Morning Notes – Wednesday July 8, 2020

/ July 8, 2020

Directional Bias For The Day:

  • S&P Futures are little changed; fluctuating within a narrow range
  • The odds are for a sideways to down day; elevated volatility – watch for break above 3152.0 for change of sentiments
  • No key economic data due:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3142.93, 3124.52 and 3114.61
  • Critical resistance levels for S&P 500 are 3160.19, 3184.15, and 3189.64
  • Key levels for E-mini futures: break above 3152.00, the high of 4:30 AM and break below 3129.00, the low of 5:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2020) closed at 3136.50 and the index closed at 3145.32 – a spread of about -8.75 points; futures closed at 3136.50 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are little changed – at 9:00 AM, S&P 500 futures were up by +2.50; Dow by +12 and NASDAQ by +30.25

Markets Around The World

  • Markets in East closed mixed – Shanghai, Hong Kong and Singapore closed up
  • European markets are lower
  • Currencies:
    Up Down
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • INR/USD
    • Dollar index
    • GBP/USD
    • USD/CHF
    • NZD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Cotton
    • Coffee
    • NatGas
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.659%, up from July 7 close of 0.65%;
    • 30-years is at 1.398% up from 1.390%
    • 2-years yield is at 0.161% unchanged
    • The 10-Year-&-2-Year spread is at 0.498 up from 0.489
  • VIX
    • Is at 28.99; down -0.44 from July 7 close; above 5-day SMA;
    • Recent high 44.44 on June 15; low 23.54 on June 5
    • 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 July 3 was a near Bullish Reversal candle, which gapped up at the week’s open
    • Stochastic (9,1, 3): %K is above %D;
    • RSI (9) is above 50
  • The week was up +120.96 or +4.0%; the 5-week ATR is 187.01
  • The weekly pivot point =3098.52, R1=3197.30, R2=3264.59; S1=3031.23, S2=2932.45; No pivot levels were breached
  • An up week; third in last five weeks and sixth 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
  • Above 10-week EMA, 39-week SMA and 89-week SMA
  • Uptrend since March 23 is under pressure
Daily
  • A relativey small red candle with almost no lower shadow and small upper shadow;
    • %Kcrossed below %D from near 100
    • RSI-9 above 60; 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 8:00 PM on July 6; moving up since 6:00 PM on June 28 from 3004.75
    • RSI-21 declined to below 50 from above 75 and Bearish Divergence at 6:00 PM on July 7
    • %K is crisscrossing %D
  • At/below EMA20, whcih is at/above EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Moving sidewyas to down since 8:30 PM on July 6 from 3184.00 to below 3150.00;
    • RSI-21 tredning down in steps from above 70 since July 6
    • %K is crisscrossing %D;
  • At/elow EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving down since 9:15 PM
  • The Bollinger Band is stable but large
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Side-Down

Previous Session

Major U.S. indices closed lower on Tuesday, July 7 in lower volume. Indices opened lower but then rose and made day’s high by midday before mostly declining in the afternoon session and closing near the lows. All but two – Consumer Staples and Materials – S&P sectors closed down.

From Briefing.com:

The stock market pulled back from its recent gains on Tuesday, with the S&P 500 (-1.1%), Dow Jones Industrial Average (-1.5%), and Russell 2000 (-1.9%) losing more than 1.0%. The Nasdaq Composite declined 0.9% after setting a new intraday high in the morning.

[…]

Cyclical sectors declined the most, specifically the energy (-3.2%), financials (-2.1%), industrials (-1.9%), and consumer discretionary (-1.7%) sectors. The consumer staples sector (+1.0%), on the other hand, was the only sector that closed higher due to a 7% gain in shares of Walmart (WMT 126.95, +8.06, +6.8%).

[…]

Longer-dated U.S. Treasuries finished higher, causing some curve-flattening activity. The 2-yr yield was unchanged at 0.16%, while the 10-yr yield declined three basis points to 0.65%. The U.S. Dollar Index increased 0.3% to 97.00. WTI crude increased 0.2% to $40.60/bbl.

Tuesday’s economic data was limited to the JOLTS – Job Openings report, which showed job openings increase to 5.397 mln in May from a revised 4.996 mln in April (from 5.046 mln).
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