Morning Notes – Tuesday May 4, 2021

/ May 4, 2021

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down day with elevated volatility – watch for a break above 4184.50 for a change of sentiments
  • Key economic data report due during the day:
    • Trade Balance ( -74.4B vs. -74.5B est.; prev. -70.5B) at 8:30 AM
    • Factor Orders ( 1.3% est.; prev. -0.8% ) at 10:00 AM
    • IBD/TIPP Economic Optimism ( 56.1 est.; prev. 56.4)

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4174.85, 4168.34, and 4153.26
  • Critical resistance levels for S&P 500 are 4188.03, 4203.92, and 4209.39
  • Key levels for E-mini futures: break above 4184.50, the high of 3:00 AM and break below 4157.25, the low of 8:15 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (June 2021) closed at 4186.25 and the index closed at 4192.66 – a spread of about -6.25 points; futures closed at 4185.75 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -23.00; Dow by -142, and NASDAQ by -119.50

Markets Around The World

  • Markets in the East closed mixed – Hong Kong, Sydney, and Seoul closed up; Mumbai and Singapore closed down; Shanghai and Tokyo were closed for trading
  • European markets are mostly lower – the UK and Spain are up
  • Currencies (from one week ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • EUR/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from one week ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mixed
    • Most soft commodities are mostly down
  • Treasuries (from one week ago)
    • 10-years yield closed at 1.607%, up +3.7 basis points from two weeks ago;
    • 30-years is at 2.288%, up +4.4 basis points;
    • 2-years yield is at 0.164%, down -0.6 basis points;
    • The 10-Year-&-2-Year spread is at 1.443, up from 1.400
  • VIX
    • At 18.86 @ 7:45 AM; up from the last close; above 5-day SMA;
    • Recent high =  19.90 on April 22; low =  16.67 on April 28
    • Sentiment: Risk-Off

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

Monthly
  • Confirmed Uptrend
  • March 2021 was a green candle with a small upper shadow and a lower shadow almost equal to the real body; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 75; broke above a downtrend line from January 2018
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows is resumed
Weekly:
  • The week ending on April 30 was a small Gravestone Doji at all-time highs;
    • Stochastic (9,1, 3): %K is below %D;
    • RSI (9) is above 75
  • The week was up +1.00 or +0.0%; the 5-week ATR is 76.64
  • An up week; fourth in the last five weeks, and seventh in the last ten weeks
  • The weekly week pivot point=4191.60, R1=4208.35, R2=4235.53; S1=4164.42, S2=4147.67; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small Doji like candlestick formation with upper shadow longer than the lower shadow
    • Broke above a symmetrical triangle at 3550.00 level on November 9; the 161.8% extension target near 4140.00 levels is achieved
    • %K is below %D near 60
    • RSI-9 is below 65; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Drifting sideways since 10:00 AM on April 15; Uptrend since 10:00 AM on March 25;
    • Breaking below a symmetrical triangle;
    • Broke above a down-sloping flag on March 26; the 100% extension target near 4100.00 is achieved; the 161.8% extension target is near 4260.00
    • RSI-21 is drifting down – just above 30
  • Below EMA10 of EMA50, which is below EMA20
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Drifting sideways to down since 9:30 AM on April 29; sequence of lower lows and lower highs
    • RSI-21 is below 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving mostly down since 12:30 PM on April 30
  • The Bollinger Band is expanding since 6:30 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is below %D since 7:00 AM
  • Bias: Down

Previous Session

Major U.S. indices closed mostly higher on Monday, May 3 in lower volume.  NASDAQ Composite closed lower. The day’s price action had a down bias.

From Briefing.com:

The S&P 500 increased 0.3% on Monday in a session marked by various narratives and consolidation activity. The Dow Jones Industrial Average (+0.7%) and Russell 2000 (+0.5%) outpaced the benchmark index, while the Nasdaq Composite declined 0.5% despite a positive open.

[…]

For example, the cyclical energy (+2.9%), materials (+1.5%), and industrials (+1.0%) sectors were among the top performers today, reflecting growth/reopening optimism.

[…]

Growth stocks underperformed, particularly those within the S&P 500 information technology (-0.2%), consumer discretionary (-0.7%), and communication services (-0.4%) sectors. The Philadelphia Semiconductor Index declined 1.2%.

[…]

In the Treasury market, the 10-yr yield decreased two basis points to 1.61%, and the 2-yr yield decreased one basis point to 0.15%. The U.S. Dollar Index decreased 0.4% to 90.96. WTI crude futures rose 1.5%, or $0.98, to $64.49/bbl.

[…]
  • The ISM Manufacturing Index for April decelerated to 60.7% (Briefing.com consensus 65.3%) from 64.7% in March. A number above 50.0% connotes an expansion in manufacturing activity. April marked the eleventh straight month of expansion.
  • […]
  • Total construction spending increased by 0.2% m/m in March (Briefing.com consensus 1.6%) after declining an upwardly revised 0.6% (from 0.8%) in February. Total private construction rose 0.7% m/m while total public construction spending decreased 1.5%.
  • […]
  • The final IHS Market Manufacturing PMI for April checked in at 60.5%, fractionally lower from the 60.6% preliminary reading.
[…]
  • Russell 2000 +15.3% YTD
  • S&P 500 +11.6% YTD
  • Dow Jones Industrial Average +11.5% YTD
  • Nasdaq Composite +7.8% YTD

Overseas: 

  • Europe: DAX +0.7%, FTSE closed for holiday, CAC +0.6%
  • Asia: Nikkei closed for holiday, Hang Seng -1.4%, Shanghai closed for holiday

Commodities: 

  • Crude Oil +0.94 @ 64.49
  • Nat Gas +0.02 @ 2.96
  • Gold +23.30 @ 1791.90
  • Silver +1.02 @ 26.96
  • Copper +0.06 @ 4.53
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