Morning Notes – Thursday July 30, 2020

/ July 30, 2020

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a sideway to down day – watch for a break above 3247.25 for change of sentiments
  • Key economic data due:
    • Advanced GDP ( -32.9% vs. -34.5% est.; prev. -5.0%) at 8:30 AM
    • Advanced GDP Price Index ( -1.8% vs. 0.0% est.; prev. 1.4% ) at 8:30 AM
    • Unemployment Claims ( 1434K vs. 1440K est.; prev. 1416K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3216.17, 3204.88 and 3198.59
  • Critical resistance levels for S&P 500 are 3240.08, 3264.74, and 3278.42
  • Key levels for E-mini futures: break above 3247.25, the high of 2:00 AM and break below 3210.75, the low of 6:30 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2020) closed at 3250.25 and the index closed at 3258.44 – a spread of about -8.25 points; futures closed at 3252.50 for the day; the fair value is -2.25
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -26.75; Dow by -236 and NASDAQ by -95.75

Markets Around The World

  • Markets in East closed mostly lower – Sydney and Seoul closed up
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities:
    Up Down
    • NatGas
    • Coffee
    • Cocoa
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Cotton
  • Bond
    • 10-yrs yield closed at 0.579%, down from July 28 close of 0.581%;
    • 30-years is at 1.242% up from 1.223%
    • 2-years yield is at 0.125% down from 0.137%
    • The 10-Year-&-2-Year spread is at 0.442 down from 0.444
  • VIX
    • Is at 26.27; up +2.27 from July 29 close; above 5-day SMA;
    • Recent high 33.67 on July 14; low 23.61 on July 21
    • 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 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 24 was a small red real body candle with large upper shadow and small lower shadow
    • Stochastic (9,1, 3): %K is below %D;
    • RSI (9) is above 60
  • The week was down -9.10 or -0.3%; the 5-week ATR is 115.60
  • The weekly week pivot point =3231.89, R1=3263.73, R2=3311.83; S1=3183.79, S2=3151.95; R1 pivot level was breached
  • A down week; second in last five weeks and third 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 green Bullish Engulfing like candlestick with small lower and upper shadows;
    • %K crossed above %D
    • RSI-9 is just above 60; below 8-day RSI;e
  • 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 sideways since 2:00 PM on July 23; declined from 3257.00 at 2:00 PM on Wednesday to near 3220.00; moving up since 6:00 PM on June 28 from 3004.75
    • RSI-21 declined to near 36 from near 75
    • %K is below %D below 20
  • Below EMA20, which is at/above EMA10 of EMA50
  • Bias: Side
30-Minute (E-mini futures)
  • Sideways move since 2:00 PM on July 23; declining since 6:00 PM from 3257.00;
    • RSI-21 made Bullish Divergence at 6:30 AM; around 40
    • %K is above %D;
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving down since 6:45 PM
  • The Bollinger Band expanded from 2:30 AM to 7:30 AM with price mostly walking down the lower band; narrowing since with price bouncing up to mid-band
    • Stochastic (9, 1, 3): %K is above %D
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Wednesday, July 29 in mostly lower volume. Russell 2000 traded in higher volume. All S&P sectors closed higher. For the past few days, major indices are moving mostly sideways.

From Briefing.com:

The S&P 500 rallied 1.2% on Wednesday, as investors were pleased with the Fed’s latest policy directive and were unconcerned by the House Judiciary Committee’s antitrust hearing. The Nasdaq Composite rose 1.4%, and the Russell 2000 rose 2.1%. The Dow Jones Industrial Average underperformed with a 0.6% gain.

It was a steady and broad-based advance that lifted all 11 S&P 500 sectors into positive territory, including seven that rose at least 1.0%. The energy (+2.1%) and financials (+2.0%) sectors advanced the most with 2% gains, while the consumer staples sector lagged with a 0.2% gain.

[…]

U.S. Treasuries edged higher after the release of the July FOMC statement, but the moves were minuscule. The 2-yr yield declined one basis point to 0.13%, and the 10-yr yield was flat at 0.58%. The U.S. Dollar Index fell another 0.4% to 93.35. WTI crude futures gained 0.6%, or $0.23, to $41.27/bbl.

[…]
  • Pending home sales increased 16.6% in June (Briefing.com consensus +17.0%) after surging an unrevised 44.3% in May.
  • The advance international trade in goods deficit totaled $70.6 bln in June following a $75.3 bln deficit in May. Advance retail inventories declined 2.6% in June after decreasing 6.2% in May. Advance wholesale inventories declined 2.0% in June after decreasing 1.2% in May.
  • The weekly MBA Mortgage Applications Index declined 0.8% following a 4.1% increase in the prior week.
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