Morning Notes – Wednesday, July 27, 2022

/ July 27, 2022

Directional Bias For The Day:

  • S&P Futures are higher at 8:15 AM; moving sideways to up since 6:00 PM on Tuesday – awaiting the FOMC press conference
  • The odds are for an up day with a good chance of sideways to down move from pre-open levels around 3955.00 – watch for a break above 3944.00 for a change of sentiments
  • The key economic data report due during the day:
    • Durable Goods Orders ( -0.5% est.; prev. 0.8%) at 8:30 AM
    • Core Durable Goods Orders ( 0.2% est.; prev. 0.7% ) at 8:30 AM
    • Goods Trade Balance ( -103.2B est.; prev. -104.2B) at 8:30 AM
    • Prelim Wholesale Inventories ( 1.5% est.; prev. 1.7% ) at 8:30 AM
    • Pending Home Sales ( -1.1% est.; prev. 0.7%) at 10:00 AM
    • FOMC Statement at 2:00 PM
    • Fed funds Rate (2.5% est.; prev. 1.75%) at 2:00 PM
    • FOMCE Press Conference at 2:30 PM

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 3939.51, 3927.64, and 3922.03
  • Critical resistance levels for S&P 500 are 3962.68, 3979.92, and 4002.86
  • Key levels for E-mini futures: break above 3964.50, the high at 5:00 AM and a break below 3946.00, the low at 3:00 PM on Monday

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2022) closed at 3965.50,  and the index closed at 3961.63 – a spread of about +3.75 points; the futures closed at 3965.00; the fair value is +0.50
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +10.00, Dow by +119; and NASDAQ by +20.50

Markets Around The World

  • Markets in the East closed mostly lower – Seoul closed up
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • EUR/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.838%, down -26.3 basis points from two weeks ago;
    • The 30-year is at 3.067%, down -20.2 basis points;
    • The 2-year yield is at 2.995%, down -12.0 basis points;
    • The 10-Year-&-2-Year spread is at -0.157, up from -0.014
    • The 30-Year-&-10-Year spread is at 0.229, up from 0.168
  • VIX
    • At 24.37 @ 7:45 AM; down from the last close; above the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 22.41 on July 22
    • Sentiment: Risk-On

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

Weekly:
  • The week ending on July 22 was a green spinning top candle
    • Stochastic (9,1, 3): %K is above %D; above 50
    • RSI-9 is above 45 after making a Bullish Divergence on June 13
  • The week was up +98.47 or +2.5%; the 5-week ATR  is 198.81
  • An up week; third in the least five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=3930.90, R1=4043.17, R2=4124.71; S1=3849.36, S2=3737.09; R1/R2 pivot levels were breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • In Correction
Daily
  • A spinning top Bearish Engulfing candle at the resistance created by the upper bound of a down gap of June 9; broke above a symmetrical triangle  on July 19 – 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 below %D;
    • RSI-9 has turned down to 60 from near 70; 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)
  • Moving up in zig-zag move up since 10:00 AM on July 14; 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 has risen to above 50 from near 35 on Friday
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving mostly sideways since 11:00 AM on July 21
    • RSI-21 is dipping lower since 7:00 AM from above 60
    • Above EMAS20, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 4:00 AM
  • The Bollinger Band is contracting since 7:15 AM, with price moving towards the middle band after walking up the upper band
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Friday, July 22, in mostly higher volume. Dow Jones Transportation Average traded in higher volume. The major indices opened up, but after moving sideways for the first few hours, they turned down and mostly traded lower for the rest of the day.

For the week, the major indices closed higher in mostly lower volume. The markets in Asia and Europe closed up. The dollar index closed down, the energy futures closed mixed, the metals – precious and industrials – closed up, and most soft commodities closed down. The US Treasury yields closed down. All S&P sectors closed up for the week.

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