Market Remarks

Morning Notes – Thursday, May 19, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; bouncing up since 5:30 AM from a low of 3856.00
  • The odds are for a down day with elevated volatility – watch for a break above 3898.25 for a change of sentiments
  • The key economic data report is due during the day
    • Philly Fed Manufacturing Index ( 2.6 vs. 14.9, prev. 17.6) at 8:30 AM
    • Unemployment Claims ( 218K vs. 200K; prev. 197K) at 8:30 AM
    • Existing Home Sales ( 5.65M est.; prev. 5.77M) at 10:00 AM
    • CB Leading Index ( 0.00% est.; prev. 0.3% ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3888.97, 3858.87, and 3851/93
  • Critical resistance levels for S&P 500 are 3913.62, 3932.81, and 3943.85
  • Key levels for E-mini futures: break above 3898.25, the high at 7:45 AM and a break below 3857.25, the low at 5:45 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2022) closed at 3923.75 and the index closed at 3923.68 – a spread of about 0.00 points; futures closed at 3922.75 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -44.25; Dow by -366; and NASDAQ by -137.25

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai closed higher
  • European markets are lower;
  • 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 mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.797%, down -12.0 basis points from two weeks ago;
    • 30-years is at 2.991%, down -1.2 basis points;
    • 2-years yield is at 2.682%, down -7.4 basis points;
    • The 10-Year-&-2-Year spread is at 0.115, up from 0.161
    • The 30-Year-&-10-Year spread is at 0.194, up from 0.086
  • VIX
    • At 31.97 @ 8:15 AM; up from the last close; above the 5-day SMA;
    • Recent high = 35.48 on May 9; low = 25.51 on May 17
    • Sentiment: Risk-Off

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 red candle with almost no upper and lower shadows
    • Stochastic (9, 1, 3): %K crossed  below %D
    • RSI-9 is 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 March 29 is resumed; at the lower bound of a Horizontal Channel after breaking below a higher channel – – 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;
    • RSI-21 is rising since 4:00 PM from below 20
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Moving down since 6:00 PM on May 17 – near the lows of May 12 around 3855.00
    • RSI-21 is below 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias:  Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 12:30 AM
  • The Bollinger Band is contracting a bit since 8:00 AM
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Wednesday, May 18, in mosty higher volume. Dow Jones Transportation Average traded in lower volume. Major indices gapped down at the open and then traded down for the rest of the day. Most held above the recent 52-week lows. Transports made a new 52-week low.

From Briefing.com:

Each of the major indices fell more than 3.5% on Wednesday in an orderly retreat fueled by profit-margin concerns. The Nasdaq Composite (-4.7%) and S&P 500 (-4.0%) were hit the hardest, followed by the Dow Jones Industrial Average (-3.6%) and Russell 2000 (-3.6%).

[…]

the fed-funds-sensitive 2-yr yield higher by one basis point to 2.68%. The 10-yr yield fell eight basis points to 2.89%

[…]

The U.S. Dollar Index rose 0.5% to 103.90.

[…]
  • Total housing starts declined 0.2% month-over-month in April to a seasonally adjusted annual rate of 1.724 million units (Briefing.com consensus 1.775 million). Building permits decreased 3.2% month-over-month to 1.819 million (Briefing.com consensus 1.820 million).
  • […]
  • The weekly MBA Mortgage Applications Index dropped 11.0% following a 2.0% increase in the prior week.
[…]
  • Dow Jones Industrial Average -13.3% YTD
  • S&P 500 -17.7% YTD
  • Russell 2000 -21.0% YTD
  • Nasdaq Composite -27.0% YTD

Overseas: 

  • Europe: DAX -1.3%, FTSE -1.1%, CAC -1.2%
  • Asia: Nikkei +1.0%, Hang Seng +0.2%, Shanghai -0.3%

Commodities: 

  • Crude Oil -2.86 @ 109.35
  • Nat Gas +0.08 @ 8.41
  • Gold -3.30 @ 1814.80
  • Silver -0.32 @ 21.38
  • Copper -0.08 @ 4.14
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