Morning Notes – Wednesday July 22, 2020

/ July 22, 2020

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a sideways to a down day – watch for a break above 3265.50 for change of sentiments
  • Key economic data due:
    • HPI ( 0.3% est.; prev. 0.2%) at 9:00 AM
    • Existing Home Sales ( 4.77M est.; prev. 3.91M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3247.77, 3238.28 and 3215.16
  • Critical resistance levels for S&P 500 are 3276.49, 3280.61 and 3295.92
  • Key levels for E-mini futures: break above 3258.00, the high of 3:00 AM and break below 3227.25, the low of 5:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2020) closed at 3249.50 and the index closed at 3257.30 – a spread of about -7.75 points; futures closed at 3251.25 for the day; the fair value is -1.75
  • Pre-NYSE session open, futures are mixed – at 8:30 AM, S&P 500 futures were down by -9.50; Dow down by -69 and NASDAQ up by +26.75

Markets Around The World

  • Markets in East closed mostly lower – Shanghai was up
  • European markets are lower
  • Currencies:
    Up Down
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • Dollar index
    • GBP/USD
    • USD/CHF
    • INR/USD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cocoa
    • Crude Oil
    • NatGas
    • Copper
    • Cotton
  • Bond
    • 10-yrs yield closed at 0.607%, down from July 20 close of 0.620%;
    • 30-years is at 1.313% down from 1.319%
    • 2-years yield is at 0.1613% down from 0.169%
    • The 10-Year-&-2-Year spread is at 0.446 down from 0.451
  • VIX
    • Is at 25.18; up +0.34 from July 21 close; below 5-day SMA;
    • Recent high 33.67 on July 14; 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 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 small red candle that opened higher; small lower and upper shadows; closing the gap created on February 24; next resistance is at 3328.45
    • %K crossing below %D from above 90; 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 down since 6:00 AM on July 21 from 3273.25 to 3247.00; moving up since 6:00 PM on June 28 from 3004.75
    • RSI-21 declined from above 80 to below 50
    • %K is crisscrossing %D lower
  • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving down since 7:30 AM on July 21; down to previously broken resistance level around 3235.00
    • RSI-21 declined from above 65 to below 50
    • %K is above %D above 80;
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving down since 11:45 AM on July 21
  • The Bollinger Band stable but relatively large
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Tuesday, July 21 in higher volume. NASDAQ Composite closed down. Indices gapped up at the open and then mostly traded sideways before declining late and closing near the lows. All but two – Technology and Utilities – S&P sectors closed higher.

From Briefing.com:

The S&P 500 increased just 0.2% on Tuesday, as selling in the last hour of trading spoiled a 0.8% intraday gain in the benchmark index. Relative weakness in the mega-cap stocks took the Nasdaq Composite down 0.8% after it set an intraday record at the open, while the Dow Jones Industrial Average (+0.6%) and Russell 2000 (+1.3%) outperformed.

[…]

Elsewhere, U.S. Treasuries and gold prices ($1843.60/ozt, +26.50, +1.4%) finished the day higher. The 2-yr yield declined one basis point to 0.14%, and the 10-yr yield declined one basis point to 0.61%. The U.S. Dollar Index fell 0.7% to 95.20. WTI crude gained 2.3%, or $0.93, to $41.76/bbl.
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