Market Remarks

Morning Notes – Friday, July 15, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; moved up more than 40 points since 8:30 AM after the release of the retail sales report
  • The odds are for an up day with elevated volatility – watch for a break below 3811.75 for a change of sentiments
  • The key economic data report due during the day:
    • Retail Sales ( 1.0% vs. 0.7% est.; prev. 0.5%) at 8:30 AM
    • Core Retail Sales ( 1.0% vs. 0.9% est.; prev. -0.3%) at 8:30 AM
    • Empire State Manufacturing Index (111 vs. -2.1 est.; prev. -1.2) at 8:30 AM
    • Capacity Utilization ( 80.0% vs. 80.7% est.; prev. 79.0%) at 9:15 AM
    • Industrial Production (-0.2% vs. 0.1% est.; pre. 0.2%) at 9:15 AM
    • Prelim UoM Consumer Sentiment ( 51.1 vs. 49.0 est.; prev 50.0 ) 10:00 AM
    • UoM Inflation Expectations ( 5.2%; prev. 5.3% ) at 10:00 AM
    • Business Inventories ( 1.4% vs. 1.3% est.; prev. 1.2% ) at 10:00 AM

Directional Bias Before Open:

  • Weekly: In Correction
  • Daily: Uptrend Under Pressure
  • 120-Min: Down-Side
  • 30-Min: Side-Up
  • 15-Min: Side-Up
  • 6-Min: Side-Up

Key Levels:

  • Critical support levels for S&P 500 are 3815.44, 3801.03, and 3795.67
  • Critical resistance levels for S&P 500 are 3829.44, 3837.87, and 3857.57
  • Key levels for E-mini futures: break above 3834.75, the high at 1:00 PM on July 13 and a break below 3811.75, the high at 8:00 PM on July 14

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2022) closed at 3794.25, and the index closed at 3790.38 – a spread of about +3.75 points; the futures closed at 3793.25; the fair value is +1.00
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +39.75, Dow by +345; and NASDAQ by +115.75

Markets Around The World

  • Markets in the East closed mostly mixed – Shanghai, Hong Kong, and Sydney closed  down; Tokyo, Mumbai, Seoul, and Singapore closed up
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.960%, down -1.2 basis points from two weeks ago;
    • The 30-year is at 3.104%, down -1.5 basis points;
    • The 2-year yield is at 3.120%, up +16.1 basis points;
    • The 10-Year-&-2-Year spread is at -0.164, up from 0.009
    • The 30-Year-&-10-Year spread is at 0.144, up from 0.147
  • VIX
    • At 25.58 @ 9:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 24.43 on July 8
    • Sentiment: Risk-On

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

Weekly:
  • The week ending on July 8 was a green candle with a small lower shadow and a smaller upper shadow
    • Stochastic (9,1, 3): %K is above %D; around 40
    • RSI-9 is above 40 after making a Bullish Divergence on June 13
  • The week was up +74.05 or +1.9%; the 5-week ATR  is 231.01
  • An up week; second in the least five weeks and third in the previous ten weeks; 11 of the last 14 weeks were down
  • The weekly pivot point=3853.31, R1=39648.57, R2=4029.75; S1=3788.13, S2=3676.87; no pivot levels were breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A green Hammer candle
    • Stochastic (9, 1, 3): %K is below %D;
    • RSI-9 is just above 40; below 8-day EMA;
  • Below 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Breaking above a downtrend line from the July 8 high of 3922.00
    • RSI-21 is just below 70; Bullish Divergence
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Trending down since 11:00 AM on July 8;
    • RSI-21 is moving above 50 since 1:30 PM on July 14
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 8:15 AM
  • The Bollinger Band is expanding since 8:15 AM, with price walking up the upper bound
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly lower on Thursday, July 14, in mixed volume. NASDAQ Composite closed higher. Dow Jones Industrial Average and S&P 500 traded in higher volume. The market gapped down at the open and made the day’s low in the first hour of trading. It then turned up and traded higher for most of the day.

From Briefing.com:

[…]

The stock market opened lower and headed even lower after that. Buyer conviction picked up around midday, leaving the S&P 500 and Dow Jones Industrial Average with modest losses. The Nasdaq was able to climb just above the flat line to close in positive territory.

[…]

Aside from information technology (+0.9%), the other S&P 500 sectors to close in the green were consumer staples (+0.2%) and utilities (+0.01%).

[…]

The remaining nine sectors showed losses ranging from 0.1% (consumer discretionary) to 1.9% (financials).

The advance-decline line showed the midday pick up in buyer interest. Earlier, decliners led advancers by a nearly 9-to-1 margin at the NYSE and a roughly 4-to-1 margin at the Nasdaq. At the close, decliners led advancers by a 14-to-5 margin at the NYSE and a 2-to-1 margin at the Nasdaq.

[…]

The 10-yr yield rose six basis points to 2.96% while the 2-yr yield slipped one basis point to 3.12%.

[…]
  • June PPI 1.1% (Briefing.com consensus 0.9%); Prior was revised to 0.9% from 0.8%; June Core PPI 0.4% (Briefing.com consensus 0.5%); Prior was revised to 0.6% from 0.5%
  • […]
  • Weekly Initial Claims 244K (Briefing.com consensus 239K); Prior 235K; Weekly Continuing Claims 1.331 mln; Prior was revised to 1.372 mln from 1.375 mln
[…]
  • Dow Jones Industrial Average: -15.7% YTD
  • S&P 400: -20.5% YTD
  • S&P 500: -20.5% YTD
  • Russell 2000: -24.0% YTD
  • Nasdaq Composite: -28.1% YTD

Overseas: 

  • Europe: DAX -1.9%, FTSE -1.6%, CAC -1.4%
  • Asia: Nikkei +0.6%, Hang Seng -0.2%, Shanghai -0.1%

Commodities: 

  • Crude Oil +0.00 @ 96.38
  • Nat Gas -0.00 @ 6.56
  • Gold -25.00 @ 1709.40
  • Silver -0.82 @ 18.32
  • Copper -0.08 @ 3.23
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