Market Remarks

Morning Notes – Friday, May 20, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; trending up since 5:30 AM on Thursday;
  • The odds are for an up day with elevated volatility – watch for a break below 3915.25 for a change of sentiments
  • No key economic data report is due during the day

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3915.90, 3896.27, and 3889.65
  • Critical resistance levels for S&P 500 are 3945.96, 3976.69, and 4013.73
  • Key levels for E-mini futures: break above 3948.50, the high at 7:45 AM and a break below 3915.25, the low at 2:45 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (June 2022) closed at 3897.00 and the index closed at 3900.79 – a spread of about -3.75 points; futures closed at 3897.75 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +37.00; Dow by +213; and NASDAQ by +143.25

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher;
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • INR/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 2.839%, down -22.7 basis points from two weeks ago;
    • 30-years is at 3.046%, down -11.4 basis points;
    • 2-years yield is at 2.606%, down -2.0 basis points;
    • The 10-Year-&-2-Year spread is at 0.233, down from 0.440
    • The 30-Year-&-10-Year spread is at 0.207, up from 0.094
  • VIX
    • At 28.68 @ 8:15 AM; down from the last close; at/above the 5-day SMA;
    • Recent high = 35.48 on May 9; low = 25.51 on May 17
    • Sentiment: Risk-On
    • Forming a symmetrical triangle since April 25

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 Doji candle just below the previous day’s large red candle ;
    • Stochastic (9, 1, 3): %K is below %D
    • RSI-9 is just above 30; below 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; bouncing off the lower bound of another Horizontal Channel between 4142.00 and 3855.00
    • RSI-21 is rising since 8:00 PM on May 18
    • Above EMA20 but below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Drifting up since 5:30 AM on May 19 from a Double Bottom around 3855.00
    • RSI-21 moving up after making a Bullish Divergence at 5:30 AM on May 19
    • 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 8:15 AM on Thursday
  • The Bollinger Band is contracting a bit since 8:15 AM
  • Bias: Up

Previous Session

Major U.S. indices closed mostly lower on Thursday, May 19, in mixed volume. Russell 2000 closed down. S&P 500 and Russell 2000 traded in lower volume.

Major indices gapped down at the open but made day’s lows n the first half-hour of trading. After that, they mostly traded higher.

From Briefing.com:

The S&P 500 declined 0.5% on Thursday, as risk sentiment remained pressured by underlying growth concerns in this downwards-trending market. The Nasdaq Composite (-0.3%) and Dow Jones Industrial Average (-0.8%) also closed lower, while the Russell 2000 (+0.1%) closed slightly higher.

Eight of the 11 S&P 500 sectors closed lower in a choppy, back-and-forth session. The consumer staples (-2.0%), information technology (-1.1%), and industrials (-0.9%) sectors were the weakest performers, while the materials (+0.7%), consumer discretionary (+0.1%), and health care (+0.2%) sectors eked out gains.

[…]

The 2-yr yield declined seven basis points to 2.61%, and the 10-yr yield declined three basis points to 2.86% after touching 2.78% in the wake of the weekly claims and Philadelphia Fed Index releases. The U.S. Dollar Index fell 0.9% to 102.86.

[…]
  • Initial claims for the week ending May 14 increased by 21,000 to 218,000 (Briefing.com consensus 200,000). That remains a low number historically, but relative to expectations it was a disappointment. Continuing claims for the week ending May 7, however, decreased by 25,000 to 1.317 million.
  • […]
  • Existing home sales decreased 2.4% month-over-month in April to a seasonally adjusted annual rate of 5.61 million (Briefing.com consensus 5.65 million) versus a downwardly revised 5.75 million (from 5.77 million) in March.
  • […]
  • The Philadelphia Fed Index for May decreased to 2.6 (Briefing.com consensus 16.5) from 17.6 in April.
  • The Conference Board’s Leading Economic Index (LEI) decreased 0.3% m/m in April (Briefing.com consensus 0.0%) following a revised 0.1% increase (from 0.3%) in March.
[…]
  • Dow Jones Industrial Average -14.0% YTD
  • S&P 500 -18.2% YTD
  • Russell 2000 -20.9% YTD
  • Nasdaq Composite -27.2% YTD

Overseas: 

  • Europe: DAX -0.9%, FTSE -1.8%, CAC -1.3%
  • Asia: Nikkei -1.9%, Hang Seng -2.5%, Shanghai +0.4%

Commodities: 

  • Crude Oil +0.56 @ 109.91
  • Nat Gas -0.09 @ 8.32
  • Gold +24.90 @ 1839.70
  • Silver +0.50 @ 21.88
  • Copper +0.13 @ 4.27
Exit mobile version