Market Remarks

Morning Notes – Friday, May 26, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM. Futures have been drifting higher up since 3:45 AM – up more than 17 points.
  • The odds are for an up day with a good chance of a sideways to down move from the pre-open levels around 4165.00
  • The major economic data reports due during the day:
    • Core PCE Price Index ( 0.4% vs. 0.3% est.; prev. 0.3%) at 8:30 AM
    • Durable Goods Orders ( 1.1% vs. -1.0% est.; prev. 3.3%) at 8:30 AM
    • Core Durable Goods Orders ( -0.2% vs. 0.0% est.; prev. 0.2%) at 8:30 AM
    • Goods Trade Balance ( -96.8B vs. -85.6B est.; prev. -82.7B) at 8:30 AM
    • Personal Spending ( 0.8% vs. 0.4% est.; prev. 0.1%) at 8:30 AM
    • Personal Income ( 0.4% vs. 0.4% est.; prev. 0.3%) at 8:30 AM
    • Prelim Wholesale Inventories ( -0.2% vs. 0.2% est.; 0.0%) at 8:30 AM
    • Revised UoM Consumer Sentiment ( 58.2 est.; prev. 57.7) at 10:00 AM
    • Revised UoM Inflation Expectations ( prev. 4.5%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4150.59, 4143.60, and 4130.98
  • Critical resistance levels for S&P 500 are 4165.74, 4174.24, and 4185.68
  • The key levels for E-mini futures are 4175.50, the high at 2:00 PM on Thursday, and 4155.50, the low at 8:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (June 2023) closed at 4160.00, and the index closed at 4151.28 – a spread of about +8.75 points; the futures closed at 4159.75; the fair value is +0.25
  • Pre-NYSE session open, futures were higher – at 9:00 AM, S&P 500 futures were up by +9.25, Dow by +46, and NASDAQ by +41.00

Markets Around The World

  • Markets in the East closed mostly higher – Singapore closed lower; Hoong Kong Was closed
  • European markets are 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-ups
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.831, up +43. basis points from two weeks ago;
    • The 30-year is at 3.993%, up +24.5 basis points;
    • The 2-year yield is at 4.794%, up +87.8 basis points;
    • The 10-Year-&-2-Year spread is at -0.963, down from -0.519
    • The 30-Year-&-10-Year spread is at 0.162, down from +0.351
  • VIX
    • At 19.04 @ 8:45 AM; up from the last close; above the 5-day SMA;
    • Recent high = 21.33 on May 4; low = 15.53 on May 1
    • Sentiment: Risk-Neutral-Off

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 that looks like a Doji and which gapped up
    • Stochastic (9, 1, 3): %K crossed above the %D;
    • RSI-9 turned up above 50; below 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Drifting up from the middle of a Horizontal Channel between 4205.00 and 4060.00 that has been forming since March 30 and which was broken to the upside once; forming an upsloping flag, which is usually bearish in nature
    • RSI-21 has risen above 60 from below 20 and after making a Bullish Divergence
    • Above  EMA10 of EMA50, which is above EMA20
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 12:30 PM on Wednesday from a support level around 4115.00, forming an upsloping flag
    • RSI-21 has been moving just below 60
    • Above EMA 20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 2:15 AM
  • The Bollinger Band has been expanding since 6:15 AM, with the price near the upper band
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mixed on Thursday, May 25, in mostly higher volume. Dow Jones Industrial Average, Russell 2000, and NYSE Composite closed lower Dow Jones Transportation Average traded in lower volume.

S&P 500 and NASDAQ gapped up at the open and did not close the gap. Transports and Wilshire 5000 Total Market index also traded with an upward bias.

All but three S&P sectors – Industrials, technology, and Real Estate – closed lower.

From Briefing.com:

[…]

The major indices had a mixed showing today as participants dealt with mixed news catalysts.

[…]

The Nasdaq 100 jumped 2.5% while the Nasdaq Composite and S&P 500 rose 1.7% and 0.9%, respectively. The Invesco S&P 500 Equal Weight ETF (RSP), though, declined 0.1%. The Dow Jones Industrial Average also fell 0.1%.

[…]

Decliners led advancers by a 9-to-5 margin at the NYSE and a better than 2-to-1 margin at the Nasdaq.

[…]

The S&P 500 information technology sector (+4.5%) was the top performer by a wide margin thanks to NVIDIA and its other mega cap components. Meanwhile, the energy (-1.9%) and utilities (-1.4%) sectors saw the steepest declines.

[…]

The 2-yr note yield rose 15 basis points to 4.49% and the 10-yr note yield rose 10 basis points to 3.81%.

[…]
  • Nasdaq Composite: +21.3% YTD
  • S&P 500: +8.1% YTD
  • Russell 2000: -0.4% YTD
  • S&P Midcap 400: -0.4% YTD
  • Dow Jones Industrial Average: -1.2% YTD
[…]
  • The second estimate for Q1 GDP was revised up to 1.3% (Briefing.com consensus 1.1%) from the advance estimate of 1.1% and the GDP Price Deflator was revised up to 4.2% (Briefing.com consensus 4.0%) from the advance estimate of 4.0%.
  • Initial claims for the week ending May 20 increased by 4,000 to 229,000 (Briefing.com consensus 247,000). The prior week saw a downward revision to 225,000 from 242,000. Continuing jobless claims for the week ending May 13 decreased by 5,000 to 1.794 million.’
[…]

Overseas:

  • Europe: DAX -0.3%, FTSE -0.7%, CAC -0.3%
  • Asia: Nikkei +0.4%, Hang Seng -1.9%, Shanghai -0.1%

Commodities: 

  • Crude Oil -2.43 @ 71.83
  • Nat Gas -0.09 @ 2.47
  • Gold -21.10 @ 1943.70
  • Silver -0.34 @ 22.91
  • Copper +0.03 @ 3.59
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