Market Remarks

Morning Notes – Thursday July 15, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day — watch for a break above 4365.50 for a change of sentiments
  • Key economic data report due during the day:
    • Philly Fed Manufacturing Index ( 21.9 vs. 28.1 est.; prev. 30.7) at 8:30 AM
    • Unemployment Claims  ( 360K vs. 350K est.; prev. 373K) at 8:30 AM
    • Empire State Manufacturing Index ( 43.0 vs. 17.9 est.; prev. 17.4) at 8:30 AM
    • Import Prices ( 1.0% vs. 1.1% est.; prev. 1.1%) at 8:30 AM
    • Industrial Production ( 0.6% est.; prev. 0.8%) at 9:15 AM
    • Capacity Utilization Rate ( 75.7% est.; prev. 75.2%) at 9:15 AM
    • Fed Chair Testimony at 9:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4353.38, 4345.87, and 4329.38
  • Critical resistance levels for S&P 500 are 4371.10, 4383.80, and 4393.68
  • Key levels for E-mini futures: break above 4359.50, the high of 6:45 AM and break below 4345.25, the low of 7:15 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2021) closed at 4367.75 and the index closed at 4374.30 – a spread of about -6.50 points; futures closed at 4367.75 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are mixed – at 8:30 AM, S&P 500 futures were down by -13.25; Dow down by -134, and NASDAQ up by +14.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai, and Seoul closed up; Tokyo, Sydney, and Singapore closed lower
  • European markets are lower
  • Currencies (from two weeks ago):
    Up Down
    • GBP/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.329%, down -11.4 basis points from two weeks ago;
    • 30-years is at 1.945%, down -12.0 basis points;
    • 2-years yield is at 0.225%, down -3.0 basis points;
    • The 10-Year-&-2-Year spread is at 1.104, down from 1.188
  • VIX
    • At 17.50 @ 8:00 AM; up from the last close; above 5-day SMA;
    • Recent high =  21.82 on June 21; low =  14.10 on June 29
    • Sentiment: Risk-Off

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

Monthly
  • Confirmed Uptrend
  • May 2021 was a Doji with a small upper shadow and a long lower shadow; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 80; broke above a downtrend line from January 2018
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows
Weekly:
  • The week ending on July 9 was a long-legged candle, like a Doji, with a small upper shadow
    • Stochastic (9,1, 3): %K is above %D; near 100
    • RSI (9) is just above 70
  • The week was up +17.21 or +0.4%; the 5-week ATR is 83.35
  • An up week; fourth in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4343.51, R1=4397.64, R2=4425.74; S1=4315.41, S2=4261.28; S1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A relatively small spinning top candle; made the all-time intraday high
    • %K is below %D;
    • RSI-9 is just below 70; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Drifting sideways to lower since 8:00 AM on July 12
    • RSI-21 moving down since 8:00 AM on July 14 after making a Bearish Divergence; near 35
    • Below EMA10 of EMA50, which is below EMA20
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting sideways to down since 11:00 AM on July 9;
    • RSI-21 is moving between 40 and 50
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 1:00 PM on July 14
  • The Bollinger Band is expanding since 5:00 AM with price moving near the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher since 6:30 AM
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mixed on Wednesday, July 14 in mostly higher volume. S&P 500, Dow Jones Industrial Average, and Dow Transportation Average closed up; NASDAQ Composite, Russell 2000, NYSE Composite, and Wilshire 5000 Total Market Index closed lower. NASDAQ Composite traded in lower volume.

From Briefing.com:

The S&P 500 increased 0.1% on Wednesday in a defensive session led by Apple (AAPL 149.15, +3.51, +2.4%) and the counter-cyclical stocks. The Dow Jones Industrial Average (+0.1%) also eked out a positive finish, while the Nasdaq Composite (-0.2%) closed slightly lower. The Russell 2000 dropped 1.6%. […]

Specifically, producer prices for final demand rose 1.0% m/m (Briefing.com consensus +0.6%) while producer prices, excluding food and energy, also rose 1.0% m/m (Briefing.com consensus +0.5%). Year-over-year, they were running noticeably hot at 7.3% and 5.6%, respectively.

The 10-yr yield fell six basis points to 1.36%, which was cited by some as a supportive factor for the S&P 500 information technology sector (+0.7%).

[…]

The defensive tone was further corroborated by the positive performances of the real estate (+0.9%), consumer staples (+0.9%), and utilities (+0.8%) sectors. Conversely, the energy (-2.9%) and financials (-0.5%) sectors were pockets of weakness amid the lower interest rates and weaker oil prices ($73.07, -2.17, -2.9%).

[…]

The 2-yr yield decreased three basis points to 0.22%. The U.S. Dollar Index fell 0.4% to 92.37.

[…]
  • S&P 500 +16.5% YTD
  • Dow Jones Industrial Average +14.1% YTD
  • Nasdaq Composite +13.6% YTD
  • Russell 2000 +11.5% YTD

Overseas: 

  • Europe: DAX flat, FTSE -0.5%, CAC flat
  • Asia: Nikkei -0.4%, Hang Seng -0.5%, Shanghai -1.1%

Commodities: 

  • Crude Oil -2.21@ 73.11
  • Nat Gas -0.04 @ 3.66
  • Gold +16.80 @ 1825.10
  • Silver +0.18 @ 26.30
  • Copper -0.02 @ 4.27
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