Morning Notes – Monday, July 3, 2023

/ July 3, 2023

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM. Futures are near the lower bound of a horizontal range between 4491.75 and 4480.75
  • The odds are for a sideways to down day – watch for a break above 4491.75 and a break below 440.75 for clarity
  • The major economic data reports due during the day:
    • ISM Manufacturing PMI ( 47.2 est.; prev. 46.3) at 10:00 AM
    • ISM Manufacturing Prices ( 44.0 est.; prev. 44.2) at 10:00 AM
    • Construction Spending ( 0.4% est.; prev. 1.2% ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 44435.93, 4422.44, and 4398.39
  • Critical resistance levels for S&P 500 are 4456.95, 4488.29, and 4512.94
  • The key levels for E-mini futures are 4493.25, the high at 6:15 AM, and 4480.75, the low at 4:00 PM on Friday

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2023) closed at 4486.25, and the index closed at 4450.38 – a spread of about +36.00 points; the futures closed at 4488.25; the fair value is -2.00
  • Pre-NYSE session open, futures were mixed – at 9:00 AM, S&P 500 futures were down by -2.50, Dow down by -65, and NASDAQ up by +21.25

Markets Around The World

  • Markets in the East closed higher
  • European markets are mixed – the UK, Spain, and Itlay are up; Germany, France, Switzerland, and STOXX 600 are down
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • INR/USD
  • 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 3.819, up +5.0 basis points from two weeks ago;
    • The 30-year is at 3.855%, unchanged;
    • The 2-year yield is at 4.896%, up +17.6 basis points;
    • The 10-Year-&-2-Year spread is at -1.077, down from -0.951
    • The 30-Year-&-10-Year spread is at 0.036, down from +0.086
  • VIX
    • At 13.79 @ 8:45 AM; up from the last close; above the 5-day SMA;
    • Recent high = 21.33 on May 4; low = 12.73 on June 22
    • Sentiment: Risk-Off-Neutral

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

Weekly:
  • The week ending on June 30 was a green Bullish Engulfing breaking above the year’s high and at the highest level since April 2022.
    • Stochastic (9,1, 3): %K is above the %D;
    • RSI-9 is just above 70
  • The week was up +02.05 or +2.3%; the 5-week ATR  is 130.40
  • An up week, fourth in the last five weeks, and seventh in the previous ten weeks;
  • The weekly pivot point=4412.31, R1=4496.55, R2=4542.71; S1=4366.15, S2=4281.91; R1/R2/R3 pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A green candle that gapped up with almost no lower shadow and a small upper shadow, breaking above the recent high, which is the year’s high

    • Stochastic (9, 1, 3): %K is above the %D; above 90
    • RSI-9 is above 70; above 8-DMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA, and 200-day SMA;
  • Uptrend
2-Hour (E-mini futures)
  • Moving sidewyas near the top of a cup pattern that is forming since June 16;
    • RSI-21 has declined to just above 65 from near 90
    • Above EMA20, which is at/below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways to down since 6:00 PM on Sunday between 4493.00 and 4480.
    • RSI-21 has declined to just above 50 after moving around 65 for some time
    • At/below EMA 20, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 9:45 PM.
  • The Bollinger Band has been expanding a little since 6:45 AM – with the price walking down the lower band.
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Friday, June 30, in mostly higher volume. Russell 2000 traded in lower volume. The major indices gapped up at the open and then mostly traded higher for the rest of the day. Most are trying to break above the recent highs. All S&P sectors closed higher.

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

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