March 24; low = 15.53 on May 1
- Sentiment: Risk-Off

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

Weekly:	The week ending on April 28 was a green candle with almost no upper shadow and a long lower shadow Stochastic (9,1, 3): %K is above the %D; RSI-9 is above 60 The week was up +35.96 or +0.9%; the 5-week ATR is 97.90 An up week, third in the last five weeks, and sixth in the previous ten weeks; The weekly pivot point=4129.63, R1=4209.91, R2=4250.34; S1=4089.20, S2=4008.92; R1/S1/S2/S3 pivot levels were breached Above 10-week EMA and 39-week SMA; below 89-week SMA Uptrend
*Daily*	A red candle with almost no lower shadow and a long upper shadow. Stochastic (9, 1, 3): %K is below the %D RSI-9 declined to just above 40; below 8-DMA Below 20-day EMA; at/above 50-day EMA; above 100-day SMA, and 200-day SMA; Uptrend Under Pressure
*2-Hour (E-mini futures)*	Moving down since 12:00 PM on May 1 – making lower highs and lower lows RSI-21 is below 40 Below EMA20, which is below EMA10 of EMA50 Bias: Side-Down
*30-Minute (E-mini futures)*	Trending down since 12:30 AM on May 1 RSI-21 is moving along 40 Below EMA 20, which is below EMA10 of EMA50 Bias: Down-Side
*15-Minute (E-mini futures)*	The Bollinger Band (20, 2.0) has been moving down since 1:30 AM. The Bollinger Band is expanding a little since 4:30 AM, with the price walking down the lower band Bias: Side-Down

Previous Session

Major U.S. indices closed mostly lower on Wednesday, May 3, in mostly mixed volume. Russell 2000 and Dow Jones Transportation Average closed higher. NASDAQ Composite and Russell 2000 traded in higher volume.

The major indices opened flat and then first declined a little and then advanced to the day’s higher before falling sharply after the FOMC statement and the press conference, closing near the lows for the day.

From Briefing.com:

[…]
Notably, the Russell 2000 (+0.4%) was able to log a slim gain today despite losses for other major indices.
[…]
All 11 S&P 500 sectors closed with losses ranging from 0.1% (health care) to 1.9% (energy).
[…]
Meanwhile, falling oil prices, which fell more than $3.00 today to $68.53/bbl on growth concerns, kept pressure on the energy sector.

The 2-yr note yield fell two basis points today to 3.95% and the 10-yr note yield fell four basis points to 3.40%. The U.S. Dollar Index fell 0.6% to 101.35.

Nasdaq Composite: +14.9% YTD

S&P 500: +6.5% YTD

Dow Jones Industrial Average: +0.8% YTD

S&P Midcap 400: +0.9% YTD

Russell 2000: -1.3% YTD

[…]

The ADP Employment Change showed an increase of 296,000 in April (Briefing.com consensus 142,000) following a revised increase of 142,000 in March (from 145,000).

The final IHS Markit Services PMI reading for April fell to 53.6 from 53.7.

The ISM Non-Manufacturing Index for April increased to 51.9% (Briefing.com consensus 51.9%) from 51.2% in March. The dividing line between expansion and contraction is 50.0%, so the April reading reflects continued growth in the services sector at a somewhat faster pace than the prior month.

[…]

The weekly EIA Crude Oil Inventories showed a draw of 1.28 million barrels after last week’s draw of 5.05 million barrels.

[…]
Overseas:

Europe: DAX +0.6%, FTSE +0..2%, CAC +0.3%

Asia: Nikkei market closed, Hang Seng -1.8%, Shanghai market closed

Commodities:

Crude Oil -3.18 @ 68.53

Nat Gas -0.06 @ 2.35

Gold +6.70 @ 2030.10

Silver +0.07 @ 25.66

Copper -0.0 2@ 3.85