Market Remarks

Morning Notes – Thursday, June 9, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM; declined more than 35 points since 7:00 AM
  • The odds are for a down day with elevated volatility – watch for a break above 4143.50 and a break below 4102.75 for clarity
  • The key economic data report due during the day:
    • Unemployment Claims (229K vs. 205K est.; prev. 200K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4107.58, 4093.53, and 4080.19
  • Critical resistance levels for S&P 500 are 4127.12, 4142.44, and 4159.14
  • Key levels for E-mini futures: break above 4143.50, the high at 7:00 AM and a break below 4102.75, the low at 2:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (June 2022) closed at 4114.25 and the index closed at 4115.77 – a spread of about -1.50 points; futures closed at 4114.00 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -2.75; Dow by -10; and NASDAQ by -15.75

Markets Around The World

  • Markets in the East closed mostly lower – Tokyo and Mumbai closed higher
  • European markets are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • INR/USD
    • GBP/USD
    • NZD/USD
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 3.029%, up +10.2 basis points from two weeks ago;
    • 30-years is at 3.177%, up +21.2 basis points;
    • 2-years yield is at 2.766%, up +27.0 basis points;
    • The 10-Year-&-2-Year spread is at 0.263, up from 0.253
    • The 30-Year-&-10-Year spread is at 0.148, up from 0.216
  • VIX
    • At 24.17 @ 8:00 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
    • 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 a Bullish Engulfing Harami candle; the past several 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; below 70
    • RSI-9 is just above 50; 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 is near 60 after declining to 30
    • Above EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting sideways to down since 3:30 PM on Tuesday
    • RSI-21 is moving just below 50
    • Below EMA20, which is at/above EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 4:15 AM
  • The Bollinger Band is expanding since 4:45 AM – price first walked up the upper band and then dropped below the middle band to the lower band
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Wednesday, June 8, in mostly lower volume. S&P 500 traded in higher volume. The major indices opened up and then traded sideways in the morning before declining in the afternoon. Most made Harami candles.

From Briefing.com:

[…]

WTI crude futures settled the day up 2.0% at $121.96/bbl.

[…]

A move in the 10-yr note yield back above 3.00% further dissuaded them. The benchmark instrument settled the day up six basis points at 3.03%

[…]

Large-cap stocks outperformed small-cap stocks; value stocks underperformed growth stocks; the Dow Jones Transportation Average dropped 3.8%; the Philadelphia Semiconductor Index slumped 2.4%; and some of today’s worst-performing sectors were the economically-sensitive real estate (-2.4%), materials (-2.1%), industrials (-1.8%), and financial (-1.7%) sectors.

Every sector, though, with the exception of the energy sector (+0.2%), finished the day with a loss.

Declining issues outpaced advancing issues by a nearly 3-to-1 margin at the NYSE.

[…]
  • MBA Mortgage Applications declined 6.5% week-over-week versus a prior decline of 2.3%; purchase applications fell 7% and refinancing applications dropped 6%.
  • April Wholesale Inventories increased 2.2% month-over-month (Briefing.com consensus 2.1%) following an upwardly revised 2.7% increase (from 2.3%) in March.
[…]
  • Dow Jones Industrial Average: -9.5% YTD
  • S&P 400: -11.3% YTD
  • S&P 500: -13.6% YTD
  • Russell 2000: -15.8% YTD
  • Nasdaq Composite: -22.7% YTD

Overseas: 

  • Europe: DAX -0.8%, FTSE -0.1%, CAC -0.8%
  • Asia: Nikkei +1.0%, Hang Seng +2.2%, Shanghai +0.8%

Commodities: 

  • Crude Oil +2.36 @ 121.96
  • Nat Gas -0.67 @ 8.67
  • Gold +3.30 @ 1856.50
  • Silver -0.10 @ 22.08
  • Copper +0.01 @ 4.44
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