Market Remarks

Morning Notes – Tuesday, May 17, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; retreated from the European session high of 4083.50
  • The odds are for an up day with elevated volatility – watch for a break below 4043.50 for a change of sentiments
  • The key economic data report is due during the day
    • Retail Sales ( 0.6% vs. 0.4% est.; prev. 1.1%) at 8:30 AM
    • Core Retail Sales ( 0.9% vs. 1.0% est.; prev. 0.5%) at 8:30 AM
    • Capacity Utilization Rate ( 78.5% est.; prev. 78.3% ) at 9:15 AM
    • Industrial Production (0.4% est.; prev. 0.9%) at 9:15 AM
    • Business Inventories ( 1.9% est.; prev. 1.5% ) at 10:00 AM
    • NAHB Housing Market Index ( 75 est.; prev. 77) at 10:00 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 4046.46, 4000.64, and 3983.99
  • Critical resistance levels for S&P 500 are 4068.82, 4081.27, and 4084.55
  • Key levels for E-mini futures: break above 4083.75, the high at 6:00 AM and a break below 4043.50, the high at 2:30 PM on Monday

Pre-Open

  • On Monday at 4:00 PM, S&P futures (June 2022) closed at 4006.50 and the index closed at 4008.01 – a spread of about -1.50 points; futures closed at 4004.75 for the day; the fair value is +1.75
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +58.00; Dow by +394; and NASDAQ by +214.00

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher;
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/CHF
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.877%, down -11.9 basis points from two weeks ago;
    • 30-years is at 3.084%, up +2.3 basis points;
    • 2-years yield is at 2.580%, down -11.8 basis points;
    • The 10-Year-&-2-Year spread is at 0.297, up from 0.298
    • The 30-Year-&-10-Year spread is at 0.207, up from 0.065
  • VIX
    • At 26.68 @ 8:45 AM; down from the last close; below the 5-day SMA;
    • Recent high = 35.48 on May 9; low = 24.94 on May 4
    • Sentiment: Risk-On

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 Harami Doji candle
    • Stochastic (9, 1, 3): %K is above %D
    • RSI-9 is 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; bouncing off from a low of 3855.00 on May 12 – just above the broken lower bound of a Horizontal Channel at 4056.0
    • RSI-21 is above 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving up since 2:30 PM on May 12
    • RSI-21 is above 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias:  Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 3:15 AM
  • The Bollinger Band is contracting since 9:00 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly lower on Monday, May 16, in lower volume. Dow Jones Industrial and NYSE Composite closed higher. Major indices opened lower and for most of the days moved sideways within a narrow band. Most indices made Doji or similar indecisive candles.

From Briefing.com:

The S&P 500 lost 0.4% on Monday amid continued weakness in the large growth stocks, which were largely responsible for the underperformance of the Nasdaq Composite (-1.2%). The Russell 2000 (-0.5%) performed comparably to the benchmark index, while the Dow Jones Industrial Average (+0.1%) eked out a gain. […]

Monday’s economic data was limited to the Empire State Manufacturing Survey for May, which dropped to -11.6 (Briefing.com consensus 15.0) from 24.6 in April.

[…]
  • Dow Jones Industrial Average -11.3% YTD
  • S&P 500 -15.9% YTD
  • Russell 2000 -20.6% YTD
  • Nasdaq Composite -25.5% YTD

Overseas: 

  • Europe: DAX -0.5%, FTSE +0.6%, CAC -0.2%
  • Asia: Nikkei +0.5%, Hang Seng +0.3%, Shanghai -0.3%

Commodities: 

  • Crude Oil +3.48 @ 113.80
  • Nat Gas +0.26 @ 8.00
  • Gold +6.60 @ 1814.90
  • Silver +0.60 @ 21.51
  • Copper +0.05 @ 4.19
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