Morning Notes – Tuesday July 21, 2020

/ July 21, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day; elevated volatility – watch for a break below 3241.00 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 resumed
  • 120-Min: Side-Up
  • 30-Min: Side-Up
  • 15-Min: Up
  • 6-Min: Up-Side

Key Levels:

  • Critical support levels for S&P 500 are 3251.52, 3238.28 and 3215.16
  • Critical resistance levels for S&P 500 are 3280.61, 3295.92 and 3313.75
  • Key levels for E-mini futures: break above 3273.25, the high of 7:30 AM and break below 3258.00, the low of 3:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2020) closed at 3242.75 and the index closed at 3251.84 – a spread of about -8.25 points; futures closed at 3245.25 for the day; the fair value is -2.50
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +20.50; Dow by +162 and NASDAQ by +59.75

Markets Around The World

  • Markets in East closed higher
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cocoa
    • Cotton
  • Bond
    • 10-yrs yield is at 0.610%, down from July 20 close of 0.620%;
    • 30-years is at 1.310% down from 1.319%
    • 2-years yield is at 0.153% down from 0.169%
    • The 10-Year-&-2-Year spread is at 0.457 up from 0.451
  • VIX
    • Is at 24.18; down -0.95 from July 20 close; below 5-day SMA;
    • Recent high 33.67 on July 14; low 23.54 on June 5
    • Sentiment: Risk-On

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 the third break of the channel since 2009 and first close below it
  • The sequence of higher highs and higher lows is broken
Weekly:
  • The week ending on July 17 was a small green real body candle with large lower shadow and small upper shadow
    • Stochastic (9,1, 3): %K is above %D;
    • RSI (9) is above 60
  • The week was up +39.69 or +1.2%; the 5-week ATR is 137.59
  • The weekly week pivot point =3196.889, R1=3266.124, R2=3307.51; S1=3155.50, S2=3086.27; R1/R2 pivot levels were breached
  • An up week; fourth in last five weeks and seventh in last ten weeks
  • The 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 green candle with small lower shadow and almost no upper shadow; closing the gap created on February 24; next resistance is at 3328.45
    • %K above %D; potential Bearish Divergence
    • RSI-9 is above 65; above 8-day RSI; potential Bearish Divergence
  • Above 20-day EMA; above 200-day SMA, above 50-day EMA; above 100-day
  • Uptrend since March 23 resumed
2-Hour (E-mini futures)
  • Moving up since 2:00 AM on July 20 from EMA50; moving up since 6:00 PM on June 28 from 3004.75
    • RSI-21 above 80
    • %K is crisscrossing %D above 90
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 3:00 AM on July 20; broke above a descending triangle at 10:00 AM on July 20 – 100% extension target near 3267.00 is achieved and 161.8% extension target is near 3285.00
    • RSI-21 is above 65
    • %K is below %D below 30;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving up since 5:00 AM on July 20
  • The Bollinger Band narrowing since 7:00 AM
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up

Previous Session

Major U.S. indices closed mixed on Monday, July 20 in mixed volume. Russell 2000, Dow Jones Transportation Average, and NYSE Composite closed lower. Dow Jones Industrial Average and NASDAQ Composite traded in higher volume. NASDAQ closed at all time high.

From Briefing.com:

The mega-cap stocks stole the show on Monday, powering the Nasdaq Composite to a 2.5% gain (and record close) and lifting the S&P 500 to a 0.8% gain. The Dow Jones Industrial Average (+0.03%) closed little changed, while the Russell 2000 declined 0.4%.

[…]

In turn, the S&P 500 consumer discretionary (+3.1%), information technology (+2.6%), and communication services (+1.3%) sectors posted solid gains, but they were the only sectors to close higher today. The Philadelphia Semiconductor Index (+2.0%) also had a great day, reflecting an infatuation for growth stocks after falling out of favor last week.

[…]

U.S. Treasuries finished little changed after trading near their flat lines all session. The 2-yr yield increased one basis point to 0.15%, and the 10-yr yield decreased one basis point to 0.62%. The U.S. Dollar Index declined 0.1% to 98.82. WTI crude futures gained 0.7%, or $0.27, to $40.83/bbl.
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