Market Remarks

Morning Notes – Monday, May 22, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a little higher at 9:00 AM. Futures have been moving sideways since 6:00 PM on Sunday, forming a slight upward-sloping flag. Awaiting debt ceiling negotiation resolution
  • The odds are for a sideways to a down day – watch for a break above 4210.50  or a break below 4196.75 for clarity
  • No major economic data reports are due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4180.20, 4160.04, and 4151.32
  • Critical resistance levels for S&P 500 are 4196.25, 412.29, and 4218.70
  • The key levels for E-mini futures are 4210.50, the high at 8:15 PM, and 4196.75, the low at 3:00 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2023) closed at 4204.50, and the index closed at 4191.98 – a spread of about +16.50 points; the futures closed at 4204.75; the fair value is -0.25
  • Pre-NYSE session open, futures were mixed – at 8:45 AM, S&P 500 futures were up by +1.25, Dow up by +19, and NASDAQ down by -2.75

Markets Around The World

  • Markets in the East closed mostly higher – Sydney closed lower
  • European markets are mostly lower – Spain is higher
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • INR/USD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly higher
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.692, up +24.6 basis points from two weeks ago;
    • The 30-year is at 3.948%, up +18.6 basis points;
    • The 2-year yield is at 4.268%, up +36.0 basis points;
    • The 10-Year-&-2-Year spread is at -0.576, down from -0.456
    • The 30-Year-&-10-Year spread is at 0.256, down from +0.316
  • VIX
    • At 17.10 @ 9:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 21.23 on May 4; low = 15.53 on May 1
    • Sentiment: Risk-Off-Neutral

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 lower on Friday, May 19, in mixed volume. S&P 500 and Russell 2000 traded in higher volume.

For the week, the major indices closed higher in higher volume. Markets in Asia were mixed, but European markets closed higher. The dollar index closed higher; the energy futures were up, precious metals were down, the industrial metals were up, and the soft commodities were mixed. The US Treasury yields closed up.

From Briefing.com:

[…]

The stock market kicked off this options expiration day on an upbeat note, but rolled over fairly quickly.

[…]

The SPDR S&P Regional Banking ETF (KRE) closed with a 1.8% loss.

[…]

Most of the S&P 500 sectors closed with losses while energy (+0.7%) and health care (+0.5%) outperformed.

[…]

The SPDR S&P Retailer ETF (XRT) fell 3.6% today.

[…]

The communication services (-0.5%) and financials (-0.5%) sectors were also top laggards today.

[…]

The 2-yr note yield, at 4.35% before the news broke, plunged to 4.19% before settling the day unchanged at 4.27%. The 10-yr note yield, at 3.71% earlier, fell to 3.64% but settled up four basis points to 3.69%.

  • Nasdaq Composite: +20.9% YTD
  • S&P 500: +9.2% YTD
  • S&P Midcap 400: +1.1% YTD
  • Dow Jones Industrial Average: +0.8% YTD
  • Russell 2000: +0.7% YTD
[…]
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