Market Remarks

Morning Notes – Monday, May 8, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM – moving within a trading range between 4142.00 and 4163.00
  • The odds are for a sideways to an up day – watch for a break above 4163.25 and a break below 4142.00 for clarity
  • The major economic data reports due during the day:
    • Final Wholesale Inventories ( 0.1% est.; prev. 0.1%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4126.91, 4112.89, and 4084.73
  • Critical resistance levels for S&P 500 are 4148.30, 4164.10, and 4186.92
  • The key levels for E-mini futures are 4163.25, the high at 2:45 PM on Friday, 4142.50, the low at 8:00 PM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2023) closed at 4151.75, and the index closed at 4136.25 – a spread of about +15.50 points; the futures closed at 4150.25; the fair value is +1.50
  • Pre-NYSE session open, futures were mixed – at 9:00 AM, S&P 500 futures were up by +6.75, Dow up by +87, and NASDAQ down by -21.25

Markets Around The World

  • Markets in the East closed mostly higher – Tokyo and Singapore closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • AUD/USD
  • NZD/USD
  • Dollar index
  • USD/CHF
  • USD/CAD
  • 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 3.496, down -7.4 basis points from two weeks ago;
    • The 30-year is at 3.810%, up 3.2 basis points;
    • The 2-year yield is at 3.908%, down -26.7 basis points;
    • The 10-Year-&-2-Year spread is at -0.412, up from -0.605
    • The 30-Year-&-10-Year spread is at 0.314, up from +0.208
  • VIX
    • At 17.46 @ 8:30 AM; up from the last close; below the 5-day SMA;
    • Recent high = 21.23 on May 4; low = 15.53 on May 1
    • Sentiment: Risk-Neutral-On

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

Weekly:
  • The week ending on May 5 as a small red candle with almost a long lower shadow and a small upper shadow, breaking above the upper bound of a symmetrical triangle
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 is just below 60
  • The week was down -33.23 or -0.8%; the 5-week ATR  is 93.78
  • A down week, third in the last five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=4123.82, R1=4199.35, R2=4262.46; S1=4060.71, S2=3985.18; S1 pivot level was breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A green candle that gapped up with almost no lower shadow and a small lower shadow – a three-day Island pattern
    • Stochastic (9, 1, 3): %K crossed above the %D; below ten
    • RSI-9 turned up above 50; above 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving up since 12:00 PM on May 4 from the lower bound of a Horizontal channel that has been emerging since March 30 between 4200.00 and 4060.00;
    • RSI-21 has risen to above 75 from 25 n May 4 and after making a Bullish Divergence
    • Above EMA20, which is above EMA10 of EMA50
  • Bias:  Side-Up
30-Minute (E-mini futures)
  • Moving sideways since 2:30 PM on Friday after rising 90 points from near 4062.00 on Thursday mid-day
    • RSI-21 is moving along 65
    • Above EMA 20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting up since 12:30 AM.
  • The Bollinger Band is relatively narrow and stable
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Friday, May 5, in mixed volume. Dow Jones Industrial Average and NASDAQ Composite traded in higher volume.

The major indices gapped up at the open and then traded mostly higher for the rest of the day. Most made a three-day lower island formation.

For the week, the major US indices closed mostly lower. Dow Jones Transportation Average and NASDAQ Composite closed higher. The markets in Asia and Europe were mixed too. The dollar index was down, energy futures were down, the precious metals were up, the industrial metals were down, and the soft commodities were mixed for the week. The US Treasury yields closed up. All but three S&P sectors – Technology, Utilities, and Healthcare – closed down for the week.

From Briefing.com:

[…]

The stock market closed out the first week of May on an upbeat note.

[…]

The SPDR S&P Regional Bank ETF (KRE) jumped 6.3% and the S&P 500 financials sector closed near the top of the leaderboard among the 11 sectors with a 2.4% gain. Other top performing sectors included the energy (+2.8%) and information technology (+2.7%) sectors.

[…]

The 2-yr note yield rose 18 basis points to 3.91% and the 10-yr note yield rose 10 basis points to 3.45%.

[…]
  • Nasdaq Composite: +16.9% YTD
  • S&P 500: +7.7% YTD
  • Dow Jones Industrial Average: +1.6% YTD
  • S&P Midcap 400: +1.3% YTD
  • Russell 2000: -0.1% YTD
[…]
  • Nonfarm payrolls grew by 253,000 in April (Briefing.com consensus 180,000) following a revised increase of 165,000 in March (from 236,000). Nonfarm private payrolls grew by 230,000 in April (Briefing.com consensus 160,000) after a revised increase of 123,000 in March (from 189,000).
  • The unemployment fell to 3.4% in April (Briefing.com consensus 3.6%) from 3.5% in March.
  • The average work week was unchanged in April at 34.4 hours (Briefing.com consensus 3.6%). Average hourly earnings increased by 0.5% (Briefing.com consensus 0.3%) after an increase of 0.3%.
[…]
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