Morning Notes – Friday May 14, 2021

/ May 14, 2021

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up day with elevated volatility – watch for a break below 4122.25 for a change of sentiment
  • Key economic data report due during the day:
    • Retail Sales PPI ( 0.00 vs. 1.0% est.; prev. 9.8% ) at 8:30 AM
    • Core Retail Sales ( -0.8% vs. 0.5% est.; prev. 8.4%) at 8:30 AM
    • Import Prices ( 0.7% vs. 0.6% est.; prev. 1.2% ) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4111.53, 4087.20, and 4074.99
  • Critical resistance levels for S&P 500 are 4137.08, 4160.01, and 4167.75
  • Key levels for E-mini futures: break above 4138.00, the high of 5:15 AM and break below 4122.25, the low of 3:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (June 2021) closed at 4105.50 and the index closed at 4112.50 – a spread of about -7.00 points; futures closed at 4107.00 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +24.50; Dow by +124, and NASDAQ by +130.25

Markets Around The World

  • Markets in the East closed lower – Mumbai and Singapore were closed
  • European markets are lower – Switzerland is closed
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • EUR/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.695%, up +7.5 basis points from two weeks ago;
    • 30-years is at 2.415%, up +11.5 basis points;
    • 2-years yield is at 0.157%, down -0.7 basis points;
    • The 10-Year-&-2-Year spread is at 1.538, up from 1.456
  • VIX
    • At 21.48 @ 8:30 AM; down from the last close; below 5-day SMA;
    • Recent high =  28.93 on May 13; low =  16.68 on May 7
    • Sentiment: Risk-On

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 May 7 was a green candle with a small upper shadow and a lower shadow equal to one and half the size of the real body
    • Stochastic (9,1, 3): %K has crossed above %D;
    • RSI (9) is above 75
  • The week was up +51.43 or +1.2%; the 5-week ATR is 83.05
  • An up week; fourth in the last five weeks, and eight in the last ten weeks
  • The weekly week pivot point=4199.74, R1=4270.90, R2=4309.19; S1=4161.45, S2=4090.29; R1/R2/S1/S2 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green Harami candle within a large red candle; small  upper shadow and almost no lower shadow;
    • %K is crossing above %D from below 5
    • RSI-9 turned up from near 30; below 8-day EMA
  • Below 20-day EMA; above 50-day EMA, 100-day, and 200-day SMA
  • Uptrend under Pressure
2-Hour (E-mini futures)
  • Moving up since 4:00 AM on May 13;
    • Down move since 10:00 PM on May 9; achieved more than 50% Fibonacci retracement level of the up move from March 25 low – the 61.8% Fibonacci retracement level is around 3993.00
    • RSI-21 rose above 60 from below 20
  • At/above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving up since 4:30 AM on May 13 from 4029.25 to a congestion area around 4130.00;
    • RSI-21 moving around 55
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 2:15 PM on Thursday;
  • The Bollinger Band is narrowing since 2:15 PM
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Down-Side

Previous Session

Major U.S. indices closed higher on Thursday, May 13 in lower volume. Most indices made a green Harami or similar indecisive candles. Indices opened higher and then mostly traded up for the day.

From Briefing.com:

The S&P 500 gained 1.2% on Thursday, as investors bought the dip in most areas of the market following a rough three-day stretch. The Dow Jones Industrial Average (+1.3%) and Russell 2000 (+1.7%) outperformed the benchmark index, while the Nasdaq Composite trailed with a 0.7% gain.

[…]

Within the S&P 500, the gains were spread to ten of its 11 sectors. The industrials (+1.9%), financials (+1.9%), and utilities (+1.8%) sectors rounded out the top spots. The information technology sector rose 1.4%.

Buying interest, however, evaded the S&P 500 energy sector (-1.4%) and the more speculative growth stocks,

[…]

Separately, the demand for longer-dated Treasuries was somewhat peculiar since the Producer Price Index (PPI) rose 0.6% m/m (Briefing.com consensus +0.3%) and weekly initial claims declined to a new post-pandemic low at 473,000 (Briefing.com consensus 510,000). Core PPI, which excludes food and energy, rose 0.7% m/m (Briefing.com consensus +0.4%).

[…]
  • The PPI for final demand increased 0.6% month-over-month (Briefing.com consensus +0.3%) while the index for final demand, less foods and energy (“core PPI”), increased 0.7% month-over-month (Briefing.com consensus +0.4%). That left the year-over-year increases at 6.2% and 4.1%, respectively, with base effects very much in the picture there. Still, the month-over-month increases are not a function of low base effects.
  • […]
  • For the week ending May 8, initial jobless claims decreased by 34,000 to 473,000 (Briefing.com consensus 510,000), marking their lowest level since March 14, 2020. Continuing claims for the week ending May 1 decreased by 45,000 to 3.655 million.
[…]
  • Dow Jones Industrial Average +11.2% YTD
  • Russell 2000 +9.9% YTD
  • S&P 500 +9.5% YTD
  • Nasdaq Composite +1.8% YTD

Overseas: 

  • Europe: DAX +0.3%, FTSE -0.6%, CAC +0.1%
  • Asia: Nikkei -2.5%, Hang Seng -1.7%, Shanghai -1.0%

Commodities: 

  • Crude Oil -2.27 @ 63.68
  • Nat Gas -0.01 @ 2.97
  • Gold +1.00 @ 1824.00
  • Silver -0.21 @ 27.06
  • Copper -0.06 @ 4.67
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