Morning Notes – Friday July 30, 2021

/ July 30, 2021

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day — watch for a break above 4388.75 for a change of sentiments
  • Key economic data report due during the day:
    • Core PCE Price Index ( 0.4% vs. 0.6% est.; prev. 0.5% ) at 8:30 AM
    • Employment Cost Index (0.7% vs,. 0.9% est.; prev. 0.9%) at 8:30 AM
    • Personal Income ( 0.1% vs. -0.4% est.; prev. -2.2%) at 8:30 AM
    • Personal Spending ( 1.0% vs. 0.7% est.; prev. -0.1%) at 8:30 AM
    • Chicago PMI ( 64.2 est.; prev. 66.1) at 9:45 AM
    • Revised UoM Consumer Sentiments ( 80.8 est.; prev. 80.8) at 10:00 AM
    • Revised UoM Inflation Expectations ( prev. 4.8% ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4387.01, 4372.51, and 4350.06
  • Critical resistance levels for S&P 500 are 4418.57, 4429.97, and 4443.95
  • Key levels for E-mini futures: break above 4388.75, the high of 6:30 AM and break below 4371.75, the low of 2:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2021) closed at 4411.75 and the index closed at 4419.15 – a spread of about -7.50 points; futures closed at 4411.75 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -28.00; Dow by -88, and NASDAQ by -161.50

Markets Around The World

  • Markets in the East closed lower
  • European markets are lower
  • Currencies (from two weeks ago):
    Up Down
    • EUR/USD
    • GBP/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Most soft commodities are higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.242%, down -5.5 basis points from two weeks ago;
    • 30-years is at 1.894%, down -2.6 basis points;
    • 2-years yield is at 0.204%, down -2.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.038, down from 1.068
  • VIX
    • At 19.40 @ 8:00 AM; up from the last close; below 5-day SMA;
    • Recent high =  25.09 on July 19; low =  16.33 on July 23
    • Sentiment: Risk-Off

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 23 was a relatively large Bullish Engulfing with almost no per shadow and small lower shadow
    • Stochastic (9,1, 3): %K crossed above %D; above 90
    • RSI (9) is just turned below 70
  • The week was up +84.63 or +2.0%; the 5-week ATR is 107.17
  • An up week; fourth in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4353.37, R1=4473.60, R2=4535.42; S1=4291.55, S2=4171.32; R1/S1/S2 pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A relatively small green candle with small upper shadow and  almost no lower shadow;
    • %K is above %D; above 90
    • RSI-9 is just below 65; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Moving within a Horizontal Channel between 4420.00 and 4380.00; near the lower bound of the pattern
    • RSI-21 declined to near 40 from near 70
    • Below EMA20, which is at/below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways since 10:30 AM on July 23
    • RSI-21 is rising since 1:00 after making a minor Bullish Divergence
    • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 6:00 PM; sideways-to-up move since 1:30 AM
  • The Bollinger Band is expanding a bit;
    • Stochastic (9, 1, 3): %K crossed above %D at 8:00 AM
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Thursday, July 29 in lower volume. The indices opened higher and then traded higher in the morning session before drifting lower in the afternoon session.

From Briefing.com:

The S&P 500 (+0.4%) and Dow Jones Industrial Average (+0.4%) set intraday record highs on Thursday amid strength in the cyclical stocks, although the market did close off session highs. The Nasdaq Composite increased just 0.1% while the Russell 2000 outperformed with a 0.7% gain.

[…]

Nine of the 11 S&P 500 sectors finished in positive territory with some rotational activity favoring the cyclical groups.

The financials (+1.1%), materials (+1.1%), energy (+0.9%), and consumer discretionary (+0.9%) sectors each advanced around 1%, while the communication services (-0.9%) and real estate (-0.2%) sectors closed lower.

[…]

U.S. Treasuries settled mixed and little changed in a tight-ranged session. The 2-yr yield decreased one basis point to 0.20% while the 10-yr yield increased one basis point to 1.27%. The U.S. Dollar Index decreased 0.5% to 91.90. WTI crude futures increased 1.7%, or $1.24, to $73.62/bbl.

[…]
  • The advance Q2 GDP report reflected the rebound effort in the U.S. economy from the pandemic. It showed real GDP increasing at an annual — and robust — rate of 6.5% (Briefing.com consensus 8.5%), helped by an 11.8% increase in personal spending. The GDP Chain Deflator increased 6.0% (Briefing.com consensus 5.4%) following a 4.3% increase in the first quarter.
  • […]
  • Initial claims for the week ending July 24 decreased by 24,000 to 400,000 (Briefing.com consensus 375,000) while continuing claims for the week ending July 17 increased by 7,000 to 3.269 million.
  • […]
  • Pending home sales decreased 1.9% m/m in June (Briefing.com consensus +0.8%) following an upwardly revised 8.3% increase (from 8.0%) in May.
[…]
  • S&P 500 +17.7% YTD
  • Nasdaq Composite +14.7% YTD
  • Dow Jones Industrial Average +14.6% YTD
  • Russell 2000 +13.4% YTD

Overseas: 

  • Europe: DAX +0.5%, FTSE +0.9%, CAC +0.4%
  • Asia: Nikkei +0.7%, Hang Seng +3.2%, Shanghai +1.5%

Commodities: 

  • Crude Oil +1.22 @ 73.59
  • Nat Gas +0.11 @ 4.06
  • Gold +31.60 @ 1831.10
  • Silver +0.86 @ 25.74
  • Copper +0.06 @ 4.53
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