Market Remarks

Morning Notes – Friday, June 17, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a bit higher at 9:15 AM; moved down more than 40 points from the high of 3713.50 at 4:30 AM
  • The odds are for a choppy day with a greater chance of going up than down from the pre-market levels around 3675.00 – watch for a break above 3713.50 and a break below 3668.50 for clarity
  • The key economic data report due during the day:
    • Capacity Utilization ( 79.00% vs 79.2% est.; prev. 78.9% ) at 9:15 AM
    • Industrial Production ( 0.2% vs 0.4% est.; prev. 1.4% ) at 9:15 AM
    • CB Leading Index ( -0.4% 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-Side
  • 15-Min: Side-Up
  • 6-Min: Up-Side

Key Levels:

  • Critical support levels for S&P 500 are 3672.58, 3646.92, and 3639.77
  • Critical resistance levels for S&P 500 are 3687.33, 3705.68, and 3728.18
  • Key levels for E-mini futures: break above 3713.50, the high at 4:30 AM and a break below 3668.50, the low at 8:00 PM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2022) closed at 3673.50 and the index closed at 3666.77 – a spread of about +6.75 points; futures closed at 3671.25 for the day; the fair value is +2.25
  • Pre-NYSE session open, futures are a bit higher – at 9:00 AM, S&P 500 futures were up by +8.25; Dow by +40; and NASDAQ by +34.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hongkong, and Singapore closed higher; Tokyo, Sydney, Mumbai, and Seoul closed lower
  • European markets are mostly higher – Switzerland is 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 mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.229%, up +31.6 basis points from two weeks ago;
    • The 30-year is at 3.287%, up +21.1 basis points;
    • The 2-year yield is at 3.106%, up +47. basis points;
    • The 10-Year-&-2-Year spread is at 0.123, up from 0.283
    • The 30-Year-&-10-Year spread is at 0.051, up from 0.163
  • VIX
    • At 32.70 @ 9:00 AM; down from the last close; at/below the 5-day SMA;
    • Recent high = 35.05 on June 13; 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 red candle that gapped down with almost no upper shadow and a small lower shadow; broke below January 29, 2021 low of 3694.12
    • Stochastic (9, 1, 3): %K crossed below %D; below 10
    • RSI-9 is just above 25; below 8-day EMA; potential Bullish Divergence
  • Below 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Declining since 8:00 PM on June 15 from a resistance level formed by the lower bound of a Horizontal Channel and the May 20 low of 3807.50; breached the low of January 2021 low of 3652.50
    • RSI-21 has risen to near 50 from, below 20 and after making a Bullish Divergence
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Making a bearish upsloping flag since 2:30 PM on Thursday from lows – break below 3668.50 will increase the chance of the down move;
    • RSI-21 declined from just above 50 to just above 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up since 3:45 PM
  • The Bollinger Band is expanding a bit since 8:30 AM with price walking down the lower band
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Thursday, June 16, in mostly higher volume. NASDAQ Composite traded in lower volume. The major indices gapped down at the open and then mostly drifted lower for the rest of the day.

From Briefing.com:

[…]

The S&P 500 (-3.3%) and Nasdaq Composite (-4.1%) were on a slow decline most of the day with the Dow Jones Industrial Average (-2.4%) exhibiting more volatile price action.

[…]

sending the 10-yr yield lower by nine basis points to 3.31% while the 2-yr yield fell eleven basis points to 3.16%.

[…]

The declining issues outpaced the advancing issues by a greater than 9-to-1 margin at the NYSE and an almost 4-to-1 margin at the Nasdaq. Today’s session saw above-average volume with more than 1.3 bln shares changing hands at the NYSE floor.

All 11 of the S&P 500 sectors closed in the red with the selling paced by energy (-5.6%), consumer discretionary (-4.8%), information technology (-4.1%), and materials (-3.7%). The best performing sectors were the consumer staples (-0.7%), health care (-1.5%), and the utilities (-1.9%), but they could not stay out of the red.

[…]
  • Housing starts declined 14.4% month-over-month in May to a seasonally adjusted annual rate of 1.549 million units (Briefing.com consensus 1.730 million) while building permits — a leading indicator — declined 7.0% month-over-month to 1.695 million (Briefing.com consensus 1.800 million).
  • […]
  • Initial jobless claims for the week ending June 11 decreased by 3,000 to 229,000 (Briefing.com consensus 215,000) while continuing jobless claims for the week ending June 4 increased by 3,000 to 1.312 million.
  • […]
  • The Philadelphia Fed survey fell to -3.3 in June (Briefing.com consensus 5.0) from 2.6 in May.
[…]
  • Dow Jones Industrial Average -17.6% YTD
  • S&P 400 -22.5% YTD
  • S&P 500 -23.1% YTD
  • Russell 2000 -26.5% YTD
  • Nasdaq Composite -32.0% YTD

Overseas: 

  • Europe: DAX -3.3%, FTSE -3.1%, CAC -2.4%
  • Asia: Nikkei +0.4%, Hang Seng -2.2%, Shanghai -0.6%

Commodities: 

  • Crude Oil +0.03 @ 115.28
  • Nat Gas +0.04 @ 7.47
  • Gold +30.30 @ 1850.10
  • Silver +0.47 @ 21.89
  • Copper -0.04 @ 4.11
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