Morning Notes – Friday, May 19, 2023

Sunil Sharma

2 years ago

Directional Bias For The Day:

S&P Futures are higher at 8:45 AM. Futures have been advancing since 6:15 AM at the upper bound of a Horizontal Channel.
The odds are for a sideways to an up day – watch for a break above 4225.50 or a break below 4212.00 for clarity
No major economic data reports is due during the day:

Directional Bias Before Open:

Weekly: Uptrend Resumed
Daily: Uptrend Resumed
120-Min: Side-Up

30-Min: Up-Side
15-Min: Side
6-Min: Side

Key Levels:

Critical support levels for S&P 500 are 4195.44, 4186.92, and 4160.04
Critical resistance levels for S&P 500 are 4218.70, 4243.27, and 4266.31
The key levels for E-mini futures are 4225.50, the high at 6:00 PM, and 4212.00, the low at 3:15 AM

Pre-Open

On Thursday at 4:00 PM, S&P futures (June 2023) closed at 4211.25, and the index closed at 4198.05 – a spread of about +13.25 points; the futures closed at 4212.00; the fair value is -0.75
Pre-NYSE session open, futures were higher – at 8:45 AM, S&P 500 futures were up by +12.00, Dow by +98, and NASDAQ by +0.50

Markets Around The World

Markets in the East closed mostly higher – Shanghai and Hong Kong closed lower
European markets are higher
Currencies (Compared to two weeks ago):

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

Commodities (Compared to two weeks ago):
- Energy futures are higher
- Precious metals are lower
- Industrial metals are mostly higher
- Soft commodities are mixed
Treasuries (Compared to two weeks ago)
- The 10-year yield closed at 3.680, up +32.9 basis points from two weeks ago;
- The 30-year is at 3.938%, up +22.0 basis points;
- The 2-year yield is at 4.267%, up +46.2 basis points;
- The 10-Year-&-2-Year spread is at -0.581, down from -0.454
- The 30-Year-&-10-Year spread is at 0.357, down from +0.372
VIX
- At 16.00 @ 8:15 AM; down from the last close; below 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*	Another large green candle – closed at the highest level for the year and above a narrow range in which the index had moved for the past several trading days. Stochastic (9, 1, 3): %K is above the %D; RSI-9 just above 65; above 8-DMA Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA; Uptrend Resumed
*2-Hour (E-mini futures)*	Breaking above a Horizontal Channel between 4205.00 and 4060.00 that has been forming since March 30 RSI-21 is above 75 Above EMA20, which is above EMA10 of EMA50 Bias: Side-Up
*30-Minute (E-mini futures)*	Moving sideways to up since 4:30 PM between 4225.00 and 4212.00 RSI-21 has been drifting lower since 6:00 PM – above 60 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 moving sideways since 10:15 PM The Bollinger Band has been expanding a little since 7:00 AM, with the price walking up the upper band Bias: Side

Previous Session

Major U.S. indices closed higher on Thursday, May 18, in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in lower volume.

The major indices opened flat. They moved up for a couple of hours and then declined for some time before advancing again and closing near the high for the day.

From Briefing.com:

[…]
the S&P 500 breach the 4,200 level for the first time since August 2022. Ultimately, the S&P 500 closed at its best level of the year, just a whisker shy of 4,200.
[…]
Nonetheless, the afternoon rally was fairly broad based, ratcheting up as the mega cap stocks took another leg higher along with the semiconductor stocks. The PHLX Semiconductor Index jumped 3.2% today.

Advancers led decliners by a 5-to-3 margin at the NYSE and a greater than 11-to-10 margin at the Nasdaq. The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.8% versus a 0.9% gain in the market-cap weighted S&P 500.
[…]
The information technology (+2.1%), communication services (+1.8%), and consumer discretionary (+1.5%) sectors led the pack. They were the only sectors to move more than 1.0% in either direction.
[…]
Notably, the consumer staples sector (-0.4%) was among the top laggards despite an earnings-related gain in Dow component Walmart (WMT 151.47, +1.94, +1.3%).
[…]
The 2-yr note yield rose 11 basis points to 4.27%. The 10-yr note yield rose seven basis points to 3.65%, its highest level since mid-March.

Nasdaq Composite: +21.2% YTD

S&P 500: +9.3% YTD

S&P Midcap 400: +2.0% YTD

Russell 2000: +1.3% YTD

Dow Jones Industrial Average: +1.2% YTD

[…]

Weekly Initial Claims 242K (Briefing.com consensus 259K); Prior 264K; Weekly Continuing Claims 1.799 mln; Prior was revised to 1.807 mln from 1.813 mln

[…]

May Philadelphia Fed Index -10.4 (Briefing.com consensus -16.0); Prior -31.3

April Existing Home Sales 4.28 mln (Briefing.com consensus 4.30 mln); Prior was revised to 4.43 mln from 4.44 mln

[…]

April Leading Indicators -0.6% (Briefing.com consensus -0.5%); Prior -1.2%

[…]
Overseas:

Europe: DAX +1.3%, FTSE +0.3%, CAC +0.6%

Asia: Nikkei +1.6%, Hang Seng +0.9%, Shanghai +0.4%

Commodities:

Crude Oil -0.97 @ 71.84

Nat Gas +0.22 @ 2.72

Gold -25.80 @ 1959.80

Silver -0.26 @ 23.67

Copper -0.06 @ 3.69