Market Remarks

Morning Notes – Friday, July 29, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:15 AM; drifting sideways to down since 4:45 PM – down more than 25 points from the high of 4111.00;
  • The odds are for an up day with a good chance of sideways to down move from the pre-open levels around 4085.00 – watch for a break above 4097.25 and a break below 4068.25 for clarity
  • The key economic data report due during the day:
    • Core PCE Price Index ( 0.6% vs. 0.5% est.; prev. 0.3%) at 8:30 AM
    • Employment Cost Index ( 1.3% vs. 1.1% est.; prev. 1.4%) at 8:30 AM
    • Personal Income ( 0.6%  vs. 0.5% est.; prev. 0.6%) at 8:30 AM
    • Personal Spending ( 1.1% vs. 0.9% est.; prev.; 0.3%) at 8:30 AM
    • Chicago PMI ( 551. est.; prev. 56.0) at 9:45 AM
    • Revised UoM Consumer Sentiment ( 51.1 est.; prev. 51.1) at 10:00 AM
    • Revised UoM Inflation Expectations ( prev. 5.2%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4078.95, 4061.33, and 4043.18
  • Critical resistance levels for S&P 500 are 4096.31, 4110.81, 4127.12
  • Key levels for E-mini futures: break above 4097.25, the high at 8:30 AM and a break below 4068.25, the low at 3:45 PM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2022) closed at 4073.25,  and the index closed at 4072.43 – a spread of about +0.75 points; the futures closed at 4073.50; the fair value is -0.25
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +20.75, Dow by +18; and NASDAQ by +95.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Tokyo, and Singapore closed down; Sydney, Mumbai, and Seoul closed up
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.705%, down -25.5 basis points from two weeks ago;
    • The 30-year is at 3.042%, down -6.2 basis points;
    • The 2-year yield is at 2.863%, down -25.7 basis points;
    • The 10-Year-&-2-Year spread is at -0.158, up from -0.160
    • The 30-Year-&-10-Year spread is at 0.337, up from 0.144
  • VIX
    • At 21.92 @ 8:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 19.75 on April 20
    • 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
  • The second 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; near 100
    • RSI-9 is near 70; above 8-day EMA;
  • Above 20-day EMA and 50-day EMA; below 200-day SMA and 100-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving sideways since 4:00 PM on July 28; the uptrend since 10:00 AM on July 14 resumed at 4:00 PM on July 26 after a sideways move from 12:00 PM on July 19; broke above a Descending Triangle on July 19 – the 100% extension target near 4105.00 is achieved, and the 161.8% extension target is near 4235.00
    • RSI-21 has declined to just above 60 from just below 90
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Moving sideways to down since 5:00 PM on Thursday
    • RSI-21 has drifted down to just above 50 from near 75
    • Below EMAS20, but above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 10:30 PM
  • The Bollinger Band is expanding a bit since 8:00 AM, with price walking down the lower band
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Thursday, July 28, in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in higher volume. The major indices opened down but turned around in the first hour of trading and then traded higher for the rest of the day.

From Briefing.com:

[…]

Many stocks moved higher on the session, leading to ten of the 11 S&P 500 sectors closing in positive territory. Gains ranged from 0.5% (energy) to 3.7% (real estate). The lone laggard was communication services (-0.7%)

…]

The 2-yr note yield fell 12 basis points to 2.88% while the 10-yr note yield fell five basis points to 2.68%.

WTI crude oil futures fell 0.7% to $96.56/bbl. Natural gas futures fell 4.9% to $8.13/mmbtu. Unleaded gasoline futures fell 1.6% to $3.10/gal.

[…]
  • The Advance Q2 GDP Report indicated that real GDP decreased at a seasonally adjusted annual rate of 0.9% (Briefing.com consensus +0.5%), which marked the second straight quarter of contraction. Real GDP in Q1 was down 1.6%. Real PCE was up just 1.0%, which was the weakest growth rate since Q2 2020.
  • […]
  • Initial jobless claims, which are a leading indicator, decreased by 5,000 for the week ending July 23 to 256,000 (Briefing.com consensus 253,000). The prior week’s number was revised up to 261,000 from 251,000. Continuing claims for the week ending July 16 decreased by 25,000 to 1.359 million.
[…].
  • Dow Jones Industrial Average: -10.5% YTD
  • S&P 400: -12.7% YTD
  • S&P 500: -14.6% YTD
  • Russell 2000: -16.6% YTD
  • Nasdaq Composite: -22.1% YTD

Overseas: 

  • Europe: DAX +0.9%, FTSE -0.0%, CAC +1.3%
  • Asia: Nikkei +0.4%, Hang Seng -0.2%, Shanghai +0.2%

Commodities: 

  • Crude Oil -0.70 @ 96.84
  • Nat Gas -0.42 @ 8.14
  • Gold +22.90 @ 1748.70
  • Silver +1.10 @ 19.87
  • Copper +0.03 @ 3.47
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