Market Remarks

Morning Notes – Thursday, June 23, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 8:45 AM;  drifting down since 7:15 AM; down from 3796.75  to a support level around 3773.75
  • The odds are for an up day with elevated volatility – watch for a break below 3773.75 for a change of sentiments
  • The key economic data report due during the day:
    • Unemployment Claims (229K vs. 227K est.; prev. 231K) at 8:30 AM
    • Current Account ( -291B vs, -275B est.; prev. -218B) at 8:30 AM
    • Flash Manufacturing PMI ( 53.9 est.; prev. 53.4 ) at 9:45 AM
    • Flash Services PMI ( 53.9 est.; prev. 53.4 )at 9:45 AM
    • 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-Up
  • 15-Min: Side-Up
  • 6-Min: Up

Key Levels:

  • Critical support levels for S&P 500 are 3772.91, 3756.58, and 3715.31
  • Critical resistance levels for S&P 500 are 3789.90, 3801.79, and 3837.56
  • Key levels for E-mini futures: break above 3796.75, the high at 7:15 AM and a break below 3773.75, the low at 8:30 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2022) closed at 3760.75 and the index closed at 3759.89 – a spread of about +0.75 points; the futures closed at 3762.75; the fair value is -2.00
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +12.25; Dow by +56; and NASDAQ by +52.25

Markets Around The World

  • Markets in the East closed mostly up – Seoul and Singapore closed down
  • European markets are mixed – Germany, the UK, Switzerland, and STOXX-600 are lower; France, Spain, and Italy are higher
  • 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 3.096%, up +6.7 basis points from two weeks ago;
    • The 30-year is at 3.212%, up +3.5 basis points;
    • The 2-year yield is at 3.051%, up +28.5 basis points;
    • The 10-Year-&-2-Year spread is at 0.045, up from 0.263
    • The 30-Year-&-10-Year spread is at 0.116, up from 0.018
  • VIX
    • At 29.03 @ 8:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 35.05 on June 13; low = 24.94 on May 4
    • Sentiment: Risk-On

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 Harami candle with a small lower shadow and an upper shadow a bit larger than the real body – still indicating indecision;
    • Stochastic (9, 1, 3): %K is above %D; Bullish Divergence on June 17
    • RSI-9 is just below 40; above 8-day EMA; Bullish Divergence on June 17
  • Below 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Forming an Inverse Head-&-Shoulders pattern; a break above 3805.50, which is also just below a strong resistance, will complete the pattern – the 61;8% extension target is near 3910.00 and the 100% extension target is near 3974.00
    • RSI-21 is just above 60 after dipping below 50
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Trending up since 10:30 AM on June 17 in up-down moves; broke above a Double Bottom pattern on Monday – the 100% extension target near 3788.00 is achieved and the 161.8% extension target is near 3834.00; near the upper bound of a Horizontal Channel between 3805.50 and 3737.75
    • RSI-21 is just below 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 4:30 AM
  • The Bollinger Band is expanded since 4:30 AM the price first walked up the upper bound and is now retreating to the middle band
  • Broke above Double Bottom at 6:00 AM – the 61.8% extension target near 3796.00 is achieved; the 100% extension target is near 3810.00 and the 161.8% extension target is near 3832.00
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Wednesday, June 22, in mixed volume. S&P 500 and NASDAQ Composite traded in higher volume.

The major indices opened lower but then quickly turned around and moved higher to th positive territory. Then they moved sideways for most of the day before giving up the gains in the final hour of trading. Most major indices made Harami candles – some green and some red – indicating indecision.

From Briefing.com:

[…]

A fairly steady performance from the mega-cap stocks helped hold the index line, which was also supported by relative strength in the real estate (+1.6%), health care (+1.4%), and utilities (+1.0%) sectors. That helped offset relative weakness in the information technology (-0.4%) sector and the more cyclically-oriented energy (-4.2%), materials (-1.3%), and industrials (-0.5%) sectors.

[…]

Similarly, copper futures fell 2.1% to $3.95/lb on the growth concerns, which also manifested themselves in the Treasury market. The 2-yr note yield dropped 17 basis points to 3.05% and the 10-yr note yield dropped 15 basis points to 3.16%.

[…]
  • Dow Jones Industrial Average: -16.2% YTD
  • S&P 500: -21.1% YTD
  • S&P 400: -21.3% YTD
  • Russell 2000: -24.8% YTD
  • Nasdaq Composite: -29.4% YTD

Overseas: 

  • Europe: DAX -1.1%, FTSE -0.9%, CAC -0.8%
  • Asia: Nikkei -0.4%, Hang Seng -2.6%, Shanghai -1.2%

Commodities: 

  • Crude Oil -3.45 @ 106.07
  • Nat Gas +0.06 @ 6.87
  • Gold -0.40 @ 1838.40
  • Silver -0.31 @ 21.44
  • Copper -0.09 @ 3.95
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