Market Remarks

Morning Notes – Friday June 4, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed
  • Non-Farm Payroll report day, which will have an impact on the trader sentiments and market direction
  • The odds are for a down day with elevated volatility – watch for a break above 4201.50
  • Key economic data report due during the day:
    • Non-Farm Employment Change ( 645K est.; prev. 266K) at 8:30 AM
    • Average Hourly Earnings ( 0.2% est.; prev. 0.7% ) at 8:30 AM
    • Unemployment Rate ( 5.9% est.; prev. 6.1%) at 8:30 AM
    • Factory Orders ( -0.3% est.; prev. 1.1%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4192.15, 4177.15, and 4167.93
  • Critical resistance levels for S&P 500 are 4204.39, 4209.17, and 4217.37
  • Key levels for E-mini futures: break above 4198.50, the high of 8:00 AM  and break below 4183.75, the low of 6:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (June 2021) closed at 4190.75 and the index closed at 4192.85 – a spread of about -2.00 points; futures closed at 4191.25 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are mixed – at 8:00 AM, S&P 500 futures were up by +6.25; Dow down by -11, and NASDAQ up by +33.25

Markets Around The World

  • Markets in the East closed mostly lower – Hong Kong and Sydney were up;
  • European markets are mixed – Germany, Italy, Switzerland, and STOXX 600 are higher; the UK, France, and Spain are lower;
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.625%, down -0.9 basis points from two weeks ago;
    • 30-years is at 2.295%, down -4.7 basis points;
    • 2-years yield is at 0.146%, up +1.2 basis points;
    • The 10-Year-&-2-Year spread is at 1.460, down from 1.481
  • VIX
    • At 18.21 @ 6:45 AM; higher from the last close; above 5-day SMA;
    • Recent high =  25.96 on May 19; low =  15.90 on May 28
    • Sentiment: Risk-Off

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

Monthly
  • Confirmed Uptrend
  • May 2021 was a Doji with a small upper shadow and a long lower shadow; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 80; 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
Weekly:
  • The week ending on May 28 was a green candle with almost no lower shadow and small upper shadow;
    • Stochastic (9,1, 3): %K is crossing above %D;
    • RSI (9) is just below 70
  • The week was up +48.25 or +1.2%; the 5-week ATR is 104.54
  • An up week; third in the last five weeks, and seventh in the last ten weeks
  • The weekly week pivot point=4197.54, R1=4224.93, R2=4245.74; S1=4176.73, S2=4149.34; 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 candle with down bias near all-time highs;
    • %K is below %D
    • RSI-9 is just above 50; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend Under Pressure – moving sideways
2-Hour (E-mini futures)
  • Moving sideways since 12:00 PM on May 24
    • RSI-21 rose to just above 50
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Rising since 8:30 PM to a resistance made by a downtrend line;
    • RSI-21 is just above 50
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 12:30 AM
  • The Bollinger Band is stable
    • Stochastic (9, 1, 3): %K is crisscrossing %D above 80
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Thursday, June 3 in mostly higher volume. Dow Jones Transportation Average traded in lower volume. Market indices gapped down at the open but turned around in the morning session and recovered in the afternoon session.

From Briefing.com:

The stock market ended Thursday on a lower note, though the S&P 500 (-0.4%) was able to reclaim the bulk of its opening loss. The Dow (-0.1%) outperformed throughout the day while the Nasdaq (-1.0%) finished behind the broader market. […]

On the upside, health care (+0.4%) and financials (+0.2%) outperformed throughout the day, as did lightly-weighted sectors like consumer staples (+0.5%), energy (+0.3%), and utilities (+0.5%). The energy sector padded this week’s gain to 6.1% even though crude oil ended the day flat at $68.81/bbl. The flat finish was pretty good for the dollar-denominated commodity since the U.S. Dollar Index rose 0.6% to 90.48, reaching its best level since mid-May.

[…]

Treasuries ended the day in the red with the 10-yr yield rising three basis points to finish a tenth of a basis point below its 50-day moving average (1.626%).

[…]
  • Initial claims for the week ending May 29 decreased by 20,000 to 385,000 (Briefing.com consensus 395,000). Continuing claims for the week ending May 22 increased by 169,000 to 3.771 million.
  • […]
  • The ADP Employment Change report pointed to the addition of 978,000 private-sector payrolls in May (Briefing.com consensus 675,000) after a downwardly revised increase of 654,000 (from 742,000) in April.
  • The ISM Non-Manufacturing Index for May increased to 64.0% (Briefing.com consensus 63.0%) from 62.7% in April. The dividing line between expansion and contraction is 50.0%. The May reading marks the twelfth straight month of growth for the services sector and is a record high for this series.
  • […]
  • The Final IHS Markit Services PMI for May increased to 70.4 from 70.1 in the preliminary reading.
  • Q1 Productivity was unrevised at 5.4% (Briefing.com consensus 5.5%). Q1 unit labor costs, though, were revised to +1.7% (Briefing.com consensus -0.4%) from -0.3% given a 2.1-percentage point upward revision to hourly compensation.
[…]
  • Russell 2000 +15.4% YTD
  • Dow Jones Industrial Average +13.0% YTD
  • S&P 500 +11.6% YTD
  • Nasdaq Composite +5.6% YTD

Overseas: 

  • Europe: DAX +0.2%, FTSE -0.6%, CAC -0.2%
  • Asia: Nikkei +0.4%, Hang Seng -1.1%, Shanghai -0.4%

Commodities: 

  • Crude Oil -0.12 @ 68.70
  • Nat Gas -0.02 @ 3.05
  • Gold -36.10 @ 1873.80
  • Silver -0.75 @ 27.51
  • Copper -0.14 @ 4.45
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