Market Remarks

Morning Notes – Monday, May 16, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; moved up more than 30 points since 11:00 PM after declining  more than 60 points since the start of the week
  • The odds are for an up day with elevated volatility – watch for a break below 4000.50 for a change of sentiments
  • The key economic data report is due during the day
    • Empire State Manufacturing Index ( 11.6 vs. 15.3 est.; prev. 24.6) at 8:30 AM

Directional Bias Before Open:

  • Weekly: In Correction
  • Daily: In Correction
  • 120-Min:  Down-Side
  • 30-Min: Side-Up
  • 15-Min: Up-Side
  • 6-Min: Side-Up

Key Levels:

  • Critical support levels for S&P 500 are 4006.54, 3979.74, and 3963.90
  • Critical resistance levels for S&P 500 are 4038.88, 4049.09, and 4068.82
  • Key levels for E-mini futures: break above 4026.25, the high at 8:30 AM and a break below 4000.50, the low at 5:45 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2022) closed at 4020.25 and the index closed at 4023.89 – a spread of about -3.50 points; futures closed at 4019.75 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are mixed – at 8:45 AM, S&P 500 futures were down by -5.00; Dow up by +11; and NASDAQ down by -18.25

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Seoul were down; Singapore was closed
  • European markets are mixed – Germany, France, and STOXX-600 are lower; the UK, Spain, Itlay, and Switzerland are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.909%, up +2.2 basis points from two weeks ago;
    • 30-years is at 3.096%, up +14.9 basis points;
    • 2-years yield is at 2.590%, down -12.9 basis points;
    • The 10-Year-&-2-Year spread is at 0.319, up from 0.168
    • The 30-Year-&-10-Year spread is at 0.187, up from 0.060
  • VIX
    • At 29.17 @ 8:15 AM; up from the last close; below the 5-day SMA;
    • Recent high = 35.48 on May 9; low = 24.94 on May 4
    • Sentiment: Risk-Off-Neutral

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

Weekly:
  • The week ending on May 13 was a red Hammer candle
    • Stochastic (9,1, 3): %K crossed above %D;
    • RSI-9 is below 30
  • The week was down -99.47 or -2.4%; the 5-week ATR  is 185.00
  • A down week; fifth in the last five weeks, and seventh in the previous ten weeks
  • The weekly pivot point=3988.01, R1=4117.15, R2=4210.41; S1=3894.75, S2=3765.61; S1/S2 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A large green candle with almost no lower shadow and a small upper shadow; a three-day Morning Star formation
    • Stochastic (9, 1, 3): %K is above %D from; above 30
    • RSI-9 turned up to just below 40; above 8-day EMA
  • Below 50-day EMA, 20-day EMA, 200-day SMA, and 100-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • The downtrend since 12:00 AM on March 30; lower highs and lower lows since April 21; broke below a Horizontal Channel bounded by 4303.75 and 4056.00 – the 61.8% extension target near 3903.00 is achieved, the 100% extension target is near 3809, and the 161.8% extension target is near 3650.00; bouncing off from a low of 3855.00 on May 12, just above support made by March 25, 2021 low of 3854.50
    • RSI-21 is above 60
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Lower highs and lower lows since May 4; drifting up since 2:30 PM on May 12 forming a rounding bottom.
    • RSI-21 is above 50
    • Above EMA20, which is above EMA10 of EMA50
  • Bias:  Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting sideways to up since 2:30 AM
  • The Bollinger Band is relatively narrow
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Friday, May 13, in lower volume. The major indices gapped up at the open and then moved higher. They briefly loved sideways and drifted a bit lower in the mid-day day trading before again moving up near the close of the day. Most are making three-day Morning Star candlestick patterns.

For the week, the major indices closed mostly lower in mixed volume. Dow Jones Transportation Average closed up. Dow Jones Industrial Average and  Transports closed lower. Most indices in Asia and Europe closed lower. The dollar index and energy futures were up for the week. The precious metals were down, the industrial metals were mixed and most soft commodities were down for the week. The US Treasury yields closed up.

From Briefing.com:

The S&P 500 rallied 2.4% on Friday, bouncing from an oversold condition and closing back above the psychological 4,000 level. The Nasdaq Composite (+3.8%) and Russell 2000 (+3.1%) outperformed with gains over 3.0% while the Dow Jones Industrial Average rose 1.5%. […]

All 11 S&P 500 sectors finished higher with gains ranging from 1.1% (utilities and health care) to 4.1% (consumer discretionary), with individual leadership belonging to the battered mega-cap stocks.

[…]

Selling interest in Treasuries pushed yields higher: the 2-yr yield rose eight basis points to 2.59%, and the 10-yr yield rose 12 basis points to 2.94%.

[…]
  • The preliminary University of Michigan Index of Consumer Sentiment for May dropped to 59.1 (Briefing.com consensus 63.5) from the final reading of 65.2 for April. In the same period a year ago, the index stood at 82.9.
  • […]
  • Import prices were flat in April after increasing 2.9% in March. Excluding oil, import prices rose 0.4% after increasing 1.2% in March. Export prices rose 0.6% after increasing 4.1% in March. Excluding agriculture, export prices also rose 0.5% after increasing 4.1% in March.
[…]
  • Dow Jones Industrial Average -11.4 YTD
  • S&P 500 -15.6% YTD
  • Russell 2000 -20.2% YTD
  • Nasdaq Composite -24.5% YTD
Exit mobile version