Market Remarks

Morning Notes – Monday, August 1, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:15 AM; moving down since 7:45 AM – down more than 30 points to around 4100.00;
  • On the first trading day of August, Dow has declined 16 out of the last 24 years
  • The odds are for a down day with elevated volatility – watch for a break above 4133.75
  • The key economic data report due during the day:
    • Final Manufacturing PMI ( 52.3 est.; prev. 52.3) at 9:45 AM
    • ISM Manufacturing PMI ( 52.3 est.; prev. 53.00 ) at 10:00 AM
    • Construction Spending ( 0.3% est.; prev. -0.1%0 at 10:00 AM
    • ISM Manufacturing Prices ( 74.5 est.; prev. 78.5) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4100.10, 4091.61, and 4079.22
  • Critical resistance levels for S&P 500 are 4128.83, 4140.12, 4164.86
  • Key levels for E-mini futures: break above 4133.75, the high at 7:45 AM and a break below 4093.50, the low at 11:30 AM on Friday

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2022) closed at 4133.75,  and the index closed at 4130.29 – a spread of about +3.50 points; the futures closed at 4133.50; the fair value is +0.25
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -31.50, Dow by -196; and NASDAQ by -91.25

Markets Around The World

  • Markets in the East closed up
  • European markets are mostly lower – Italy is higher
  • Currencies (Compared to two weeks ago):
  • Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are higher
    • Soft commodities are mostly higher
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.642%, down -28.8 basis points from two weeks ago;
    • The 30-year is at 2.974%, down -12.0 basis points;
    • The 2-year yield is at 2.884%, down -24.4 basis points;
    • The 10-Year-&-2-Year spread is at -0.242, up from -0.198
    • The 30-Year-&-10-Year spread is at 0.332, up from 0.164
  • VIX
    • At 22.79 @ 9:00 AM; down from the last close; at/below the 5-day SMA;
    • Recent high = 29.06 on July 13; low = 21.21 on July 29
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on July 29 was a relatively large green candle
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI-9 is above 50 after making a Bullish Divergence on June 13
  • The week was up +168.47 or +4.3%; the 5-week ATR  is 196.93
  • An up week; third in the least five weeks, and fifth in the previous ten weeks;
  • The weekly pivot point=4060.39, R1=4210.05, R2=4289.80; S1=3980.64, S2=3830.98; R1/R2 pivot levels were breached
  • Above 10-week EMA, below 39-week SMA, and 89-week SMA
  • Uptrend
Daily
  • The green candle that gapped up with small upper and lower shadows; broke above a symmetrical triangle  on July 19 – the 61.8% extension target near 4070.00 is achieved, 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 near 4025.00 is achieved, and the 161.8% extension target is near 4216.00
    • Stochastic (9, 1, 3): %K is above %D; near 100
    • RSI-9 is above 70; above 8-day EMA;
  • Above 20-day EMA and 50-day EMA; at/above 100-day SMA; below 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving sideways to down since 10:00 AM on July 29; the uptrend since 10:00 AM on July 14; broke above a Descending Triangle on July 19 – the 100% extension target near 4105.00 is achieved, and the 161.8% extension target is near 4235.00
    • RSI-21 has declined to below 70 from above 90 and after making a Bearish Divergence at 2:00 PM on Friday
    • At/above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways to down since 6:00 PM on Friday
    • RSI-21 is drifting down since e7:30 AM; near 40
    • Below EMA10 of EMA50, but below EMAS20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 11:00 PM
  • The Bollinger Band is expanding a bit since 8:15 AM, with price walking down the lower band
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Friday, July 29, in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in lower volume. The major indices opened up and moved in the first half-hour o trading. They then declined a bit before turning around in the late morning and trading higher for the rest of the day.

The major US indices closed higher for the week in mostly lower volume. The Asian exchanges closed mixed, but the European exchanges closed up. The dollar index closed down, the energy futures were mixed, the metals – precious and industrials – closed up, and most soft commodities closed higher. The US Treasury Yields closed down.

From Briefing.com:

[…]

Each of the main indices lost a little steam and traded sideways through midday before finding upside momentum and climbing to close near fresh highs.

[…]

Week-to-date the S&P 500, Dow Jones Industrial Average, and Nasdaq gained 4.3%, 3.0%, and 4.7%, respectively.

[…]

Consumer discretionary (+4.3%) and information technology (+1.6%) outperformed

[…]

The energy sector (+4.5%) closed at the top of the leaderboard thanks to Exxon (XOM 96.93, +4.29, +4.6%) and Chevron (CVX 163.78,+13.39, +8.9%)

[..]

The only two sectors to close in negative territory were health care (-0.4%) and consumer staples (-0.7%).

[…]

Also, Energy complex futures made upside moves today. WTI crude oil futures rose 2.1% to $98.55/bbl while Natural gas futures rose 2.8% to $8.32/mmbtu.

The Treasury market closed mixed with the 2-yr note yield rising two basis points to 2.90% while the 10-yr note yield fell four basis points to 2.64%.

[…]
  • June Personal Income 0.6% (Briefing.com consensus 0.5%); Prior was revised to 0.6% from 0.5%;June Personal Spending 1.1% (Briefing.com consensus 0.8%); Prior was revised to 0.3% from 0.2%; June PCE Prices 1.0% (Briefing.com consensus 1.0%); Prior 0.6%; June PCE Prices – Core 0.6% (Briefing.com consensus 0.6%); Prior 0.3%
  • […]
  • Q2 Employment Cost Index 1.3% (Briefing.com consensus 1.1%); Prior 1.4%
  • […]
  • July Chicago PMI 52.1 (Briefing.com consensus 56.2); Prior 56.0
  • July Univ. of Michigan Consumer Sentiment – Final 51.5 (Briefing.com consensus 51.1); Prior 51.1
[…]
  • Dow Jones Industrial Average: -9.6% YTD
  • S&P 400: -11.6% YTD
  • S&P 500: -13.4% YTD
  • Russell 2000: -16.0% YTD
  • Nasdaq Composite: -20.7% YTD
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