Morning Notes – Tuesday, June 7, 2022

/ June 7, 2022

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM; moving down since 11:00 AM on Monday
  • The odds are for a down day with elevated volatility – watch for a break above 4110.75 for a change of sentiments
  • The key economic data report due during the day:
    • Trade Balance ( -87.1B vs. -89.6B est.; prev. -107.7B) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4073.85, 4050.90, and 4042.22
  • Critical resistance levels for S&P 500 are 4101.22, 4111.76, and 4126.62
  • Key levels for E-mini futures: break above 4110.75, the high at 4:30 AM and a break below 4078.00, the low at 7:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (June 2022) closed at 4119.25 and the index closed at 4121.43 – a spread of about -2.25 points; futures closed at 4120.50 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -34.00; Dow by -227; and NASDAQ by -140.00

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo, and Singapore closed higher; Hong Kong, Sydney, Mumbai, and Seoul closed lower
  • European markets are mostly lower – Spain and Switzerland are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
    • GBP/USD
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 3.018%, up +15.9 basis points from two weeks ago;
    • 30-years is at 3.171%, up +10.6 basis points;
    • 2-years yield is at 2.720%, up +11.2 basis points;
    • The 10-Year-&-2-Year spread is at 0.298, up from 0.251
    • The 30-Year-&-10-Year spread is at 0.153, up from 0.206
  • VIX
    • At 26.01 @ 8:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 35.48 on May 9; low = 24.94 on May 4
    • Sentiment: Risk-Off
    • Broke below a symmetrical triangle

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

Weekly:
  • The week ending on June 3 was a small red Harami candle near the close of the previous week;
    • Stochastic (9,1, 3): %K is above %D following a Bullish Divergence
    • RSI-9 is just above 40
  • The week was down -49.70 or -1.2%; the 5-week ATR  is 235.41
  • A down week; fourth in the least five weeks and eight in the previous ten weeks
  • The weekly pivot point=4119.97, R1=4166.08, R2=4223.63; S1=4062.42, S2=4016.31; No pivot levels were breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A red Harami candle following another red Harami candle, which followed a relatively large Bullish Engulfing candle; the past four days’ price-action is sideways; finding resistance at around 4160.00, the lows of June 18, 2021
    • Stochastic (9, 1, 3): %K is below %D; above 80
    • RSI-9 is around 55; below 8-day EMA;
  • Above 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving sideways after breaking above a Horizontal channel bounded between 4055.00 and 3856.00 – the 61.8% extension target is near 4195.00 and the 100% extension target is near 4275.00;
    • RSI-21 has declined to near 30 from above 60
    • Below EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting down since 10:00 AM on Monday – down more than 80 points;
    • RSI-21 is moving below 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 1:15 PM on Monday
  • The Bollinger Band is expanding a bit since 6:45 AM with price walking down the lower band
  • Bias: Down

Previous Session

Major U.S. indices closed higher on Monday, June 6, in mostly lower volume. Russell 2000 traded in higher volume. The major indices opened higher and then advanced before declining and moving sideways for the rest of the day at a lower level. Most indices closed below the opens and stayed within the real body of large green candles that they made two days ago.

From Briefing.com:

A stock market that moved higher in broad-based fashion at the start of today’s trading ended the day mixed in disappointing fashion.

[…]

Briefly, the 10-yr note yield moved back above 3.00%, ending its session up eight basis points at 3.04%, and natural gas futures settled the session up $0.84, or 9.8%, at $9.34/mmbtu.

[…]
  • Dow Jones Industrial Average: -9.4% YTD
  • S&P 400: -10.9% YTD
  • S&P 500: -13.5% YTD
  • Russell 2000: -16.0% YTD
  • Nasdaq Composite: -22.9% YTD

Overseas: 

  • Europe: DAX +1.3%, FTSE +1.0%, CAC +1.0%
  • Asia: Nikkei +0.6%, Hang Seng +2.7%, Shanghai +1.3%

Commodities: 

  • Crude Oil -1.01 @ 118.21
  • Nat Gas +0.84 @ 9.34
  • Gold -6.80 @ 1844.40
  • Silver +0.21 @ 22.11
  • Copper -0.04 @ 4.43
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