Market Remarks

Morning Notes – Wednesday July 1, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower to near 3080.00
  • The odds are for a sideways to up day with elevated volatility – watch for break below 3062.75 for change of sentiments
  • Key economic data due:
    • ADP Non-Farm Employment Change (269K vs. 2850K est.; prev. 3065K) at 8:15 AM
    • ISM Manufacturing PMI ( 49.5 est.; prev. 43.1) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Uptrend since March 23 under pressure
  • Daily: Uptrend since March 23 under pressure
  • 120-Min: Side
  • 30-Min: Side
  • 15-Min: Up-Side
  • 6-Min: Side-Down

Key Levels:

  • Critical support levels for S&P 500 are 3067.43, 3032.27 and 3015.62
  • Critical resistance levels for S&P 500 are 3111.51, 3115.01 and 3127.12
  • Key levels for E-mini futures: break above 3093.50, the high of 5:30 AM and break below 3056.00, the low of 1:00 PM on Tuesday

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2020) closed at 3084.25 and the index closed at 3100.29 – a spread of about -16.00 points; futures closed at 3090.25 for the day; the fair value is -6.00
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -15.00; Dow by -176 and NASDAQ by -34.25

Markets Around The World

  • Markets in East closed mixed – Shanghai, Sydney Mumbai and Singapore were up; Tokyo and Seoul were down; Hong Kong was closed
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Sugar
    • Cotton
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Coffee
    • Cocoa
  • Bond
    • 10-yrs yield closed at 0.653%, up from June 29 close of 0.636;
    • 30-years is at 1.409% up from 1.391%
    • 2-years yield is at 0.164% up from 0.161%
    • The 10-Year-&-2-Year spread is at 0.489 up from 0.475
  • VIX
    • Is at 31.42; up +0.99 from June 30 close; above 5-day SMA;
    • Recent high 44.44 on June 15; low 29.26 on June 23
    • Sentiment: Risk-Neutral

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

Monthly
  • Uptrend under pressure
  • June 2020 was a green spinning candle with large  upper and lower shadows;
    • Stochastic %K is above %D and above 60; %K Bearish Divergence in January
    • RSI-9 turning up after declining to 34.91, the lowest level since April 2009, from above 75 in January and Bearish Divergence
    • Regaining the middle band of the 120-month regression channel after only third break of channel since 2009 and first close below it
  • Sequence of higher highs and higher lows broken
Weekly:
  • The week ending on June 26 was a red Dark Cloud Cover type of candle but not at the high with upper shadow one third of the real body and almost no lower shadow
    • Stochastic (9,1, 3): %K is below %D;
    • RSI (9) is near 50
  • The week was down 88.69 or -2.9%; the 5-week ATR is 176.44
  • The weekly week pivot point =3056.19, R1=3107.76, R2=3206.46; S1=2947.49, S2=2905.92; No pivot levels were breached
  • A down week; second in last five weeks and fifth in last ten weeks
  • All time high of 3393.52, the last swing high, was during the week of February 17; broke below the low of the week of December 24, 2018; support near 2193.81, the high during the week of August 15, 2016; sequence of higher highs and higher lows broken
  • At/below 10-week EMA; at/above 39-week SMA; above 89-week SMA
  • Uptrend since March 23 is under pressure
Daily
  • A green candle with small upper and lower shadows; a symmetrical triangle is emerging with price approaching the upper bound;
    • %K is above %D;
    • RSI-9 above 50; above 8-day RSI;
  • Above 20-day EMA; above 200-day SMA, above 50-day EMA; above 100-day
  • Uptrend since March 23 is under pressure
2-Hour (E-mini futures)
  • Moving sideways to down since 10:00 PM on June 15; mostly bounded between 3160.00 and 3000.00; near the middle of the range
    • RSI-21 declining since 4:00 PM on June 30 from above 75 to near 50
    • %K is crisscrossing %D lower
  • At/above EMA20; aboveEMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Moving up since 6:00 PM on June 28 from 2983.50 to near 3070.00;
    • RSI-21 declining since 6:00 PM on June 30 from near 70 to near 45
    • %K is crisscrossing %D lower;
  • Below EMA10 of EMA50, which is below EMA20
  • Bias: Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways to down since 9:45 PM
  • The Bollinger Band was relatively stable till 5:00 AM expanding since with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crossing above %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday, June 30 in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in lower volume. Most indices are in indecisive congestion area. All S&P sectors closed up. Indices opened up and then mostly traded higher during the day.

From Briefing.com:

The S&P 500 gained 1.5% on Tuesday to close out a tremendous second quarter, while the Nasdaq Composite (+1.9%) pulled ahead amid strength in its mega-cap and semiconductor components. The Dow Jones Industrial Average increased 0.9%, and the Russell 2000 increased 1.4%.

The gains were broad, with all 11 S&P 500 sectors closing in positive territory. Eight sectors rose at least 1.0%, including a 2% gain in the energy sector (+2.2%), while the utilities sector (+0.4%) lagged. The most influential gains, though, were found in the mega-cap stocks, including Tesla (TSLA 1079.81, +70.46, +7.0%) and NVIDIA (NVDA 379.91, +11.91, +3.2%).

[…]

U.S. Treasuries finished near their starting positions. The 2-yr yield declined one basis point to 0.15%, and the 10-yr yield increased two basis points to 0.65%. The U.S. Dollar Index decreased 0.2% to 97.38. WTI crude declined 1.0%, or $0.39, to $39.28/bbl.

[…]
  • The Conference Board’s Consumer Confidence Index for June increased to 98.1 (Briefing.com consensus 92.0) from a downwardly revised 85.9 (from 86.6) for May.
    • The improvement is welcome, yet the key takeaway from the report is that the index remains well below the February reading of 132.6, which predated the COVID-19 shutdown effort.
  • The Chicago PMI for June increased to 36.6 (Briefing.com consensus 45.0) from 32.3 in May.
  • The S&P Case-Shiller Home Price Index increased 4.0% in April (Briefing.com consensus 4.1%) following a 3.9% increase in March.
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