Market Remarks

Morning Notes – Wednesday, June 22, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; forming an upsloping flag, a bearish formation since 4:00 AM on the 15-minute timeframe
  • The odds are for a down day with elevated volatility – watch for a break above 3724.75 and 3738.75
  • The key economic data report due during the day:
    • The Semi-Annual Testimony of the Fed Chair to the Senate

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3715.31, 3704.22, and 3673.63
  • Critical resistance levels for S&P 500 are 3740.52, 3748.05, and 3754.60
  • Key levels for E-mini futures: break above 3724.75, the high at 7:30 AM and a break below 3703.75, the low at 8:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2022) closed at 3768.50 and the index closed at 3764.79 – a spread of about +3.75 points; the futures closed at 3767.75; the fair value is +0.75
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -56.50; Dow by -418; and NASDAQ by -180.25

Markets Around The World

  • Markets in the East closed down
  • European markets are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • 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 3.307%, up +33.5 basis points from two weeks ago;
    • The 30-year is at 3.390%, up +26.7 basis points;
    • The 2-year yield is at 3.211%, up +47.0 basis points;
    • The 10-Year-&-2-Year spread is at 0.096, up from 0.231
    • The 30-Year-&-10-Year spread is at 0.083, up from 0.151
  • VIX
    • At 31.19 @ 8:30 AM; up 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 17 was a large red candle that gapped down at the open with a small lower shadow; at the lows of December 21, 2020
    • Stochastic (9,1, 3): %K is below %D; below 20
    • RSI-9 is just above 25
  • The week was down -132.11 or -3.4%; the 5-week ATR  is 240.01
  • A down week; fourth in the least five weeks and ninth in the previous ten weeks
  • The weekly pivot point=3747.92, R1=3858.98, R2=3949.20; S1=3657.70, S2=3546.64; S1/S2 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A green candle that gapped at the open with no lower shadow and a small upper shadow;
    • Stochastic (9, 1, 3): %K is above %D; Bullish Divergence
    • RSI-9 is just below 40; above 8-day EMA; Bullish Divergence
  • Below 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Rising since 10:00 AM on Friday after making a Double Bottom around 3640.00 level; declined from 3783.75 at 2:00 PM on Tuesday to 3693.25 at 4:00 AM
    • RSI-21 declined to near 35 from above 70
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Moving down since 3:00 PM on Tuesday from a high of 3783.75 to a low of 3693.25 at 4:00 AM
    • RSI-21 is moving up from below 30 at 4:00 AM;  just 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 7:45 PM on June 21
  • The Bollinger Band is a bit expanded and flattening
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Tuesday, June 21, in lower volume. The major indices gapped up at the open and did not close the gap. Most had no lower shadow and small upper shadows. Most of the gains were achieved in the first half-hour of trading and then the indices mostly moved sideways.

From Briefing.com:

[…]

All 11 S&P 500 sectors started higher and all 11 S&P 500 sectors finished higher. Today’s gains ranged from 1.5% to 5.1%.

[…]
  • Existing home sales decreased 3.4% month-over-month in May to a seasonally adjusted annual rate of 5.41 million (Briefing.com consensus 5.40 million) versus a downwardly revised 5.60 million (from 5.61 million) in April. Total sales in April were down 8.6% from a year ago.
[…]
  • Dow Jones Industrial Average: -15.6% YTD
  • S&P 400: -20.7% YTD
  • S&P 500: -21.0% YTD
  • Russell 2000: -24.3% YTD
  • Nasdaq Composite: -29.2% YTD

Overseas: 

  • Europe: DAX +0.2%, FTSE +0.4%, CAC +0.8%
  • Asia: Nikkei +1.8%, Hang Seng +1.9%, Shanghai -0.3%

Commodities: 

  • Crude Oil +1.40 @ 109.46
  • Nat Gas -0.14 @ 6.81
  • Gold -2.20 @ 1838.30
  • Silver +0.16 @ 21.76
  • Copper +0.02 @ 4.03 
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