Market Remarks

Morning Notes – Friday July 16, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day — watch for a break 4355.50 for a change of sentiments
  • Key economic data report due during the day:
    • Retail Sales ( 0.6% vs. -0.4% est.; prev. -1.7%) at 8:30 AM
    • Core Retail Sale  ( 1.3% vs. 0.4% est.; prev. -0.9%) at 8:30 AM
    • Prelim UoM Consumer Sentiment ( 86.5 est.; prev. 85.5) at 10:00 AM
    • Business Inventories ( 0.6% est.; prev. -0.2%) at 10:00 AM
    • Prelim UoM Inflation Expectations ( prev. 4.2%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4354.96, 4345.91, and 4340.70
  • Critical resistance levels for S&P 500 are 4369.02, 4383.80, and 4393.68
  • Key levels for E-mini futures: break above 4370.00, the high of 4:30 AM on July 15 and break below 4355.25, the low of 5:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2021) closed at 4353.00 and the index closed at 4360.03 – a spread of about -7.00 points; futures closed at 4352.00 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +10.25; Dow by +56, and NASDAQ by +41.25

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo, Mumbai, and Seoul closed down;  Hong Kong, Sydney, and Singapore closed up
  • European markets are mixed – Germany, France, and STOXX 600 are lower; the UK, Itlay, Spain, and Singapore are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • NZD/USD
    • USD/CAD
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are lower
    • Precious metals are higher
    • Industrial metals are mostly higher
    • Most soft commodities are mostly higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.315%, down -16.5 basis points from two weeks ago;
    • 30-years is at 1.943%, down -14.3 basis points;
    • 2-years yield is at 0.229%, down -2.6 basis points;
    • The 10-Year-&-2-Year spread is at 1.086, down from 1.225
  • VIX
    • At 16.65 @ 7:45 AM; down from the last close; at/above 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 July 9 was a long-legged candle, like a Doji, with a small upper shadow
    • Stochastic (9,1, 3): %K is above %D; near 100
    • RSI (9) is just above 70
  • The week was up +17.21 or +0.4%; the 5-week ATR is 83.35
  • An up week; fourth in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4343.51, R1=4397.64, R2=4425.74; S1=4315.41, S2=4261.28; S1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A relatively small red candle with no upper shadow and a lower shadow equal to twice the real-body
    • %K is below %D;
    • RSI-9 is near 60; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Drifting lower since 8:00 AM on July 14; bounced up to the downtrend line from all-time highs
    • RSI-21 moving up since 12:00 PM on July 15 to above 50 from below 30
    • At/above EMA10 of EMA50, which is at/below EMA20
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting lower since 9:30 AM on July 14; bouncing up from a low 4332.75 to near 4360.00
    • RSI-21 is rising since 2:00 PM on July 15 from near 30 to near 55
    • At/above EMA10 of EMA50, which is above EMA20
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 10:45 PM
  • The Bollinger Band is a bit expanded; price near the upper band
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly lower on Thursday, July 15 in mixed volume. Dow Jones Industrial Average, and Dow Transportation Average closed up; NASDAQ Composite and Russell 2000 traded in higher volume.  Indices gapped down at the open and then traded down before turning around in the afternoon session and recovering most of the early losses.

From Briefing.com:

The S&P 500 decreased 0.3% on Thursday in a mixed session, although it did battle back from a 0.8% intraday decline. The Nasdaq Composite (-0.7%) and Russell 2000 (-0.6%) underperformed the benchmark index, while the Dow Jones Industrial Average increased 0.2%.

Declining issues had a modest advantage over advancing issues at the NYSE and Nasdaq, but the most influential losses arguably came from the top seven of the eight stocks in the S&P 500, which comprise 25% of its market capitalization.

[…]

The S&P 500 information technology (-0.8%), consumer discretionary (-0.6%), and communication services (-0.5%) sectors, which contain the mega-caps, were among the worst-performing sectors today. The energy sector (-1.4%) was the weakest link, though, with a 1.4% decline amid lower oil prices ($71.66/bbl, -1.41, -1.9%).

On the upside, there was a mix of cyclical/counter-cyclical winners. The utilities (+1.2%), consumer staples (+0.4%), financials (+0.4%), industrials (+0.2%), and real estate (+0.1%) sectors closed higher. The utilities sector was the only one that gained more than 0.5%.

Interestingly, the 10-yr yield settled lower by six basis points to 1.30% amid reported growth concerns, yet the large growth stocks still struggled and bank stocks rebounded from recent losses. The 2-yr yield increased one basis point to 0.23%. The U.S. Dollar Index increased 0.2% to 92.57.

[…]
  • Initial jobless claims for the week ending July 10 decreased by 26,000 to 360,000 (Briefing.com consensus 360,000) — the lowest level since March 14, 2020. Continuing claims for the week ending July 3 fell by 126,000 to 3.241 million — the lowest level since March 21, 2020.
  • […]
  • Total industrial production increased 0.4% in June (Briefing.com consensus 0.7%) following a downwardly revised 0.7% increase in May (from 0.8%). The capacity utilization rate increased to 75.4% (Briefing.com consensus 75.6%) from a downwardly revised 75.1% in May (from 75.2%).
  • […]
  • Import prices increased 1.0% in June, while import prices excluding oil increased 0.7%. Export prices increased 1.2% in June, while export prices excluding agriculture increased 1.1%.
  • The Empire State Manufacturing Survey jumped to 43.0 in July (Briefing.com consensus 18.0) from 17.4 in June.
  • The Philadelphia Fed Index for July decreased to 21.9 (Briefing.com consensus 28.3) from 30.7 in June.
[…]
  • S&P 500 +16.1% YTD
  • Dow Jones Industrial Average +14.3% YTD
  • Nasdaq Composite +12.8% YTD
  • Russell 2000 +10.9% YTD

Overseas: 

  • Europe: DAX -1.0%, FTSE -1.1%, CAC -1.0%
  • Asia: Nikkei -1.1%, Hang Seng +0.8%, Shanghai +1.0%

Commodities: 

  • Crude Oil -1.43 @ 71.68
  • Nat Gas -0.05 @ 3.61
  • Gold +3.80 @ 1828.90
  • Silver +0.06 @ 26.36
  • Copper +0.04 @ 4.31
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