Morning Notes – Tuesday, July 19, 2022

/ July 19, 2022

Directional Bias For The Day:

  • S&P Futures are higher at 8:30 AM; drifted down 12 points since the 6:30 AM high of 3871.75
  • The odds are for an up day with elevated volatility – watch for a break below 3835.00 for a change of sentiments
  • The key economic data report due during the day:
    • Building Permits (1.69M vs. 1.64M est.; prev. 1.70M) at 8:30 AM
    • Housing Starts ( 1.56M vs. 1.57M est.; prev. 1.59M) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3838.82, 3818.63, and 3796.41
  • Critical resistance levels for S&P 500 are 3862.52, 3882.85, and 3895.81
  • Key levels for E-mini futures: break above 3871.75, the high at 6:30 AM and a break below 3835.00, the low at 3:45 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2022) closed at 3834.00,  and the index closed at 3830.85 – a spread of about +3.25 points; the futures closed at 3833.75; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +29.00, Dow by +170; and NASDAQ by +98.00

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo, and Mumbai closed higher; Hong Kong, Sydney, Seoul, and Singapore closed lower
  • European markets are mostly higher – France is lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • NZD/USD
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.960%, up +15.1 basis points from two weeks ago;
    • The 30-year is at 3.135%, up +10.3 basis points;
    • The 2-year yield is at 3.166%, up +33.7 basis points;
    • The 10-Year-&-2-Year spread is at -0.206, up from -0.020
    • The 30-Year-&-10-Year spread is at 0.175, up from 0.223
  • VIX
    • At 24.62 @ 6:30 AM; down from the last close; below the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 24.13 on July 15
    • Sentiment: Risk-On

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

Weekly:
  • The week ending on July 15 was a Haram Dragonfly Doji
    • 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 down -36.22 or -0.9%; the 5-week ATR  is 212.85
  • A down week; third in the least five weeks and seventh in the previous ten weeks; 12 of the last 15 weeks were down
  • The weekly pivot point=3821.89, R1=3922.21, R2=3981.27; S1=3762.83, S2=3662.51; S1 pivot level was breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A Dark Cloud Cover candle, after finding resistance at a downtrend line from the high of June 28th; a symmetrical triangle is emerging.
    • Stochastic (9, 1, 3): %K is above %D but turned down;
    • RSI-9 is just below 50; 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)
  • Declined from resistance at the downtrend line from the high of 3950.00 at 8:00 AM on June 28; bouncing up from the EMA50 with a Descending triangle
    • RSI-21 is turned up to near 60 from near 30
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 3:30 AM after moving sideways to up from 4:00 PM following a decline during the day on Monday
    • RSI-21 has moved up to just below 60 from 30
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 4:30 AM
  • The Bollinger Band is expanding since 4:30 AM, with price first walking up the upper band and then drifting towards the mid-band since 6:30 AM
  • Bias: Side

Previous Session

Major U.S. indices closed mostly lower on Monday, July 18, in lower volume. Dow Jones Transportation Average closed up. The market gapped up at the open and then traded sideways until mid-afternoon when it turned down and traded lower for the rest of the day. Mos indices made Dark Cloud COver or similar bearish candlestick formations.

From Briefing.com:

[…]

The market started its deterioration today after the July NAHB Housing Market Index release came in at 55. The drop from 67 to 55 was the largest monthly drop in the 37-year series other than the drop seen in April 2020.

[…]

Eight of the 11 S&P 500 sectors closed in the red with losses ranging from 0.5% (financials) to 2.2% (health care). The only sectors to gain on the day were energy (+2.0%), materials (+0.2%), and consumer discretionary (+0.2%).

Market breadth was mixed with advancers slightly outpacing decliners at the NYSE and decliners slightly outpacing advancers at the Nasdaq.

The 2-yr Treasury note yield closed the session three basis points higher at 3.16% and the 10-yr note yield rose three basis points to 2.96%.

[…]
  • Dow Jones Industrial Average: -14.5% YTD
  • S&P 400: -19.1% YTD
  • S&P 500: -19.6% YTD
  • Russell 2000: -22.5% YTD
  • Nasdaq Composite: -27.4% YTD
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