Market Remarks

Morning Notes – Thursday, July 21, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:30 AM; moving within a symmetrical triangle on intraday charts since 10:15 AM on Wednesday
  • The odds are for a sideways to down elevated volatility – watch for a break above 3974.75 or a break below 3945.50 for clarity
  • The key economic data report due during the day:
    • Philly Fed Manufacturing Index ( -12.3 vs. 0.9 est.; prev. -3.3) at 8:30 AM
    • Unemployment Claims ( 251K vs. 240K est.; prev. 244K) at 8:30 AM
    • CB Leading Index ( -0.6% est.; prev. 0.4% ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3948.69, 3836.41, and 3925.19
  • Critical resistance levels for S&P 500 are 3969.56, 3974.39, and 4017.17
  • Key levels for E-mini futures: break above 3974.75, the high at 1:45 AM and a break below 3945.50, the low at 4:15 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2022) closed at 3962.50,  and the index closed at 3959.90 – a spread of about +2.50 points; the futures closed at 3962.50; the fair value is 0.00
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -8.75, Dow by -107; and NASDAQ by -1.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, and Singapore closed down; Tokyo, Sydney, Mumbai, and Seoul closed up
  • European markets are mixed – France, Spain, Switzerland, and STOXX 600 are higher; Germany, the UK, and Itlay are lower
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
    • EUR/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 3.036%, up +12.3 basis points from two weeks ago;
    • The 30-year is at 3.170%, up +5.1 basis points;
    • The 2-year yield is at 3.234%, up +25.1 basis points;
    • The 10-Year-&-2-Year spread is at -0.198, up from -0.070
    • The 30-Year-&-10-Year spread is at 0.134, up from 0.206
  • VIX
    • At 23.91 @ 6:30 AM; up from the last close; below the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 23.40 on July 20
    • Sentiment: Risk-Neutral-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 green spinning top candle at/above the previous day’s close/high; broke above a symmetrical triangle – the 61.8% extension target is near 4070.00, the 100% extension target is near 4190.00, and the 161.8% extension target is near 4380.00;  the 100% extension target for the ABCD pattern is around 4025.00, and the 161.8% extension target is near 4216.00
    • Stochastic (9, 1, 3): %K is above %D; turning down from near 100;
    • RSI-9 is above 60; above 8-day EMA;
  • Above 20-day EMA and 50-day EMA; below 200-day SMA and 100-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Drifting sideways to up since 10:00 PM on July 19; broke above a Descending Triangle on July 19 – the 61.8% extension target is near 4025.00, the 100% extension target is near 4105.00, and the 161.8% extension target is near 4235.00
    • RSI-21 is drifting lower since 10:00 PM from above 70 to just above 50
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting sideways to up since 3:00 PM on July 19 around 3950.00 levels
    • RSI-21 is moving around 50 since 1:00 PM on Wednesday
    • At/above EMAS20, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting sideways to down since 2:15 AM
  • The Bollinger Band is a bit contracting since 6:45 AM
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Wednesday, July 20, in mixed volume. Dow Jones Industrial Average and S&P 500 traded in lower volume. The market opened sideways, then moved higher in early morning trading, then gave up the advance before moving up again in the late afternoon.

From Briefing.com:

[…]

The market opened modestly lower before finding momentum to the upside.

[…]

The mega caps did some heavy lifting today with the Vanguard Mega Cap Growth ETF (MGK) closing up 1.5% versus a 0.6% gain in the S&P 500 and a 0.7% gain in the Invesco S&P 500 Equal Weight ETF (RSP).

[…]

Communication services (+1.0%), information technology (+1.6%), and consumer discretionary (+1.8%) were some of the best performers on the day thanks,

[…]

As for the laggards, the countercyclical sectors, utilities (-1.4%), consumer staples (-0.7%), and health care (-1.1%), led the underperformers.

[…]

With buyers favoring growthy areas, the Russell 3000 Growth Index (+1.2%) outpaced the Russell 3000 Value Index, which closed up 0.4%.

The 2-yr note yield rose two basis points to 3.24% and the 10-yr note yield rose two basis points to 3.04% after testing 2.94% in early morning action.

[…]
  • Existing home sales decreased 5.4% month-over-month in June to a seasonally adjusted annual rate of 5.12 million (Briefing.com consensus 5.40 million) versus 5.41 million in May. Total sales in June were down 14.2% from a year ago.
[…] 
  • Dow Jones Industrial Average: -12.3% YTD
  • S&P 400: -15.6% YTD
  • S&P 500: -16.9% YTD
  • Russell 2000: -18.6% YTD
  • Nasdaq Composite: -24.0% YTD

Overseas: 

  • Europe: DAX -0.2%, FTSE -0.4%, CAC -0.3%
  • Asia: Nikkei +2.7%, Hang Seng +1.1%, Shanghai +0.8%

Commodities: 

  • Crude Oil -0.86 @ 99.86
  • Nat Gas +0.69 @ 7.87
  • Gold -8.70 @ 1701.00
  • Silver -0.04 @ 18.59
  • Copper +0.02 @ 3.30
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