Market Remarks

Morning Notes – Wednesday, May 17, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM. Futures have been advancing since 3:30 AM – up more than 20 points.
  • The odds are for an up day – watch for a break below 4131.00 for a change in sentiments
  • The major economic data reports due during the day:
    • Building Permits ( 1.42M vs. 1.44M est.; prev. 1.43M) at 8:30 AM
    • Housing Starts ( 1.40M vs. 1.40M est.; prev. 1.37M) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4111.65, 4099.94, and 4084.73
  • Critical resistance levels for S&P 500 are 4143.74, 4154.28, and 4164.10
  • The key levels for E-mini futures are 4143.75, the high at 12:30 AM, and 4133.25, the high at 8:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (June 2023) closed at 4123.00, and the index closed at 4109.90 – a spread of about +13.00 points; the futures closed at 4123.00; the fair value is +0.00
  • Pre-NYSE session open, futures were higher – at 9:00 AM, S&P 500 futures were up by +18.75, Dow by +165, and NASDAQ by +30.75

Markets Around The World

  • Markets in the East closed mostly lower – Tokyo and Seoul closed higher
  • European markets are mostly higher – the UK and Switzerland are down
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • GBP/USD
  • USD/CHF
  • NZD/USD
  • INR/USD
  • EUR/USD
  • USD/JPY
  • AUD/USD
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.549, up +11.0 basis points from two weeks ago;
    • The 30-year is at 3.871%, up +13.8 basis points;
    • The 2-year yield is at 4.080%, up +9.8 basis points;
    • The 10-Year-&-2-Year spread is at -0.531, up from -0.543
    • The 30-Year-&-10-Year spread is at 0.322, up from +0.294
  • VIX
    • At 17.72 @ 8:45 AM; down from the last close; above the 5-day SMA;
    • Recent high = 21.23 on May 4; low = 15.53 on May 1
    • Sentiment: Risk-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 small red candle with a small upper shadow and almost no lower shadow. The index has moved within a narrow range for the past seven trading days.
    • Stochastic (9, 1, 3): %K crossed below the %D;
    • RSI-9 dropped below 50; below 8-DMA
  • Below 20-day EMA; above 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving sideways around the middle of a Horizontal Channel between 4205.00 and 4060.00 that has been forming since March 30
    • RSI-21 has up to just above 50 from near 30
    • Above EMA20 but below EMA10 of EMA50
  • Bias:  Side
30-Minute (E-mini futures)
  • Moving sideways to up 4:00 PM on Tuesday;
    • RSI-21 has drifted above 50 from near 30
    • Above EMA 20, which is at EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 4:15 AM
  • The Bollinger Band has been contracting a little since 8:00 AM, with the price declining to the middle band from the upper band
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Tuesday, May 16, in mostly higher volume. Russell 2000 traded in lower volume.

The major indices opened lower flat and then drifted sideways in a narrow range for most of the day before declining more in the last half-hour of trading.

From Briefing.com:

[…]

The major indices closed near their worst levels of the day, though,

[…]

The Invesco S&P 500 Equal Weight ETF (RSP) fell 1.4% while the Vanguard Mega Cap Growth ETF (MGK) logged a 0.1% gain.

[…]

WTI crude oil futures fell 0.6% to $70.70/bbl and copper futures fell 2.2% to $3.67/lb.

Nine of the 11 S&P 500 sectors closed with losses. The communication services (+0.6%) and information technology (+0.2%) sectors were alone in the green while the real estate (-2.6%) and energy (-2.5%) sectors suffered the largest declines.

[…]

The 2-yr note yield, at 3.99% before the data, rose seven basis points to 4.07%. The 10-yr note yield, at 3.49% before the data, rose four basis points to 3.55%.

  • Nasdaq Composite: +17.9% YTD
  • S&P 500: +7.0% YTD
  • Dow Jones Industrial Average: -0.4% YTD
  • S&P Midcap 400: -0.6% YTD
  • Russell 2000: -1.4% YTD
[…]
  • April Retail Sales 0.4% (Briefing.com consensus 0.7%); Prior was revised to -0.7% from -1.0%; April Retail Sales ex-auto 0.4% (Briefing.com consensus 0.3%); Prior was revised to -0.5% from -0.8%
  • […]
  • April Industrial Production 0.5% (Briefing.com consensus 0.0%); Prior was revised to 0.0% from 0.4%; April Capacity Utilization 79.7% (Briefing.com consensus 79.8%); Prior was revised to 79.4% from 79.8%
  • […]
  • March Business Inventories -0.1% (Briefing.com consensus 0.0%); Prior was revised to 0.0% from 0.2%’
  • May NAHB Housing Market Index 50 (Briefing.com consensus 45); Prior 45
[…]

Overseas:

  • Europe: DAX -0.1%, FTSE -0.3%, CAC -0.2%
  • Asia: Nikkei +0.7%, Hang Seng +0.0%, Shanghai -0.6%

Commodities: 

  • Crude Oil -0.41 @ 70.70
  • Nat Gas -0.03 @ 2.51
  • Gold -32.60 @ 1991.20
  • Silver -0.41 @ 23.89
  • Copper -0.08 @ 3.67
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