Market Remarks

Morning Notes – Thursday, July 28, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed at 9:15 AM; moving sideways s4:00 PM on Wednesday within a narrow band between 4030.00 and 4003.50
  • Day after Fed funds rate increase has been bearish for the past many months
  • The odds are for sideways to a down with elevated volatility – watch for a break above 4030.50 and a break belwo4003.50 for clarity
  • The key economic data report due during the day:
    • Advanced GDP ( -0.9% vs. 0.4% est.; prev. -1.6%) at 8:30 AM
    • Advanced GDP Price Index ( 8.7% vs. 7.9% est.; prev. 8.2%) at 8:30 AM
    • Unemployment Claims ( 256K vs. 253K est.; prev. 261K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4004.63, 3995.93, and 3967.15
  • Critical resistance levels for S&P 500 are 4039.56, 4069.04, 4086.23
  • Key levels for E-mini futures: break above 4030.00, the high at 8:45 AM and a break below 4003.50, the low at 8:30 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2022) closed at 4024.00,  and the index closed at 4023.61 – a spread of about +0.75 points; the futures closed at 4024.50; the fair value is -0.50
  • Pre-NYSE session open, futures are a bit lower – at 9:00 AM, S&P 500 futures were down by -6.00, Dow by -40; and NASDAQ by -40.50

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong closed down
  • European markets are mixed – Germany, the UK, and Spain are lower; France, Italy, Switzerland, and STOXX 600 are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.745%, down -15.9 basis points from two weeks ago;
    • The 30-year is at 3.066%, down -0.3 basis points;
    • The 2-year yield is at 3.024%, down -12.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.279, up from -0.249
    • The 30-Year-&-10-Year spread is at 0.321, up from 0.165
  • VIX
    • At 23.15 @ 8:15 AM; down from the last close; above the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 22.41 on July 22
    • Sentiment: Risk-On

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

Weekly:
  • The week ending on July 22 was a green spinning top candle
    • Stochastic (9,1, 3): %K is above %D; above 50
    • RSI-9 is above 45 after making a Bullish Divergence on June 13
  • The week was up +98.47 or +2.5%; the 5-week ATR  is 198.81
  • An up week; third in the least five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=3930.90, R1=4043.17, R2=4124.71; S1=3849.36, S2=3737.09; R1/R2 pivot levels were breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • In Correction
Daily
  • A large green candle following a Rising Three Method pattern; broke above a symmetrical triangle  on July 19 – the 61.8% extension target is near 4070.00, the 100% extension target is near 4190.00, and the 161.8% extension target is near 4380.00;  the 100% extension target for the ABCD pattern near 4025.00 is achieved, and the 161.8% extension target is near 4216.00
    • Stochastic (9, 1, 3): %K crossed above %D;
    • RSI-9 has turned up to above 60; above 8-day EMA;
  • Above 20-day EMA and 50-day EMA; below 200-day SMA and 100-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Bounced up from a support level around 3920.00 at 4:00 PM on July 26; Moving sideways to down from 4042.75 at 2:00 PM on July 27; broke above a Descending Triangle on July 19 – the 61.8% extension target near 4025.00 is achieved, the 100% extension target is near 4105.00, and the 161.8% extension target is near 4235.00
    • RSI-21 has declined from above 80 to near 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving mostly sideways to down since 3:00 PM on Wednesday
    • RSI-21 has dipped below 60 from above 80
    • At/above EMAS20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 9:45 PM
  • The Bollinger Band is expanding a bit since 8:30 AM, with price walking up the upper band
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Wednesday, July 27, in higher volume. The major indices gapped up at the open. They then traded sideways up until the FOMC press conference before advancing more in the late trading session. Most are making Rising Three Method candlestick patterns.

From Briefing.com:

[…]

The main indices stuck to a fairly narrow range as market participants waited for the FOMC decision. There was some whipsaw action immediately after the rate hike announcement but the market moved sharply higher during Chairman Powell’s subsequent press conference. Each of the indices closed near session highs.

[…]

The Vanguard Mega Cap Growth ETF (MGK) closed up 4.3% versus a 2.6% gain in the S&P 500 and a 1.9% gain in the Invesco S&P 500 Equal Weight ETF (RSP).

The late-session rally left all 11 S&P 500 sectors in positive territory. Gains ranged from 0.1% (utilities) to 5.1% (communication services).

[…]

The 2-yr note yield fell four basis points to 3.00% while the 10-yr note yield fell five basis points to 2.73%.

[…]

WTI crude oil futures rose 2.8% to $97.54/bbl. Natural gas futures fell 2.0% to $8.57/mmbtu. Unleaded gasoline futures rose 2.7% to $3.19/gal.

[…]
  • Weekly MBA Mortgage Applications Index -1.8%; Prior -6.3%
  • June Durable Orders 1.9% (Briefing.com consensus -0.5%); Prior was revised to 0.8% from 0.7%; June Durable Orders, Ex-Transportation 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.5% from 0.7%
  • […]
  • June Adv. Retail Inventories 2.0%; Prior was revised to 1.6% from 1.1%
  • June Adv. Wholesale Inventories 1.9%; Prior was revised to 1.9% from 2.0%
  • June Adv. Intl. Trade in Goods -$98.2 bln; Prior was revised to -$104.0 bln from -$104.3 bln
  • June Pending Home Sales -8.6% (Briefing.com consensus -1.5%); Prior was revised to 0.4% from 0.7%
[…]
  • Dow Jones Industrial Average: -11.4% YTD
  • S&P 400: -13.9% YTD
  • S&P 500: -15.6% YTD
  • Russell 2000: -17.6% YTD
  • Nasdaq Composite: -23.1% YTD

Overseas: 

  • Europe: DAX +0.5%, FTSE +0.6%, CAC +0.8%
  • Asia: Nikkei +0.2%, Hang Seng -1.1%, Shanghai -0.1%

Commodities: 

  • Crude Oil +2.62 @ 97.54
  • Nat Gas -0.18 @ 8.56
  • Gold +10.40 @ 1725.80
  • Silver +0.23 @ 18.77
  • Copper +0.06 @ 3.44
Exit mobile version