Market Remarks

Morning Notes – Thursday June 24, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with a good chance of sideways to down move from the pre-open levels around 4250.00 – watch for a break below 4246.75 or a break above 4254.50 for clarity
  • Key economic data report due during the day:
    • Final GDP ( 6.4% vs. 6.4%; prev. 6.4%) at 8:30 AM
    • Unemployment Claims ( 411K vs 382K est.; prev. 418K) at 8:30 AM
    • Durable Goods Orders ( 2.3% vs. 2.9% est; prev. -0.8%) at 8:30 AM
    • Core Durable Goods Orders (0.3% vs. 0.8% est.; prev. 1.7%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4256.60, 4241.43, and 4236.01
  • Critical resistance levels for S&P 500 are 4261.79, 4266.99, and 4274.49
  • Key levels for E-mini futures: break above 4254.50, the high of 6:15 AM and break below 4246.75, the low of 4:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2021) closed at 4231.75 and the index closed at 4241.84 – a spread of about -10.00 points; futures closed at 4231.50 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +20.25; Dow by +162, and NASDAQ by +85.50

Markets Around The World

  • Markets in the East closed mostly higher – Sydney closed lower
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.487%, down -0.2 basis points from two weeks ago;
    • 30-years is at 2.104%, down -6.5 basis points;
    • 2-years yield is at 0.265%, up +11.6 basis points;
    • The 10-Year-&-2-Year spread is at 1.222, down from 1.340
  • VIX
    • At 15.60 @ 6:45 AM; down from the last close; below 5-day SMA;
    • Recent high =  21.82 on June 21; low =  14.86 on June 23
    • Sentiment: Risk-On

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 June 18 was a Bearish Engulfing candle at all-time highs with almost no lower shadow and a small upper shadow
    • Stochastic (9,1, 3): %K crossed below %D;
    • RSI (9) is just below 60
  • The week was down -80.99 or -1.9%; the 5-week ATR is 78.02
  • A down week; second in the last five weeks, and fourth in the last ten weeks
  • The weekly week pivot point=4196.00, R1=4227.61, R2=4288.76; S1=4134.85, S2=4103.24; S1/S2/S3 pivot levels were breached
  • Below 10-week EMA; above 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small red candle with a small upper shadow and almost no lower shadow mostly within the upper shadow of the previous day’s candle
    • %K is above %D;
    • RSI-9 near 60 from just above 30; 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 up since 10:00 PM on June 20;
    • RSI-21 is just below 70; potential Bearish Divergence
    • Above EMA20; which is at/below EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving sideways to up since 3:00 PM on June 22
    • RSI-21 is around 65; potential Bearish Divergence
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 9:00 PM on June 22
  • The Bollinger Band is contracting after expanding from 3:45 AM to 8:00 AM; price declined to lower band from the upper band
    • Stochastic (9, 1, 3): %K is below %D since 8:15 AM
  • Bias: Side

Previous Session

Major U.S. indices closed mostly lower on Wednesday, June 23 in mostly lower volume. NASDAQ Composite and Russell 2000 closed higher. Russell 2000 traded in higher volume. Major indices traded within a narrow range and most of the day’s loss was in the last half hour of trading.

From Briefing.com:

The S&P 500 decreased 0.1% on Wednesday, and came within one point of its all-time high (4257.16), while the Nasdaq Composite (+0.1%) eked out intraday and closing record highs. The Russell 2000 (+0.3%) sided with the Nasdaq in positive territory while the Dow Jones Industrial Average (-0.2%) closed slightly lower.

Overall price action was tight ranged, and trading volume was relatively light at the NYSE on this slow summer day. Eight of the 11 S&P 500 sectors closed lower, although advancing issues did outnumber declining issues at both the NYSE and Nasdaq.

The utilities sector (-1.1%) lagged with a 1% decline while the consumer discretionary (+0.6%), energy (+0.3%), and financials (+0.3%) sectors padded their weekly gains.

[…]

U.S. Treasury yields settled slightly higher. The 2-yr yield increased one basis point to 0.24%, and the 10-yr yield increased two basis points to 1.49%. The U.S. Dollar Index increased 0.1% to 91.83. WTI crude futures settled unchanged at $73.09/bbl after briefly topping $74/bbl intraday.

[…]
  • New home sales declined 5.9% month-over-month in May to a seasonally adjusted annual rate of 769,000 (Briefing.com consensus 873,000) from a downwardly revised 817,000 (from 975,000) in April. On a yr/yr basis, new home sales were up 9.2%.
  • […]
  • The current account deficit for the first quarter totaled $195.7 billion (Briefing.com consensus -$207.1 billion). The fourth quarter deficit was downwardly revised to $175.1 billion from $188.5 billion.
  • The preliminary IHS Markit Manufacturing PMI for June increased to 62.6 from 62.1 in May. The preliminary IHS Markit Services PMI for June decreased to 64.8 from 70.4 in May.
  • The weekly MBA Mortgage Applications Index increased 2.1% following a 4.2% increase in the prior week.
[…]
  • Russell 2000 +16.6% YTD
  • S&P 500 +12.9% YTD
  • Nasdaq Composite +10.7% YTD
  • Dow Jones Industrial Average +10.7% YTD

Overseas: 

  • Europe: DAX -1.2%, FTSE -0.2%, CAC -0.9%
  • Asia: Nikkei flat, Hang Seng +2.0%, Shanghai +0.3%

Commodities: 

  • Crude Oil +0.20 @ 73.05
  • Nat Gas +0.07 @ 3.35
  • Gold +6.20 @ 1783.60
  • Silver +0.26 @ 26.12
  • Copper +0.10 @ 4.33
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