Market Remarks

Morning Notes – Friday July 2, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are a higher;
  • The odds are for an up day with elevated volatility
  • Non-Farm payroll report will have an impact on the day’s trading – watch for a break above 4318.25 and a break below 4309.00
  • Key economic data report due during the day:
    • Non-Farm Employment Change ( 850K vs. 725K est.; prev. 559K at 8:30 AM
    • Average Hourly Earnings ( 0.3% vs. 0.3% est.; prev. 0.5%) at 8:30 AM
    • Unemployment Rate ( 5.9% vs. 5.6% est.; prev. 5.8%) at 8:30 AM
    • Trade Balance ( -71.2B vs. -71.4B est.; p[rev. -68.9B) at 8:30 AM
    • Factory Orders ( 1.7% est.; prev. -0.6%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4315.29, 4303.92, and 4291.46
  • Critical resistance levels for S&P 500 are 4326.82, 4333.71, and 4346.75
  • Key levels for E-mini futures: break above 4318.25, the high of 3:30 AM and break below 4309.50, the low of 4:45 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2021) closed at 4310.50 and the index closed at 4319.94 – a spread of about -9.50 points; futures closed at 4310.75 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are mixed – at 8:00 AM, S&P 500 futures were up by +4.25; Dow down by -6, and NASDAQ up by +55.50

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and closed lower
  • European markets are mostly higher – France and Spain are lower
  • 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 higher
    • Industrial metals are mostly higher
    • Most soft commodities are higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.480%, down -3.1 basis points from two weeks ago;
    • 30-years is at 2.086%, down -1.4 basis points;
    • 2-years yield is at 0.263%, up +4.6 basis points;
    • The 10-Year-&-2-Year spread is at 1.217, down from 1.294
  • VIX
    • At 15.36 @ 8:00 AM; down from the last close; 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 green candle that gapped up a bit with almost no upper and lower shadows
    • %K is above %D; above 90
    • RSI-9 is near 75; 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 just above 60 from just above 75
    • Above EMA20; which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Retraced a bit from all-time highs of 4318.25 at 3:30 AM  to 4311.00 levels
    • RSI-21 is around 55 after making a Bearish Divergence at 4:00 AM
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to up since 9:30 PM
  • The Bollinger Band is expanding a bit since 3:30 AM;
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Thursday, July 1 in lower volume. All but one S&P sector – Consumer Staples – closed higher. S&P 500 and Wilshire 5000 Total Market Index made all-time intraday and closing highs.

From Briefing.com:

The S&P 500 rose 0.5% on Thursday, kicking off the third quarter with another pair of intraday and closing record highs. The Russell 2000 pulled ahead with a 0.8% gain, the Dow Jones Industrial Average kept pace with a 0.4% gain, and the Nasdaq Composite underperformed with a 0.1% gain. […]

U.S. Treasuries ended the session mostly lower amid the positive bias in stocks and encouraging economic data, but there appeared to be a lack of conviction in front of the June employment report tomorrow. The 10-yr yield increased two basis points to 1.47% while the 2-yr yield was flat at 0.25%. The U.S. Dollar Index increased 0.1% to 92.55.

[…]
  • The June ISM Manufacturing Index checked in at 60.6% (Briefing.com consensus 61.0%), down from 61.2% in May. A number above 50.0% is indicative of expansion. June marked the 13th straight month of expansion for the manufacturing sector, albeit at a slightly slower pace than what was seen in May.
  • […]
  • For the week ending June 26, initial claims decreased by 51,000 to 364,000 (Briefing.com consensus 400,000), which is the lowest level since March 14, 2020. Continuing claims for the week ending June 19 increased by 56,000 to 3.469 million.
  • […]
  • Total construction spending decreased 0.3% m/m in May (Briefing.com consensus +0.3%) following a downwardly revised 0.1% increase (from 0.2%) in April.
[…]
  • Russell 2000 +18.0% YTD
  • S&P 500 +15.0% YTD
  • Dow Jones Industrial Average +13.2% YTD
  • Nasdaq Composite +12.7% YTD

Overseas: 

  • Europe: DAX +0.5%, FTSE +1.3%, CAC +0.7%
  • Asia: Nikkei -0.3%, Hang Seng closed for holiday, Shanghai -0.1%

Commodities: 

  • Crude Oil +1.73 @ 75.23
  • Nat Gas +0.01 @ 3.65
  • Gold +3.30 @ 1773.70
  • Silver -0.08 @ 26.12
  • Copper -0.05 @ 4.24
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