Morning Notes – Tuesday, May 16, 2023

Directional Bias For The Day:

• S&P Futures are lower at 9:00 AM. Futures have been declining since 3:45 AM – down nearly 15 points.
• The odds are for a down day with elevated volatility – watch for a break above 4149.50 for a change in sentiments
• The major economic data reports due during the day:
  • Retail Sales ( 0.4% vs. 0.8% est.; prev. -1.0%) at 8:30 AM
  • Core Retail Sales ( 0.4% vs. 0.5% est.; prev. -0.8%) at 8:30 AM
  • Capacity Utilization ( 79.7% vs. 79.7% est.; prev. 79.4%) at 9:15 AM
  • Industrial Production ( 0.5% vs. 0.0% est.; prev. 0.4%) at 9:15 AM
  • Business Inventories ( 0.0% est.; prev. 0.2%) at 10:00 AM

Directional Bias Before Open:

Key Levels:

• Critical support levels for S&P 500 are 4111.65, 409994, and 4084.73
• Critical resistance levels for S&P 500 are 4143.74, 4154.28, and 4164.10
• The key levels for E-mini futures are 4149.50, the high at 8:30 AM, and 4132.25, the high at 3:00 AM

Pre-Open

• On Monday at 4:00 PM, S&P futures (June 2023) closed at 4151.50, and the index closed at 4136.28 – a spread of about +15.25 points; the futures closed at 4150.00; the fair value is +1.50
• Pre-NYSE session open, futures were lower – at 9:00 AM, S&P 500 futures were down by -12.00, Dow by -94, and NASDAQ by -32.25

Markets Around The World

• Markets in the East closed mixed – Shanghai, Sydney, Mumbai, and Singapore closed lower; Hong Kong, Toky, and Seoul closed higher
• European markets are mixed – Germany, Italy, and Spain are up; the UK, France, Switzerland, and STOXX 600 are down
• Currencies (Compared to two weeks ago):

• Commodities (Compared to two weeks ago):
  • Energy futures are mixed
  • Precious metals are mixed
  • Industrial metals are mostly higher
  • Soft commodities are mostly higher
• Treasuries (Compared to two weeks ago)
  • The 10-year yield closed at 3.534, down -4.0 basis points from two weeks ago;
  • The 30-year is at 3.875%, up +5.7 basis points;
  • The 2-year yield is at 4.004%, down -13.9 basis points;
  • The 10-Year-&-2-Year spread is at -0.470, up from -0.569
  • The 30-Year-&-10-Year spread is at 0.341, up from +0.244
• VIX
  • At 17.69 @ 9:00 AM; up from the last close; above the 5-day SMA;
  • Recent high = 21.23 on May 4; low = 15.53 on May 1
  • Sentiment: Risk-Off

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

Previous Session

Major U.S. indices closed higher on Monday, May 15, in mostly lower volume. Russell 2000 traded in higher volume.

The major indices opened almost flat and then drifted higher for the rest of the day. The day’s range was small. The major indices have been moving within a narrow congestion range for the past few days.

From Briefing.com:

[…] The stock market closed the session on a relatively upbeat note, but today’s price action was somewhat lackluster on below-average volume. The major indices all closed near their highs of the day, sporting only modest gains. […] Strength from regional bank stocks, along with energy shares, led the Russell 2000 to outperform its peers today with a 1.2% gain. […] Aside from financials, the materials (+0.9%) and information technology (+0.7%) sectors were the top performers today. The utilities sector (-1.2%) was the worst performer by a wide margin. […] The 2-yr note yield rose two basis points to 4.00% and the 10-yr note yield rose five basis points to 3.51%. Today’s economic data was limited to the New York Fed Empire State Manufacturing Survey for May, which plunged to -31.8 (Briefing.com consensus -1.8) from 10.8 in April. […] Nasdaq Composite: +18.1% YTD S&P 500: +7.7% YTD Dow Jones Industrial Average: +0.6% YTD S&P Midcap 400: +0.9% YTD Russell 2000: UNCH YTD […] Overseas: Europe: DAX +0.0%, FTSE +0.3%, CAC +0.1% Asia: Nikkei +0.8%, Hang Seng +1.8%, Shanghai +1.2% Commodities:  Crude Oil +1.05 @ 71.11 Nat Gas +0.10 @ 2.54 Gold +5.10 @ 2023.80 Silver +0.16 @ 24.30 Copper +0.02 @ 3.75