Market Remarks

Morning Notes – Thursday June 10, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher; near the lower bound of a Horizontal Channel between 4235.00 and 4212.00
  • The odds are for a sideways to down day – watch for a break above 4225.50
  • Key economic data report due during the day:
    • CPI ( 0.4% est.; prev. 0.8%) at 8:30 AM
    • Core CPI ( 0.5% est.; prev. 0.9%) at 8:30AM
    • Unemployment Claims ( 370K est.; prev. 385K) at 8:30 AM
    • 30-yr Bond Auction at 1:01 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4215.66, 4206.05, and 4198.77
  • Critical resistance levels for S&P 500 are 4225.87, 4233.64, and 4236.92
  • Key levels for E-mini futures: break above 4225.50, the high of 9:30 PM on Wednesday and break below 4218.00, the low of 2:45 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2021) closed at 4219.25 and the index closed at 4219.55 – a spread of about -0.25 points; futures closed at 4218.50 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are mixed – at 8:00 AM, S&P 500 futures were up by +1.25; Dow up by +58, and NASDAQ down by -29.75

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong was down;
  • European markets are mostly lower – the UK is higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are mostly higher
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.489%, down -8.5 basis points from two weeks ago;
    • 30-years is at 2.169%, down -9.1 basis points;
    • 2-years yield is at 0.157%, up +0.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.332, down from 1.422
  • VIX
    • At 17.88 @ 6:45 AM; down from the last close; above 5-day SMA;
    • Recent high =  25.96 on May 19; low =  15.90 on May 28
    • Sentiment: Risk-Neutral

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 small candle similar to a Doji candle at all-time highs with a small upper shadow and a long lower shadow
    • Stochastic (9,1, 3): %K is above %D;
    • RSI (9) is just above 70
  • The week was up +25.78 or +0.6%; the 5-week ATR is 108.99
  • An up week; third in the last five weeks, and seventh in the last ten weeks
  • The weekly week pivot point=4210.65, R1=4253.36, R2=4276.84; S1=4187.17, S2=4144.46; R1 & S1 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small red candle; moving sideways for the past few days
    • %K is below %D near 80
    • RSI-9 is just below 60; 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 2:00 PM on June 4 after breaking above a sideways move from 12:00 PM on May 24
    • RSI-21 is at 40 after steadily declining since 6:00 PM on June 6
    • At/below EMA20, which is at/above EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Near the lower band of a Horizontal Channel between 4235.00 and 4212.00 after moving around the middle for some time;
    • RSI-21 is moving below 50 since 2:30 PM on Wednesday
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 9:15 PM
  • The Bollinger Band is a bit expanded with price bouncing up t the middle band from the lower band
    • Stochastic (9, 1, 3): %K is above %D above 80
  • Bias: Side-Down

Previous Session

Major U.S. indices closed lower on Wednesday, June 9 in mostly lower volume. S&P 500 traded in higher volume. The day’s price range was small and the move was mostly sideways.

From Briefing.com:

The S&P 500 decreased 0.2% on Wednesday and was unsuccessful yet again at setting new all-time highs. The Nasdaq Composite (-0.1%) and Dow Jones Industrial Average (-0.4%) also closed slightly lower while the Russell 2000 (-0.7%) underperformed with a 0.7% decline. […]

Losses were concentrated in the cyclical financials (-1.1%), industrials (-1.0%), materials (-0.8%), and energy (-0.6%) sectors on no specific macro drivers, outweighing the gains in the health care (+1.0%), utilities (+0.9%), real estate (+0.2%), and information technology (+0.1%) sectors.

Notably, the 10-yr yield declined four basis points to 1.49%, settling near the bottom of its three-month consolidation range and signaling peak inflation expectations. The 2-yr yield remained unchanged at 0.14%. This curve-flattening activity acted as a headwind for the financials sector.

[…]

The U.S. Dollar Index increased 0.1% to 90.16. WTI crude futures settled lower by 0.3% (-$0.18) to $69.90/bbl.

[…]

Reviewing Wednesday’s economic data:

  • Wholesale inventories increased 0.8% m/m in April (Briefing.com consensus 0.8%) following a downwardly revised 1.2% increase (from +1.3%) in March.
  • The weekly MBA Mortgage Applications Index decreased 3.1% following a 4.0% decline in the prior week.
[…]
  • Russell 2000 +17.8% YTD
  • Dow Jones Industrial Average +12.6% YTD
  • S&P 500 +12.3% YTD
  • Nasdaq Composite +7.9% YTD

Overseas: 

  • Europe: DAX -0.4%, FTSE -0.2%, CAC +0.2%
  • Asia: Nikkei -0.4%, Hang Seng -0.1%, Shanghai +0.3%

Commodities: 

  • Crude Oil -0.40 @ 69.78
  • Nat Gas +0.01 @ 3.14
  • Gold -1.40 @ 1893.60
  • Silver +0.28 @ 27.99
  • Copper -0.02 @ 4.53
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