Market Remarks

Morning Notes – Wednesday May 19, 2021

Sunil Sharma

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 4167.75 for a change of sentiments
  • No key economic data report due during the day:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4074.99, 4056.88, and 4034.44
  • Critical resistance levels for S&P 500 are 4087.20, 4111.53, and 4125.99
  • Key levels for E-mini futures: break above 4101.00, the high of 5:00 AM and break below 4029.25, the low of 4:00 AM on May 13

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (June 2021) closed at 4123.00 and the index closed at 4127.83 – a spread of about -4.75 points; futures closed at 4123.00 for the day; the fair value is +0.0
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -42.25; Dow by -295, and NASDAQ by -195.00

Markets Around The World

  • Markets in the East closed lower – Hong Kong and Seoul were closed
  • European markets are lower
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.642%, up +5.0 basis points from two weeks ago;
    • 30-years is at 2.364%, up +9.8 basis points;
    • 2-years yield is at 0.157%, down -0.7 basis points;
    • The 10-Year-&-2-Year spread is at 1.485, up from 1.428
  • VIX
    • At 23.37 @ 8:00 AM; higher from the last close; above 5-day SMA;
    • Recent high =  28.93 on May 13; low =  16.68 on May 7
    • 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 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 relatively large Bearish Engulfing that closed below the low of Friday
    • %K crossed below %D
    • RSI-9 is below 50; 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 down since 2:00 AM on May 18;
    • Broke below a Double Top pattern at 4:00 PM on May 18;  achieved 100% extension target around 4094.00; the 161.8% extension target is around 4068.00
    • RSI-21 declined below 20 after making a Bearish Divergence at 2:00 AM on Tuesday
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Declining since 2:30 AM; broke below a Double Top pattern; achieved more than 61.8% Fibonacci retracement of the up-move from May 13 low around 4029.25 to 4179.50
    • RSI-21 moving around 30 since 7:00 PM
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 9:45 AM on Tuesday;
  • The Bollinger Band is expanding since 4:00 AM with  the price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Tuesday, May 18 in mixed volume. Dow Jones Industrial Average and Russell 2000 traded in higher volume. Most major indices made Bearish Engulfing and similar bearish candlestick formations. Indices opened lower and then for most of the day traded sideways before accelerating the decline in the last half-hour of the session.

From Briefing.com:

The S&P 500 fell 0.9% on Tuesday, as sellers first reined in the value/cyclical stocks then targeted the technology stocks late in the day. The Nasdaq Composite declined 0.6%, the Dow Jones Industrial Average declined 0.8% and the Russell 2000 declined 0.7%. Both the Nasdaq and Russell 2000 coughed up 0.8% intraday gains. […]

Accordingly, the cyclical energy (-2.6%), industrials (-1.5%), financials (-1.4%), and materials (-1.1%) sectors were among the biggest laggards today. Investors leaned defensively toward the health care (+0.1%) and real estate (+0.2%) sectors, which were the only sectors that closed higher.

[…]

U.S. Treasuries settled little changed in a relatively tight-ranged session. The 2-yr yield was flat 0.15%, and the 10-yr yield was flat at 1.64%. The U.S. Dollar Index decreased 0.4% to 89.78. WTO crude futures decreased 1.1%, or $0.72, to $65.51/bbl.

[…]
  • Total housing starts declined 9.5% month-over-month to a seasonally adjusted annual rate of 1.569 million units (Briefing.com consensus 1.715 million). Total permits rose just 0.3% month-over-month to 1.760 million, as expected.
[…]
  • Russell 2000 +12.0% YTD
  • Dow Jones Industrial Average +11.3% YTD
  • S&P 500 +9.9% YTD
  • Nasdaq Composite +3.2% YTD

Overseas: 

  • Europe: DAX -0.1%, FTSE flat, CAC -0.2%
  • Asia: Nikkei +2.1%, Hang Seng +1.6%, Shanghai +0.3%

Commodities: 

  • Crude Oil -0.70 @ 65.50
  • Nat Gas -0.09 @ 3.02
  • Gold +0.20 @ 1868.40
  • Silver +0.05 @ 28.36
  • Copper +0.03 @ 4.74
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