Morning Notes – Thursday July 22, 2021

/ July 22, 2021

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 4361.25 and a break above 4340.50 for clarity
  • Key economic data report due during the day:
    • Unemployment Claims ( 419K vs. 350K est.; prev. 368K ) at8:30 AM
    • CB Leading Index ( 0.8% est.; prev. 1.1%) at 10:00 AM
    • Existing Home Sales ( 5.89M est.; prev. 5.80M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4342.12, 4331.13, and 4320.60
  • Critical resistance levels for S&P 500 are 4359.70, 4375.09, and 4383.80
  • Key levels for E-mini futures: break above 4361.25, the high of 6:45 AM and break below 4340.50, the low of 3:45 PM on Wednesday

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2021) closed at 4351.25 and the index closed at 4358.69 – a spread of about -7.25 points; futures closed at 4350.50 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are mixed – at 8:45 AM, S&P 500 futures were down by -2.25; Dow down by -31, and NASDAQ up by +11.75

Markets Around The World

  • Markets in the East closed higher – Tokyo was closed for trading
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • EUR/USD
    • USD/CAD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are lower
    • Most soft commodities are mixed
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.282%, down -3.9 basis points from two weeks ago;
    • 30-years is at 1.933%, down -1.1 basis points;
    • 2-years yield is at 0.210%, down -1.1 basis points;
    • The 10-Year-&-2-Year spread is at 1.055, down from 1.101
  • VIX
    • At 17.65 @ 8:00 AM; down from the last close; below 5-day SMA;
    • Recent high =  25.09 on July 19; low =  15.94 on July 13
    • 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 16 was a Bearish Engulfing with almost no lower shadow
    • Stochastic (9,1, 3): %K crossed below %D; near 90
    • RSI (9) is just turned below 70
  • The week was down – 42.39 or -1.0%; the 5-week ATR is 89.31
  • A down week; second in the last five weeks, and fourth in the last ten weeks
  • The weekly pivot point=4347.79, R1=4373.05, R2=4418.94; S1=4301.90, S2=4276.64; No pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A green candle that opened above the previous day’s close with almost no upper and lower shadows;
    • %K is above %D; near 80
    • RSI-9 is nearing 60 from near 35; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Bouncing up since 2:00 PM on July 19 from a low of 4224.00 to near 4360.00; just below a resistance level around 4368.00;
    • RSI-21 moving around 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 2:00 PM on Monday; drifting sideways  to up 4:30 PM on Wednesday
    • RSI-21 is moving along just below 60
    • At/below EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 7:30 PM
  • The Bollinger Band is narrow since 9:30 PM; expanding since 8:30 AM with price walking down the lower band
    • Stochastic (9, 1, 3): %K is below %D since 6:45 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Wednesday, July 21 in mostly lower volume. Dow Jones Transportations Average traded in higher volume. The market opened higher and then for the rest of the day it traded higher though most of its gains were made in the first half-hour of trading and it drifted higher slowly.

From Briefing.com:

The stock market extended its rebound bias to a second day on Wednesday, as economic concerns surrounding the Delta Covid variant continued to subside. The S&P 500 (+0.8%), Nasdaq Composite (+0.9%), and Dow Jones Industrial Average (+0.8%) rose between 0.8-0.9% while the Russell 2000 rose 1.8%.

[…]

Eight of the 11 S&P 500 sectors contributed to the steady advance, which was appropriately paced by the cyclical energy (+3.5%), financials (+1.7%), materials (+1.1%), and industrials (+1.0%) sectors. The defensive-oriented utilities (-1.1%), real estate (-0.4%) and consumer staples (-0.1%) sectors closed lower.

[…]

WTI crude futures closed back above $70 per barrel.

The 10-yr yield increased seven basis points to 1.28% while the 2-yr yield increased two basis points to 0.21%. The U.S. Dollar Index decreased 0.2% to 92.76.

[…]
  • S&P 500 +16.0% YTD
  • Dow Jones Industrial Average +13.7% YTD
  • Nasdaq Composite +13.5% YTD
  • Russell 2000 +13.1% YTD

Overseas: 

  • Europe: DAX +1.4%, FTSE +1.7%, CAC +1.9%
  • Asia: Nikkei +0.6%, Hang Seng flat, Shanghai +0.7%

Commodities: 

  • Crude Oil +2.87 @ 70.28
  • Nat Gas +0.08 @ 3.95
  • Gold -5.90 @ 1803.50
  • Silver +0.28 @ 25.27
  • Copper +0.01 @ 4.28
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