Market Remarks

Morning Notes – Monday, July 17, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 8:45 AM. Futures have been moving sidewyas since 4:45 Pm on Friday within a range bounded by 4539.25 and 4528.00.
  • The odds are for a down day to a sideways day – watch for a break above 4539.25 or a break below 4528.00 for clarity
  • The major economic data reports due during the day:
    • Empire State Manufacturing PMI ( 1.1% vs. -3.5% est.; prev. 6.6%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 4481.18, 4495.82, 4489.36, and 4481.18
  • Critical resistance levels for S&P 500 are 4506.10, 4521.85, and 4527.76
  • The key levels for E-mini futures are 4539.25, the high at 4:15 AM, and 4528.00, the low at 7:15 PM on Sunday

Pre-Open

  • On Friday at 4:00 PM, S&P futures (September 2023) closed at 4539.25, and the index closed at 4505.42 – a spread of about +34.75 points; the futures closed at 4536.75; the fair value is +2.75
  • Pre-NYSE session open, futures were lower – at 8:00 AM, S&P 500 futures were down by -7.50, Dow by -94, and NASDAQ by -10.50

Markets Around The World

  • Markets in the East closed mixed
  • European markets are lower
  • 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 mixed
    • 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 3.819, unchanged two weeks ago;
    • The 30-year is at 3.923%, up +6.8 basis points
    • The 2-year yield is at 4.746%, down -14.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.927, up from -1.076
    • The 30-Year-&-10-Year spread is at 0.104, up from +0.036
  • VIX
    • At 13.96 @ 6:45 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 July 14 was a Bullish Engulfing candle closing at the highest level since the week of April 18, 2022
    • Stochastic (9,1, 3): %K is crisscrossing the %D above 90;
    • RSI-9 has turned up above 70 but is still below the reading of the week ending on June 12, 2023.
  • The week was up +106.47 or +2.4%; the 5-week ATR  is 111.50
  • An up week, third in the last five weeks, and seventh in the previous ten weeks;
  • The weekly pivot point=4474.37, R1=4558.81, R2=4612.21; S1=4420.97, S2=4336.53; R1/R2/R3 pivot levels were breached
  • Above 10-week EMA and 39-week SMA; below 89-week SMA
  • Uptrend
Daily
  • A small Doji-like Spinning Top candle at a resistance level of around 4520.00, created by the high of April 21, 2022
    • Stochastic (9, 1, 3): %K crossed below the %D. A potential Bearish Divergence.
    • RSI-9 has turned down 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)
  • Trending up since 2:00 AM on July 10 from a support level around 4410.00. Broke above a Symmetrical Triangle – the 61.8% extension target near 4512.00 is achieved; the 100% extension target is near 4545.00, and the 161.8% extension target is near 4590.00. Drifting down since Noon on July 14.
    • RSI-21 declined from above 70 to near 40, and after making a Bearish Divergence on Friday
    • At/below EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Moving sideways since 6:00 PM on Sunday after retreating a little from the high of 4560.50, the high of 10:00 AM on Friday
    • RSI-21 is around 45 – a potential Bearish Divergence
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sidewyas to down since 10:00 PM on July 16
  • The Bollinger Band has been expanding a little since 4:30 AM, with the price walking down the lower band.
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mostly lower on Friday, July 14, in mixed volume. Dow Jones Industrial Average closed higher. S&P 500 and Dow Jones Transportation Average traded in lower volume. The major indices opened higher and made the day’s highs in the first hour of trading. They then mostly traded lower.

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

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