Market Remarks

Morning Notes – Wednesday, July 13, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; declined more than 100 points from the high before the CPI report at 8:30 AM
  • The odds are for a down day with elevated volatility – watch for a break above 3793.25
  • The key economic data report due during the day:
    • CPI ( 1.3% vs. 1.1% est.; prev. 1.0%) at 8:30 AM
    • Core CPI ( 0.7% vs. 0.5% est.; prev. 0.6%) at 8:30 AM
    • Beige Book at 2:00 PM

Directional Bias Before Open:

  • Weekly: In Correction
  • Daily: Uptrend Under Pressure
  • 120-Min: Side-Down
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for S&P 500 are 3765.41, 3743.64, and 3738.67
  • Critical resistance levels for S&P 500 are 3792.61, 3802.09, and 3822.05
  • Key levels for E-mini futures: break above 3793.25, the high at 8:32 AM and a break below 3753.25, the low at 8:47 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2022) closed at 3824.00, and the index closed at 3818.80 – a spread of about +5.25 points; the futures closed at 3823.75; the fair value is +0.25
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -61.00, Dow by -344; and NASDAQ by -242.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo, Sydney, and closed higher; Hong Kong, Mumbai, and Singapore closed lower
  • European markets are down
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.038%, down -16.8 basis points from two weeks ago;
    • The 30-year is at 3.205%, down -10.5 basis points;
    • The 2-year yield is at 3.045%, down -8.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.007, up from 0.072
    • The 30-Year-&-10-Year spread is at 0.167, up from 0.104
  • VIX
    • At 28.78 @ 8:30 AM; up from the last close; above the 5-day SMA;
    • Recent high = 35.05 on June 13; low = 24.43 on July 8
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on July 8 was a green candle with a small lower shadow and a smaller upper shadow
    • Stochastic (9,1, 3): %K is above %D; around 40
    • RSI-9 is above 40 after making a Bullish Divergence on June 13
  • The week was up +74.05 or +1.9%; the 5-week ATR  is 231.01
  • An up week; second in the least five weeks and third in the previous ten weeks; 11 of the last 14 weeks were down
  • The weekly pivot point=3853.31, R1=39648.57, R2=4029.75; S1=3788.13, S2=3676.87; no pivot levels were breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A red Spinning Top following a three-day Evening Star pattern
    • Stochastic (9, 1, 3): %K is below %D;
    • RSI-9 is just below 45; below 8-day EMA;
  • Below 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving down from 10 AM on July 8 high of 3922.00 to the lows of July 5 around 3750.00;
    • RSI-21 is below 20; potential Hidden Bullish Divergence
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Trending down since 11:00 AM on July 8;
    • RSI-21 has declined to just above 30
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways to down since 8:30 AM
  • The Bollinger Band is expanding since 8:30 AM, with the price walking down the lower band
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Tuesday, July 12, in higher volume. The market was under pressure from the open. It briefly recovered in the mid-afternoon but then declined in the final hour of trading and closed near the lows.

From Briefing.com:

[…]

WTI crude oil futures settled 8.0% lower to $95.48/bbl. Natural gas futures settled 4.6% lower to $6.03/mmbtu. Unleaded gasoline futures settled 5.9% lower to $3.25/gal.

[…]

By the close, the EUR/USD was down 0.1% to 1.0043. The USD Index was up 0.2% to 108.18.

Every sector in the S&P 500 closed in negative territory with energy (-2.1%) showing the steepest losses coinciding with the falling cost of oil. The other top laggards were health care (-1.3%), information technology (-1.3%), and consumer discretionary (-1.2%).

[…]

Market breadth reflected the late session selling interest. Earlier, advancers led decliners by a 2-to-1 margin at the NYSE and a 6-to-5 margin at the Nasdaq. At the close, decliners led advancers by a 6-to-5 margin at both the NYSE and Nasdaq.

Separately, the 2s10s spread is still inverted with the 2-yr note yield falling three basis points to 3.03%. The 10-yr note yield fell three basis points to 2.96%.

[…]
  • Dow Jones Industrial Average: -14.7% YTD
  • S&P 400: -19.4% YTD
  • S&P 500: -19.9% YTD
  • Russell 2000: -23.0% YTD
  • Nasdaq Composite: -28.0% YTD

Overseas: 

  • Europe: DAX +0.6%, FTSE +0.2%, CAC +0.8%
  • Asia: Nikkei -1.8%, Hang Seng -1.3%, Shanghai -1.0%

Commodities: 

  • Crude Oil -8.26 @ 95.48
  • Nat Gas -0.29 @ 6.02
  • Gold -7.30 @ 1725.60
  • Silver -0.18 @ 18.88
  • Copper -0.15 @ 3.27
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