Market Remarks

Morning Notes – Thursday July 1, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a higher;
  • The odds are for an up day with a good chance of sideways move from pre-open levels around 4295.00 – watch for a break above 4305.75 and a break below 4286.00 for clarity
  • Key economic data report due during the day:
    • Challenger Jobs Cuts ( -88.0%; prev. -93.8%)
    • Unemployment Claims ( 364K vs. 388K est.; prev. 411K) at 8:30 AM
    • Final Manufacturing PMI ( 62.5 est.; prev. 62.6) at 9:45 AM
    • ISM Manufacturing PMI ( 61.0 est.; prev. 61.2) at 10:00 AM
    • Construction Spending ( 0.4% est.; prev. 0.2%) at 10:00 AM
    • ISM Manufacturing Prices ( 86.0 est.; prev. 88.0) at 10:00 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Resumed
  • 120-Min: Up
  • 30-Min: Up-Side
  • 15-Min: Up-Side
  • 6-Min: Side-Down

Key Levels:

  • Critical support levels for S&P 500 are 4291.46, 4287.04, and 4274.67
  • Critical resistance levels for S&P 500 are 4302.43, 4310.43, and 4318.44
  • Key levels for E-mini futures: break above 4305.75, the high of 4:00 AM and break below 4286.00, the low of 6:45 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2021) closed at 4291.75 and the index closed at 4297.50 – a spread of about -5.75 points; futures closed at 4288.50 for the day; the fair value is +3.25
  • Pre-NYSE session open, futures are mixed – at 8:15 AM, S&P 500 futures were up by +6.00; Dow up by +77, and NASDAQ down by -9.00

Markets Around The World

  • Markets in the East closed lower- Hong Kong  was closed for trading
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are lower
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.443%, down -12.6 basis points from two weeks ago;
    • 30-years is at 2.065%, down -14.4 basis points;
    • 2-years yield is at 0.255%, up +9.4 basis points;
    • The 10-Year-&-2-Year spread is at 1.188, down from 1.408
  • VIX
    • At 15.71 @ 8:00 AM; down from the last close; at/below 5-day SMA;
    • Recent high =  21.82 on June 21; low =  14.10 on June 29
    • Sentiment: Risk-On

The trend and patterns on various time frames for S&P 500:

Monthly
  • Confirmed Uptrend
  • May 2021 was a Doji with a small upper shadow and a long lower shadow; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 80; broke above a downtrend line from January 2018
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows
Weekly:
  • The week ending on June 25 was a Bullish Engulfing candle at all-time highs with almost no lower and  upper shadows
    • Stochastic (9,1, 3): %K crossed above %D;
    • RSI (9) is just below 70
  • The week was up +114.25 or +2.7%; the 5-week ATR is 76.49
  • An up week; fourth in the last five weeks, and sixth in the last ten weeks
  • The weekly week pivot point=4246.74, R1=4320.08, R2=4359.46; S1=4207.36, S2=4134.02; R1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small spinning top Bullish Engulfing candle at all-time highs
    • %K crossed above %D; above 90
    • RSI-9 is just near 70; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend Resumed
2-Hour (E-mini futures)
  • Moving up since 10:00 PM on June 20
    • RSI-21 declined to below 60 from just above 75
    • Above EMA20; which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Retracing from all-time highs of 4305.75 at 4:00 AM  to 4286.00 at 6:30 AM; bounced up to 4295.00
    • RSI-21 moved down to near 40 from near 70
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 9:45 PM
  • The Bollinger Band is expanding since 3:15 AM; price  first walked up the upper band, then declined below the lower band by 6:45 AM, and then bounced up to the middle band
    • Stochastic (9, 1, 3): %K has crossed below %D since 8:15 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Wednesday, June 30 in mostly higher volume. NASDAQ Composite closed down. Dow Jones Transportation Average traded in lower volume. S&P 500 made all-time closing and intraday highs. Wilshire 5000 Total Market Index made an all-time closing high.

From Briefing.com:

The S&P 500 increased 0.1% on Wednesday, and closed at a record high, as money flowed into the value stocks on this final day of the second quarter. Relative to the benchmark index, the Dow Jones Industrial Average (+0.6%) outperformed, the Russell 2000 (+0.1%) performed in-line, and the Nasdaq Composite (-0.2%) underperformed.

The energy sector (+1.3%) set the winning pace with a gain over 1.0%, followed by industrials (+0.8%), consumer staples (+0.7%), and financials (+0.5%). The information technology sector (-0.1%) limited the broader advance with a slight decline, although the real estate sector (-0.8%) declined the most.

[…]
  • The ADP Employment Change report estimated the addition of 692,000 private-sector payrolls in June (Briefing.com consensus 400,000) following a downwardly revised 886,000 increase (from 978,000) in May.
  • Pending home sales rose 8.0% m/m in May following a 4.4% decline in April.
  • The Chicago PMI decreased to 66.1 in June (Briefing.com consensus 70.0) from 75.2 in May.
  • The weekly MBA Mortgage Applications Index fell 6.9% following a 2.1% increase in the prior week.
[…]
  • Russell 2000 +17.0% YTD
  • S&P 500 +14.4% YTD
  • Dow Jones Industrial Average +12.7% YTD
  • Nasdaq Composite +12.5% YTD

Overseas: 

  • Europe: DAX -1.0%, FTSE -0.7%, CAC -0.9%
  • Asia: Nikkei -0.1%, Hang Seng -0.5%, Shanghai +0.5%

Commodities: 

  • Crude Oil +0.44 @ 73.53
  • Nat Gas +0.01 @ 3.65
  • Gold +6.60 @ 1770.40
  • Silver +0.34 @ 26.19
  • Copper +0.02 @ 4.29
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