Market Remarks

Morning Notes – Thursday, July 6, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM. Trending down since 11:00 AM on Wednesday; broke below an upsloping flag at 7:30 AM – the 61.8% extension target near 4448.00 is achieved and the 100% extension target is near 4437.25 and 161.8% is near 4418.00
  • The odds are for a down day with elevated volatility – watch for a break above 4467.25 for a change in sentiments
  • The major economic data reports due during the day:
    • ADP Non-Farm Employment Change ( 497K vs. 226K est.; prev. 267K) at 8:15 AM
    • Unemployment Claims ( 248K vs. 247K est.; prev. 236K) at 8:30 AM
    • Final Services PMI ( 54.1 est.; prev. 54.1) at 9:45 AM
    • ISM Services PMI ( 51.3 est.; prev. 50.3) at 10:00 AM
    • JOLTS Job Openings ( 9.93M est.; prev. 10.10M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4422.44, 4398.39, and 4380.08
  • Critical resistance levels for S&P 500 are 4435.93, 4452.82, and 4488.29
  • The key levels for E-mini futures are 4467.25, the high at 7:15 AM, and 4448.75, the low at 6:00 AM on June 30

Pre-Open

  • On Wednesday at 1:00 PM, S&P futures (September 2023) closed at 4483.75, and the index closed at 4446.82 – a spread of about +37.00 points; the futures closed at 4483.75; the fair value is 0.0
  • Pre-NYSE session open, futures were lower – at 8:30 AM, S&P 500 futures were down by -29.50, Dow by -231, and NASDAQ by -109.75

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai closed up
  • European markets are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.945, up +22.2 basis points from two weeks ago;
    • The 30-year is at 3.944%, up +13.6 basis points
    • The 2-year yield is at 4.955%, up +24.5 basis points;
    • The 10-Year-&-2-Year spread is at -1.010, down from -0.990
    • The 30-Year-&-10-Year spread is at -0.001, down from +0.085
  • VIX
    • At 14.96 @ 8:00 AM; up from the last close; above the 5-day SMA;
    • Recent high = 21.33 on May 4; low = 12.73 on June 22
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on June 30 was a green Bullish Engulfing breaking above the year’s high and at the highest level since April 2022.
    • Stochastic (9,1, 3): %K is above the %D;
    • RSI-9 is just above 70
  • The week was up +02.05 or +2.3%; the 5-week ATR  is 130.40
  • An up week, fourth in the last five weeks, and seventh in the previous ten weeks;
  • The weekly pivot point=4412.31, R1=4496.55, R2=4542.71; S1=4366.15, S2=4281.91; R1/R2/R3 pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A small Spinning Top doji below the previous day’s real body. The index is mostly moving sideways over the past few days.
    • Stochastic (9, 1, 3): %K crossed below the %D; above 90
    • RSI-9 dipped below 70; above 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving sidewyas to down since 10::00 AM on June 30
    • RSI-21 has declined to be;low 20 from around 90
    • Below EMA20, but at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Trending lower since 9:30 PM on Tuesday after moving sideways from 10:00 AM on Junes 30. The bounce on Wednesday from a low of 4466.25 fizzled at 4491.25 and the futures are below the lows of Wednesday
    • RSI-21 has declined to 30 after the bounce on Wednesday but hasn’t made a new low
    • Below EMA 20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving down since 3:30 PM on Wednesday.
  • The Bollinger Band has been expanding since 7:45 AM, with the price walking down the lower band.
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Wednesday, July 5, in higher volume. The major indices opened lower following the July 4th holiday and then traded sideways to up in a narrow range.

Only four S&P sectors – Consumer Discretionary, Utilities, Real Estate, and Communications – closed higher.

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