Market Remarks

Morning Notes – Monday, June 13, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; moving sideways since 4:00 AM between 3810.00 and 3795.00 after declining more than 90 points from Friday’s close;
  • The odds are for a down day with elevated volatility; good chance of a sideways to up move from pre-open levels around 3800.00 – watch for a break above 3823.50 and a break below 3795.00
  • No key economic data report due during the day:

Directional Bias Before Open:

    • Weekly: In Correction
    • Daily: In C0rrection
  • 120-Min: Side-Down
  • 30-Min: Down-Side
  • 15-Min: Down-Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for S&P 500 are 3810.32, 3783.89, and 3730.19
  • Critical resistance levels for S&P 500 are 3875.12, 3981.88, and 3937.65
  • Key levels for E-mini futures: break above 3809.25, the high at 7:00 AM and a break below 3797.50, the low at 4:15 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (June 2022) closed at 3898.00 and the index closed at 3900.86 – a spread of about -2.75 points; futures closed at 3900.50 for the day; the fair value is -2.50
  • Pre-NYSE session open, futures are down – at 9:00 AM, S&P 500 futures were down by -98.00; Dow by -644; and NASDAQ by -359.00

Markets Around The World

  • Markets in the East closed lower – Tokyo was closed
  • European markets are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 3.156%, up +41.3 basis points from two weeks ago;
    • 30-years is at 3.196%, up +22.4 basis points;
    • 2-years yield is at 3.119%, up +65.1 basis points;
    • The 10-Year-&-2-Year spread is at 0.037, up from 0.275
    • The 30-Year-&-10-Year spread is at 0.040, up from 0.229
  • VIX
    • At 32.67 @ 9:00 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

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

Weekly:
  • The week ending on June 10 was a large Bearish Engulfing candle near the 38.2% Fibonacci retracement level of the previous rally from March 2020
    • Stochastic (9,1, 3): %K is below %D
    • RSI-9 is just above 30
  • The week was down -207.68 or -5.1%; the 5-week ATR  is 240.10
  • A down week; fourth in the least five weeks and nine in the previous ten weeks
  • The weekly pivot point=3989.93, R1=4079.71, R2=4258.55; S1=3811.09, S2=3721.31; R1/S1/S2/S3 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A large red that gapped down; nearing the lows of a May 20;
    • Stochastic (9, 1, 3): %K is below %D; near zero
    • RSI-9 has declined to just above 30; below 8-day EMA;
  • Below 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Near the lows made on May 20 after breaking below a Descending Triangle on June 9;
    • RSI-21 is below 15
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Gapped down at the open of the week; moving sideways since 4:00 AM
    • RSI-21 is drifting up since 4:00 PM after making a Bullish Divergence; above 30 from near 22
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 7:15 PM
  • The Bollinger Band is relatively contacting a bit since 7:15 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Friday, June 10, in higher volume. Major indices gapped down at the open and did not close the gap. The Indices again declined in the final half-hour of the session after trying to recover in the early afternoon. The market closed near the lows for the day.

For the week, the major indices closed lower in higher volume. The markets in Asia closed mixed but European exchanges closed lower. The dollar index closed up, the energy futures and precious metals closed up, the industrial metals closed mostly closed lower and the soft commodities closed mixed. Th eUS Treasury yields moved up.

From Briefing.com:

The stock market ended the week on a disappointing note, pressured by hot inflation and weakening consumer sentiment. The S&P 500 fell 2.9%, surrendering 5.1% for the week while the Nasdaq (-3.5%) underperformed, losing 5.6% this week. […]

Shorter-dated Treasuries faced immediate pressure in reaction to the inflation report while longer tenors joined the retreat after putting up some early resistance. The 2-yr yield jumped 22 bps to 3.04% while the 10-yr yield rose 11 bps to 3.16%, marking a fresh high for the year in the process.

All eleven sectors finished the day in negative territory with top-weighted groups like consumer discretionary (-4.2%), technology (-3.9%), and financials (-3.7%) showing the widest losses throughout the day. Countercyclical consumer staples (-0.4%) and utilities (-0.8%) outperformed, making a brief appearance in positive territory, but could not hold their gains into the close.

[…]
  • Total CPI increased 1.0% month-over-month in May (Briefing.com consensus 0.7%) following a 0.3% increase in April. Core CPI, which excludes food and energy, increased 0.6% month-over-month in May (Briefing.com consensus 0.5%) following a 0.6% increase in April. On a year-over-year basis, total CPI was up 8.6%, versus 8.3% in April, and core CPI was up 6.0%, versus 6.2% in April.
  • […]
  • The preliminary University of Michigan Index of Consumer Sentiment for June dropped to 50.2 (Briefing.com consensus 59.0) from the final reading of 58.4 for May. The June reading compares to 85.5 in the same period a year ago and is the lowest reading ever on records dating back to 1978.
  • […]
  • The Treasury Budget showed a $66.2 bln deficit in May versus a $132.0 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the May deficit cannot be compared to the April surplus of $308.2 bln.
[…]
  • Dow Jones Industrial Average -13.6% YTD
  • S&P 400 -15.4% YTD
  • S&P 500 -18.2% YTD
  • Russell 2000 -19.8% YTD
  • Nasdaq Composite -27.5% YTD
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