Morning Notes – Thursday May 27, 2021

/ May 27, 2021

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down to sideways day – watch for a break below 4204.00 and a break below 4177.25 for clarity
  • Key economic data report due during the day:
    • Prelim GDP (6.5% est.; prev. 6.4%) at 8:30 AM
    • Unemployment Claims ( 427K est.; prev. 444K) at 8:30 AM
    • Core Durable Goods Orders ( 0.8% est.; prev. 1.9%) at 8:30 AM
    • Durable Goods Orders ( 0.8% est.; prev. 0.8%) at 8:30 AM
    • Prelim GDP Price Index ( 4.1% est.; prev. 4.1%) at 8:30 AM
    • Pending Home Sales ( 0.6% est.; prev. 1.9%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4182.52, 4170.16, and 4154.03
  • Critical resistance levels for S&P 500 are 4202.61, 4213.42, and 4220.29
  • Key levels for E-mini futures: break above 4204.25, the high of 5:30 AM  on Wednesday and break below 4177.75, the low of 2:30 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2021) closed at 4193.75 and the index closed at 4195.99 – a spread of about -2.25 points; futures closed at 4193.00 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are mixed – at 8:00 AM, S&P 500 futures were down by -5.75; Dow up by +91, and NASDAQ down by -25.25

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Sydney, Mumbai, and Singapore closed up; Hong Kong, Tokyo, and Seoul closed down;
  • European markets are mostly higher – Germany and the UK 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 higher
    • Precious metals are higher
    • Industrial metals are lower
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.574%, down -12.1 basis points from two weeks ago;
    • 30-years is at 2.260%, down -15.5 basis points;
    • 2-years yield is at 0.152%, down -0.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.422, down from 1.538
  • VIX
    • At 17.89 @ 7:45 AM; higher from the last close; below 5-day SMA;
    • Recent high =  25.96 on May 19; 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 21 was a red candle like a Hamme, with a small body, a small upper shadow, and a long lower shadow; the whole candle is almost within the long lower shadow of the previous week’s BEarish Engulfing candle indicating a potential reversal
    • Stochastic (9,1, 3): %K is below %D;
    • RSI (9) is around 65 75
  • The week was down -17.99 or -0.4%; the 5-week ATR is 107.20
  • A down week; third in the last five weeks, and fourth in the last ten weeks
  • The weekly week pivot point=4135.33, R1=4209.25, R2=4262.64; S1=4081.94, S2=4008.02; S1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small green harami candle le with small upper and lower shadows;
    • %K is at/above %D
    • RSI-9 is just near 55; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend under Pressure
2-Hour (E-mini futures)
  • Moving sideways to down since 12:00 PM on May 24;
    • RSI-21 is drifting lower; below 50
    • Below EMA20, but above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways to down since 10:30 AM on May 24
    • RSI-21 is below 50
    • At/above EMA20, which is below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 10:15 AM on Wednesday
  • The Bollinger Band is relatively stable and narrow
    • Stochastic (9, 1, 3): %K is crossing %D
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Wednesday, May 26 in lower volume. Day’s range was small and the indices mostly traded sideways after opening higher.

From Briefing.com:

The S&P 500 increased 0.2% on Wednesday in a lackluster session for the benchmark index. The Nasdaq Composite (+0.6%) fared slightly better, but it noticeably trailed the S&P Mid Cap 400 (+1.0%), the small-cap Russell 2000 (+2.0%), and the iShares Micro-Cap ETF (IWC 147.86, +3.99, +2.8%).

The blue-chip Dow Jones Industrial Average (+0.03%) closed relatively unchanged.

[…]

The energy (+0.9%) and consumer discretionary (+0.9%) sectors were pockets of relative strength within the S&P 500. The health care (-0.6%) and consumer staples (-0.2%) sectors underperformed in negative territory.

[…]

The 2-yr yield was unchanged at 0.14%. The U.S. Dollar Index increased 0.5% to 90.04. WTI crude futures increased 0.2%, or $0.14, to $66.21/bbl.

[…]
  • Russell 2000 +13.9% YTD
  • Dow Jones Industrial Average +12.1% YTD
  • S&P 500 +11.7% YTD
  • Nasdaq Composite +6.6% YTD

Overseas: 

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

Commodities: 

  • Crude Oil +0.10 @ 66.20
  • Nat Gas +0.04 @ 3.02
  • Gold +2.30 @ 1901.20
  • Silver -0.18 @ 27.90
  • Copper +0.02 @ 4.53
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