Morning Notes – Tuesday May 18, 2021

/ May 18, 2021

Directional Bias For The Day:

  • S&P Futures are little changed; they were higher but  are declining
  • The odds are for a sideways to a down day – watch for a break above 4167.75 for a change of sentiments
  • Key economic data report due during the day:
    • Building Permits ( 1.76M vs. 1.77M est.; prev.1.76M) at 8:30 AM
    • Housing Starts ( 1.57M vs. 1.71M est.; prev. 1.74M) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4142.69, 4129.58, and 4111.53
  • Critical resistance levels for S&P 500 are 4171.92, 4188.13, and 4207.94
  • Key levels for E-mini futures: break above 4167.75, the high of 8:00 AM and break below 4156.00, the low of 7:00 PM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (June 2021) closed at 4158.50 and the index closed at 4163.29 – a spread of about -4.75 points; futures closed at 4157.75 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +8.50; Dow by +67, and NASDAQ by +83.50

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.640%, up +3.3 basis points from two weeks ago;
    • 30-years is at 2.355%, up +6.7 basis points;
    • 2-years yield is at 0.149%, down -1.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.491, up from 1.443
  • VIX
    • At 19.90 @ 8:00 AM; higher from the last close; below 5-day SMA;
    • Recent high =  28.93 on May 13; low =  16.68 on May 7
    • Sentiment: Risk-Off-Neutral

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 14 was a red candle resembling Bearish Engulfing with almost no upper shadow and a lower shadow almost twice the size of the real body
    • Stochastic (9,1, 3): %K has crossed above %D;
    • RSI (9) is above 75
  • The week was down -58.75 or -1.4%; the 5-week ATR is 97.03
  • A down week; second in the last five weeks, and third in the last ten weeks
  • The weekly week pivot point=4155.71, R1=4254.53, R2=4335.22; S1=4075.02, S2=3976.20; R1/R2 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small red Harami candle almost like a Doji
    • %K is above %D
    • RSI-9 is above 50; below 8-day EMA
  • Above 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; broke above a down-trending line from the all-time high
    • RSI-21 is at around 55; Bearish Divergence at 2:00 AM
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • An emerging Double Top; a break below 4136.50 will complete it and a break above 4178.75 will nullify it
    • RSI-21 drifted down since 2:30 Am after making a Bearish Divergence
    • Below EMA20; at/above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 2:45 AM;
  • The Bollinger Band is expanding slightly with  the price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 30
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly lower on Monday, May 17 in mostly lower volume. Russell 2000 and NYSE Composite closed up. and Dow Jones Transportation Average traded in higher volume. Most major indices made small Doji like indecisive candles.

From Briefing.com:

The S&P 500 (-0.3%), Nasdaq Composite (-0.4%), and Dow Jones Industrial Average (-0.2%) closed slightly lower on Monday, as the market struggled to find direction without the leadership of the technology stocks. The large-cap indices, however, did close off session lows while the Russell 2000 (+0.1%) closed higher after starting with a 1.2% decline.

[…]

The 10-yr yield increased just one basis point to 1.64% while the 2-yr yield was flat at 0.15%. The U.S. Dollar Index declined 0.2% to 90.17.

[…]

Conversely, the energy (+2.3%), materials (+0.9%), and financials (+0.1%) sectors were the only sectors that closed higher today, giving the session another one of those cyclical tilts.

[…]
  • The NAHB Housing Market Index for May was unchanged at 83.0 (Briefing.com consensus 83.0).
  • The Empire State Manufacturing Survey decreased to 24.3 in May (Briefing.com consensus 25.0) from 26.3 in April.
[…]
  • Russell 2000 +12.8% YTD
  • Dow Jones Industrial Average +12.2% YTD
  • S&P 500 +10.8% YTD
  • Nasdaq Composite +3.8% YTD

Overseas: 

  • Europe: DAX -0.1%, FTSE -0.2%, CAC -0.3%
  • Asia: Nikkei -0.9%, Hang Seng +0.5%, Shanghai +0.8%

Commodities: 

  • Crude Oil +0.90 @ 66.20
  • Nat Gas +0.15 @ 3.11
  • Gold +29.60 @ 1868.20
  • Silver +0.92 @ 28.31
  • Copper +0.06 @ 4.71
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