Morning Notes – Wednesday, June 28, 2023

Directional Bias For The Day:

• S&P Futures are lower at 9:00 AM. Futures have been making a broadening pattern since 6:30 PM within a narrow range.
• The odds are for a sideways to down day – watch for a break above 4416.75 and a break below 4406.50 for clarity
• The major economic data reports due during the day:
  • Goods Trade Balance ( -91.1B vs. -93.6B est.; prev. -97.1B) at 8:30 AM
  • Prelim Wholesale Inventories ( -0.1% vs. -0.1% est.; prev. -0.1%) at 8:30 AM
  • Fed Chair Powell Speaks at 9:30 AM

Directional Bias Before Open:

Key Levels:

• Critical support levels for S&P 500 are 4364.34, 4342.17, and 4335.00
• Critical resistance levels for S&P 500 are 4384.42, 4396.66, and 4407.44
• The key levels for E-mini futures are 4416.75, the high at 7:15 AM, and 4406.50, the low at 4:45 AM

Pre-Open

• On Tuesday at 4:00 PM, S&P futures (September 2023) closed at 4418.00, and the index closed at 4378.41 – a spread of about +39.50 points; the futures closed at 4418.75; the fair value is -0.75
• Pre-NYSE session open, futures were lower – at 8:45 AM, S&P 500 futures were down by -11.00, Dow by -26, and NASDAQ by -67.00

Markets Around The World

• Markets in the East closed mostly higher – Shnaghi and Seoul closed lower
• European markets are higher
• Currencies (Compared to two weeks ago):

• 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 3.768, down -7.1 basis points from two weeks ago;
  • The 30-year is at 3.840%, down -10.1 basis points;
  • The 2-year yield is at 4.887%, up +20.4 basis points;
  • The 10-Year-&-2-Year spread is at -1.119, down from -0.844
  • The 30-Year-&-10-Year spread is at 0.072, down from +0.102
• VIX
  • At 13.76 @ 8:30 AM; up from the last close; above the 5-day SMA;
  • Recent high = 21.33 on May 4; low = 12.73 on June 22
  • Sentiment: Risk-Neutral-Off

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

Previous Session

Major U.S. indices closed higher on Tuesday, June 27, in mixed volume. Both Dow averages – Industrial and Transportation – traded in higher volume.

The major indices opened up and gradually drifted higher for the rest of the day. All but one S&P sector – Healthcare – closed higher.

From Briefing.com:

[…] The Vanguard Mega Cap Growth ETF (MGK) rose 1.5%; the Invesco S&P 500 Equal Weight ETF (RSP) rose 1.2%; and the market-cap weighted S&P 500 rose 1.2%. Gains in their respective mega cap components propelled the information technology (+2.0%) and consumer discretionary (+2.1%) sectors to first place on the leaderboard. […] The SPDR S&P Homebuilder ETF (XHB) rose 2.9%. The PHLX Semiconductor Index rose 3.6%. Other top performers included the economically-sensitive materials (+1.4%) and industrials (+1.3%) sectors. The countercyclical health care (-0.2%), utilities (+0.3%), and consumer staples (+0.3%) sectors all underperformed, […] The 2-yr note yield rose two basis points to 4.76% and the 10-yr note yield rose five basis points to 3.77%. Nasdaq Composite: +29.5% YTD S&P 500: +14.0% YTD Russell 2000: +5.0% YTD S&P Midcap 400: +6.0% YTD Dow Jones Industrial Average: +2.4% YTD […] Total durable goods orders were up 1.7% month-over-month in May (Briefing.com consensus -1.0%) following an upwardly revised 1.2% increase (from 1.1%) in April. Excluding transportation, durable goods orders increased 0.6% month-over-month (Briefing.com consensus 0.0%) following a downwardly revised 0.6% decline (from -0.2%) in April. […] The FHFA Housing Price Index rose 0.7% in April following a revised 0.5% increase in March (from 0.6%). The S&P Case-Shiller Home Price Index fell 1.7% in April (Briefing.com consensus -2.5%) following a 1.1% decrease in March. The Conference Board’s Consumer Confidence Index jumped to 109.7 in June (Briefing.com consensus 103.8) from an upwardly revised 102.5 (from 102.3) in May. In the same period a year ago, the index stood at 98.4. […] New home sales surged 12.2% month-over-month in May to a seasonally adjusted annual rate of 763,000 units (Briefing.com consensus 665,000) from a downwardly revised 680,000 (from 683,000) in April. On a year-over-year basis, new home sales were up 20.0%. […] Overseas: Europe: DAX +0.2%, FTSE +0.1%, CAC +0.4% Asia: Nikkei -0.5%, Hang Seng +1.9%, Shanghai +1.2% Commodities:  Crude Oil -1.91 @ 67.58 Nat Gas -0.03 @ 2.77 Gold -10.40 @ 1922.20 Silver +0.06 @ 22.89 Copper +0.01 @ 3.79