Market Remarks

Morning Notes – Monday July 19, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day with elevated volatility and with a good chance of a bounce from the pre-open levels around 4265.00 levels — watch for a break above 4308.25 for a change of sentiments
  • Key economic data report due during the day:
    • NAHB Housing Market Index ( 82 est.; prev. 81) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4274.67, 4262.56, and 4256.97
  • Critical resistance levels for S&P 500 are 4289.37, 4305.39, and 4322.53
  • Key levels for E-mini futures: break above 4285.00, the low of 4:45 AM on July 15 and break below 4264.25, the low of 12:00 PM on June 28

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2021) closed at 4319.00 and the index closed at 4327.16 – a spread of about -8.25 points; futures closed at 4318.50 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -53.50; Dow by -500, and NASDAQ by -156.25

Markets Around The World

  • Markets in the East closed lower
  • European markets are lower
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • NZD/USD
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are lower
    • Precious metals are mixed
    • Industrial metals are mostly higher
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.300%, down -13.1 basis points from two weeks ago;
    • 30-years is at 1.931%, down -11.4 basis points;
    • 2-years yield is at 0.238%, down -0.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.062, down from 1.188
  • VIX
    • At 21.64 @ 7:45 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 16 was a Bearish Engulfing with almost no lower shadow
    • Stochastic (9,1, 3): %K crossed below %D; near 90
    • RSI (9) is just turned below 70
  • The week was down – 42.39 or -1.0%; the 5-week ATR is 89.31
  • A down week; second in the last five weeks, and fourth in the last ten weeks
  • The weekly pivot point=4347.79, R1=4373.05, R2=4418.94; S1=4301.90, S2=4276.64; No pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A relatively large Bearish Engulfing candle with a small upper shadow and no lower shadow
    • %K is below %D;
    • RSI-9 is near 50; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving down lower since 8:00 AM on July 14 from all-time highs; broke a sequence of higher highs and higher lows;
    • RSI-21 moved down to below 25
    • Below EMA 20, which is below EMA10 of EMA50,
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Trending down since 9:30 AM on July 14;
    • RSI-21 is rising since 2:00 PM on July 15 from near 30 to near 55
    • At/above EMA10 of EMA50, which is above EMA20
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 11:15 AM on Friday
  • The Bollinger Band is expanding since 4:30 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D lower
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Friday, July 16 in mixed volume. NASDAQ Composite and Russell 2000 traded in lower volume.  Indices opened higher but then turned down and then traded down for the rest of the day even increasing the pace near the session close.

For the week, major indices closed down in mostly higher volume. S&P 500 traded in lower volume. Asian market closed up for the week but the European markets mostly closed down. The dollar index was up. The energy, the precious metals, and the industrial metals were mixed but the soft commodities were most up. The US Treasury yields ticked down for the week. All but three S&P sectors – Consumer Staples, Utilities, and Real Estate – closed down.

From Briefing.com:

The S&P 500 fell 0.8% on Friday, as the market faded a positive start driven by the cyclical stocks and reverted to a defensive posture. The Nasdaq Composite (-0.8%), Dow Jones Industrial Average (-0.9%), and Russell 2000 (-1.2%) struggled alongside the benchmark index.

The opening gains ranged from 0.3% (Dow) to 0.9% (Russell 2000) after data showed total retail sales increase 0.6% m/m in June (Briefing.com consensus -0.6%). The Dow also came within two points of its all-time high.

[…]

The S&P 500 energy (-2.8%), materials (-1.5%), financials (-1.3%), and consumer discretionary (-1.3%) sectors piled on the losses into the close while the defensive-oriented utilities (+1.0%), consumer staples (+0.2%), real estate (+0.1%), and health care (+0.2%) sectors closed higher.

[…]

The 10-yr yield settled unchanged at 1.30%, even as consumers’ expectations on inflation kept rising, according to the consumer sentiment report. The 10-yr yield touched 1.34% following the retail sales report. This remained well below the dividend yields of the real estate, utilities, and consumer staples sectors.

[…]

The 2-yr yield was unchanged at 0.23%. The U.S. Dollar Index increased 0.1% to 92.71. WTI crude futures increased 0.1%, or $0.10, to $71.76/bbl.

[…]
  • Total retail sales, weighed down by a 2.0% decline in motor vehicle and parts dealers sales, still increased 0.6% month-over-month (Briefing.com consensus -0.6%) following a downwardly revised 1.7% decline (from -1.3%) in May. Excluding autos, retail sales jumped 1.3% month-over-month (Briefing.com consensus +0.3%) following a downwardly revised 0.9% decline (from -0.7%) in May.
  • […]
  • The preliminary July reading for the University of Michigan Index of Consumer Sentiment slipped to 80.8 (Briefing.com consensus 86.3) from the final reading of 85.5 for June. This is the lowest reading since February and compares to the 99.3 reading seen in July 2020.
  • […]
  • Business inventories increased 0.5% m/m in May (Briefing.com consensus +0.4%) following an upwardly revised 0.1% increase (from -0.2%) in April.
[…]
  • S&P 500 +15.2% YTD
  • Dow Jones Industrial Average +13.3% YTD
  • Nasdaq Composite +11.9% YTD
  • Russell 2000 +9.5% YTD
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