Market Remarks

Morning Notes – Tuesday, June 27, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM. Futures have been drifting lower since 3:00 AM and sideways to down since – 4:45 AM.
  • The odds are for a sideways move within a 20-30 points range around the pre-open levels – watch for a break above 4387.75 and a break below 4368.50 for clarity
  • The major economic data reports due during the day:
    • Core Durable Goods Orders ( 0.6% vs. 0.0% est.; prev. -0.3%) at 8:30 AM
    • Durable Goods Orders ( 1.7% vs. -0.8% est.; prev. 1.2%) at 8:30 AM
    • HPI ( 0.7% vs. 0.5% est.; prev. 0.6%) at 9:00 AM
    • S&P/CS Composite-20 HPI ( -1.7% vs. -2.5% est.; prev. -1.1%) at 9:00 AM
    • CB Consumer Confidence ( 103.9 est.; prev. 102.3) at 10:00 AM
    • New Home Sales ( 677k est.; prev. 683K ) at 10:00 AM
    • Richmond Manufacturing Index ( -12 est.; prev. -15 ) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Down
  • 30-Min: Down-Side
  • 15-Min: Down-Side
  • 6-Min:  Down-Side

Key Levels:

  • Critical support levels for S&P 500 are 4328.08, 4306.07, and 4297.54
  • Critical resistance levels for S&P 500 are 4345.08, 4359.53, and 4366.55
  • The key levels for E-mini futures are 4381.75, the high at 6:45 AM, and 4371.50, the low at 8:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2023) closed at 4371.25, and the index closed at 4328.82 – a spread of about +42.50 points; the futures closed at 4370.25; the fair value is +1.25
  • Pre-NYSE session open, futures were mixed – at 9:00 AM, S&P 500 futures were up by +7.00, Dow down by -16, and NASDAQ up by +53.50

Markets Around The World

  • Markets in the East closed mostly higher – Tokyo and Seoul closed lower
  • European markets are mostly lower – Spain is higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • USD/CAD
  • Dollar index
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.737, down -2.8 basis points from two weeks ago;
    • The 30-year is at 3.830%, down -7.7 basis points;
    • The 2-year yield is at 4.668%, up +8.78 basis points;
    • The 10-Year-&-2-Year spread is at -0.931, down from -0.816
    • The 30-Year-&-10-Year spread is at 0.093, down from +0.142
  • VIX
    • At 14.31 @ 8:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 21.33 on May 4; low = 15.53 on May 1
    • Sentiment: Risk-Neutral-Off

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

Weekly:
  • The week ending on June 23 was a red Harami candle within a green candle that closed at the highest level since April 2022.
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 is just below 70
  • The week was down -61.26 or -1.4%; the 5-week ATR  is 102.56
  • A down week, first in the last five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=4363.27, R1=4385.21, R2=4422.08; S1=4326.40, S2=4304.46; No pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A small red candle at a support level, a previous resistance level created by the high of August 16, 2022; the index has been declining gradually since June 16
    • Stochastic (9, 1, 3): %K is below the %D – near zero;
    • RSI-9 has declined to 50; below 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Drifting down since June 16, after reaching a high of 4493.75, which was below the resistance level of 4509.00, the high of April 21, 2022.
    • RSI-21 has been forming a symmetrical triangle around 40
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving sideways to down since 12:30 PM on June 26 within a downtrend since June 16
    • RSI-21 has been moving around 45
    • Below EMA 20, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting down since 4:30 AM
  • The Bollinger Band has been stable and a bit expanded
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Monday, June 26, in mostly lower volume. S&P 500, Dow Jones Industrial Average, and NASDAQ Composite closed lower. Russell 2000, Dow Jones Transportation Average, and NYSE Composite closed higher. NASDAQ Composite traded in higher volume.

The major indices opened up but turned around in the first hour of trading and then mostly drifted lower.

From Briefing.com:

[…]

The session started on a more upbeat note, but the three major indices all closed in negative territory. The S&P 500 and Nasdaq settled near their worst levels of the day while the Dow Jones Industrial Average closed just below its flat line.

[…]

The Vanguard Mega Cap Growth ETF (MGK) closed with a 1.3% loss while the market-cap weighted S&P 500 fell 0.5%.

[…]

Roughly half of the 11 S&P 500 sectors closed with gains. Real estate (+2.2%) led the pack by a wide margin followed by energy (+1.7%) and materials (+1.0%). Meanwhile, the communication services (-1.9%), consumer discretionary (-1.3%), and information technology (-1.0%) sectors fell to the bottom of the pack, dragged down by their respective mega cap components.

[…]

The 2-yr note yield fell one basis point to 4.74% and the 10-yr note yield fell two basis points to 3.72%.

  • Nasdaq Composite: +27.4% YTD
  • S&P 500: +12.7% YTD
  • Russell 2000: +3.5% YTD
  • S&P Midcap 400: +4.3% YTD
  • Dow Jones Industrial Average: +1.7% YTD
[…]

Overseas:

  • Europe: DAX -0.1%, FTSE -0.1%, CAC +0.3%
  • Asia: Nikkei -0.3%, Hang Seng -0.5%, Shanghai -1.5%

Commodities: 

  • Crude Oil +0.31 @ 69.49
  • Nat Gas +0.08 @ 2.80
  • Gold +1.70 @ 1932.60
  • Silver +0.40 @ 22.83
  • Copper -0.02 @ 3.78
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