Market Remarks

Morning Notes – Tuesday July 14, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down to sideways day; elevated volatility – watch for break above 3166.00 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: Up-Side
  • 30-Min: Down-Side
  • 15-Min: Down-Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for S&P 500 are 3149.43, 3136.22 and 3115.70
  • Critical resistance levels for S&P 500 are 3181.17, 3214.36 and 3235.32
  • Key levels for E-mini futures: break above 3166.00, the high of 2:30 AM and break below 3126.50, the low of 10:00 AM on July 10

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2020) closed at 3148.00 and the index closed at 3155.22 – a spread of about -7.25 points; futures closed at 3148.25 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are mixed – at 9:00 AM, S&P 500 futures were down by -9.00; Dow up by +14 and NASDAQ down by -80.00

Markets Around The World

  • Markets in East closed lower
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • USD/CAD
    • INR/USD
    • GBP/USD
    • USD/CHF
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.614%, down from July 12 close of 0.640%;
    • 30-years is at 1.299% down from 1.337%
    • 2-years yield is at 0.153% up from 0.129%
    • The 10-Year-&-2-Year spread is at 0.461 down from 0.511
  • VIX
    • Is at 30.96; down -1.23 from July 13 close; above 5-day SMA;
    • Recent high 44.44 on June 15; low 23.54 on June 5
    • Sentiment: Risk-Off to 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 10 was a small green candle with large lower shadow and almost no upper shadwo
    • Stochastic (9,1, 3): %K is above %D;
    • RSI (9) is above 60
  • The week was up +55.03 or +1.8%; the 5-week ATR is 165.20
  • The weekly week pivot point =3162.52, R1=3209.34, R2=3233.64; S1=3138.22, S2=3091.40; No pivot levels were breached
  • An up  down week; third in last five weeks and seventh 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 red Bearish Engulfing candle or a Dark Cloud Cover candle with almost no lower shadow and upper shadow equal to half the real body; in a congestion area;
    • %K is below %D from above 90
    • RSI-9 is near 55; below 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)
  • Declined from 3226.25 to 3140.50 on Monday; at the upper bound of a down-sloping flag that it broke to the upside at 2:00 PM on July 10; moving up since 6:00 PM on June 28 from 3004.75
    • RSI-21 declined from above 75 to 40; near 50
    • %K is above %D from below 10
  • At/below EMA20, which is at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sidewyas since 4:00 PM on July 13;
    • RSI-21 moving between 50 and 40 since 3:00 PM on Monday
    • %K is below %D;
  • Below EMA20, which is at/above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving sideways since 9:30 PM
  • The Bollinger Band is relatively narrow and stable
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mostly lower on Monday, July 13 in mostly higher volume. Dow Jones Industrial Average closed higher and Dow Jones Transportation Average traded in lower volume. Indices gapped up at the open and reached high for the day by late morning. They all declined in afternoon and most made bearish candlestick formation including Bearish Engulfig, Dark Cloud Cover and Shooting Star.

From Briefing.com:

The S&P 500 advanced as much as 1.6% on Monday, but a confluence of negative-sounding headlines caused noticeable profit taking in many of the technology-related stocks that left the benchmark index down 0.9% for the session. The Nasdaq Composite fell 2.1%, and Russell 2000 fell 1.3%. The Dow Jones Industrial Average (+0.04%) eked out a fractional gain.

The S&P 500 information technology (-2.1%), communication services (-2.0%), and consumer discretionary (-1.7%) sectors declined the most, while the health care (+0.5%), industrials (+0.4%), and financials (+0.3%) sectors showed relative strength.

[…]

U.S. Treasuries ended the session near their flat lines. The 2-yr yield was flat at 0.16%, and the 10-yr yield increased one basis point to 0.64%. The U.S. Dollar Index decreased 0.1% to 96.54. WTI crude decreased 1.2%, or $0.49, to $40.08/bbl.

[…]
  • The Treasury Budget was earmarked with a gaping (and record) $864.1 billion deficit for the month of June. This budget data is not seasonally adjusted, so the June deficit cannot be compared to the May deficit of $398.7 billion other than to say both qualify as massive shortfalls in terms of government finances. The deficit in June 2019 was $8.5 billion.
    • The key takeaway from the report is that the huge swing in the budget was a function of the tax filing deadline being extended, and government spending surging, due to stimulus measures employed in response to the COVID-19 impact..
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