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Market Rap 06/14/22 by CTG

SPY / QQQ / Vix

SPY 5 days, hourly candles S&P futures bounced to yesterdays upper end of the range overnight, cooling off the hourly oversold RSI conditions (4hr RSI still pretty beaten up). Giving about half that move back currently. 373.40 the after hours low from yesterday, before futures opened

380.55 the corresponding futures high

SPY 3 months, daily candles and SPY 3 years, weekly candles Last daily "higher low" area lost convincingly yesterday on high volume; weekly downtrend continues after the recent bounce topped out at the weekly 12ema (white line). Gaps left open overhead. Daily RSI getting closer to oversold but not quite there yet. Weekly support levels going back to the start of '21 in view. (support)

373.30 the low from yesterday

371.88 the low from early March '21

364.82-368.27 from Jan '21 (resistance)

381.81 the high from yesterday

389.75 open gap

395.78 after that

400.70 the daily 12ema (white line)

401.44 next open gap

QQQ 5 days, hourly candles Similar bounce here on Nasdaq futures, cooling off hourly RSI overnight, 4hr RSI still hanging out in oversold territory 275 the after hours low from yesterday before futures opened

280.50 the corresponding futures high from early this AM

QQQ 3 months, daily candles and 3 year, weekly candles Convincing loss of the recent lows on high volume, as the weekly downtrend continues after failing at the weekly 12ema (white line) on this most recent bounce. Daily RSI closer to oversold but not quite there. (support)

274.53 the low from yesterday

266.97 weekly support from Nov '20

260.11 weekly support from Sept '20 (resistance)

282.34 the high from yesterday

288.38 the first open gap overhead

294.87 next

297.96 the daily 12ema (white line)

299.23 next open gap

(June Vix expires today, moving onto July Vix futures contract) July Vix futures 3months, daily candles Massive continuation of Fridays move here yesterday, testing and trying to push thru May highs

Front end of the curve higher than the back end as backwardation returns to the Vix futures curve

Spot Vix 3 months, daily candles A huge 3 day move has us heading back up to test the highs seen in May. 35.50 was the peak from yesterday. 35.48 was the peak on 5/9 and 36.64 was the high from 5/2. Inside bar so far today within yesterdays wide range, but refusing to back down much ahead of the Fed tomorrow.

Bigger daily ranges and moves should be expected both directions, with this back in the 30s.

TLT 3yr, weekly candles and 15year, monthly candles to find the next levels of interest Big flush of the May lows here on high volume, as the weekly downtrend continues.

Lows from Nov '18 convincingly broken as we start to see prices last seen in the summer of 2014 as interest rates surge S&P futures vs fair value: +6.50. Nasdaq futures vs fair value: +23.40.The S&P 500 futures are up five points and are trading 0.2% above fair value. The Nasdaq 100 futures are up 42 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 19 points and are trading 0.3% above fair value. A reassuring earnings report and outlook from Oracle (ORCL) provided a nice distraction from recent selling efforts. ORCL is up 12% in pre-market action. That has helped the futures trade, but the real catalyst for the uplift in the futures market is the significant weakness seen since last week. The S&P 500 is down 10.0% from its intraday high last Monday while the Nasdaq 100 is down 11.8%. The scope of those losses has stirred some hope that the market could be poised for a rebound effort, although talk of a potential "profit recession," uncertainty about the ultimate impact of the Fed's aggressive rate-hike approach, and unruly bond markets have curtailed buy-the-dip interest. Separately, the Fed is now expected to raise the target range for the fed funds rate by 75 basis points on Wednesday versus a previously expected 50 basis points. This can be seen in the fed funds futures market, which is assigning a 95.3% probability to such a move, versus just 3.9% a week ago. The sudden shift in expectations follows yesterday's Wall Street Journal report that suggested a 75 basis point increase would likely be under consideration given the impact of the May CPI report. Some see a more aggressive line by the Fed as a good thing since priority number one is to get inflation, and inflation expectations, under control. The change in rate-hike expectations has been most acute in the 2-yr note yield. It stood at 2.82% prior to the release of the May CPI report. It shot up to 3.43% yesterday after The Wall Street Journal report. It is currently at 3.32%. The 10-yr note yield for its part also hit 3.43% yesterday and is currently at 3.34% in closely-watched curve-flattening action. The U.S. Dollar Index is down 0.1% to 104.97. WTI crude futures are up 0.7% to $121.71/bbl. In corporate news:

  • Oracle (ORCL 71.45, +7.40, +11.6%): beats by $0.16, beats on revs; sees AugQ EPS in-line and revs above consensus; expects its cloud business to organically grow over 30% yr/yr in FY23

  • National Vision (EYE 29.04, +3.76, +14.9%): to join S&P SmallCap 600, effective prior to the open June 16

  • Continental Resources (CLR 69.60, +5.10, +7.9%): announces receipt of "take private" proposal from Hamm Family of $70/share

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