Directional Bias For The Day:
- S&P Futures are lower; mostly moving down since 8:00 AM on July 16; up-sloping bearish flag since 9:00 PM
- The odds are for a down to sideways day – watch for break above 2993.25 for change of fortune
- Key economic data due:
- Philly Fed Manufacturing Index ( est. 5.0 ; prev. 0.3 ) at 8:30 AM
- Unemployment Claims ( est. 216K ; prev. 209K ) at 8:30 AM
- CB Leading Index ( est. 0.1% ; prev. 0.0% ) at 10:00 AM
Markets Around The World
- Markets in the East closed down
- European markets are mixed – Germany, U.K., Spain and STOXX 600 are down; France, Italy and Switzerland are up
- Crude Oil
- 10-yrs yield closed at 2.061%, down from July 16 close of 2.122%;
- 30-years is at 2.573%, down from 2.632%
- 2-years yield is at 1.826%, down from 1.850%
- The 10-Year-&-2-Year spread is at 0.235, down from 0.272
- Critical support levels for S&P 500 are 2984.62, 2972.44 and 2963.44
- Critical resistance levels for S&P 500 are 2994.29, 2998.95 and 3009.53
- Key levels for eMini futures: break above 2093.00, the low of 10:30 AM on Wednesday and break below 2975.50, the low of 1:30 AM
- On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2987.25 and the index closed at 2984.42 – a spread of about +2.75 points; futures closed at 2985.00 for the day; the fair value is +2.25
- Pre-NYSE session open, futures are down – at 7:30 AM, S&P 500 futures were down by -1.25; Dow by -36 and NASDAQ by -11.75
Directional Bias Before Open
- Weekly: Uptrend resumed
- Daily: Uptrend
- 30-Min: Down-Side
- 15-Min: Down-Side
- 6-Min: Side
The trend and patterns on various time frames for S&P 500:
|2-Hour (e-mini future)||
|30-Minute (e-mini future)||
|15-Minute (e-mini future)||
Major U.S. indices closed lower on Wednesday, July 17 in mixed volume. Dow Jones Transportation Average and S&P 500 traded in higher volume. The day’s trend was mostly down and the indices have been moving down since early morning on July 16.
The S&P 500 lost 0.6% on Wednesday, pressured by noticeable losses in the transport stocks after CSX Corp. (CSX 71.38, -8.17, -10.3%) provided disappointing earnings results and guidance. The broader market traded modestly lower for most of the day with losses accelerating into the close.
The Dow Jones Industrial Average lost 0.5%, the Nasdaq Composite lost 0.5%, and the Russell 2000 lost 0.7%.
CSX was presumably the biggest influence on the transports, but earnings warnings from trucking companies Knight-Swift (KNX 35.08, -0.81, -2.3%) and Covenant Transport (CVTI 14.65, -0.51, -3.4%) also contributed to the negative sentiment. Strikingly, the transports were among the best performers yesterday amid easing concerns about a downturn in the sector.
The S&P 500 industrials sector (-2.2%) was Wednesday’s outright laggard, nearly doubling the losses of the second-worst performing energy sector (-1.2%).
The S&P 500 utilities (+0.4%) and health care (+0.02%) sectors were the lone sectors that finished higher.
Despite earnings-related gains in Bank of America (BAC 29.19, +0.20, +0.7%) and U.S. Bancorp (USB 54.22, +1.18, +2.2%), the S&P 500 financial sector (-0.9%) was unable to gain any ground.
The 2-yr yield declined three basis points to 1.83%, and the 10-yr yield declined six basis points to 2.06%. The U.S. Dollar Index lost 0.2% to 97.21. WTI crude lost 1.4% to $56.78/bbl.
• Housing starts declined 0.9% m/m in June to a seasonally adjusted annual rate of 1.253 million units (Briefing.com consensus 1.270 million) while building permits declined 6.1% m/m to a seasonally adjusted annual rate of 1.220 million (Briefing.com consensus 1.300 million).
o The key takeaway from the report is that the single-family supply dynamic will remain a limiting issue for the overall housing market as single-family starts were down 0.8% yr/yr while single-family permits were down 4.7% yr/yr.
• The Federal Reserve’s Beige Book for July described the expansion of overall economic activity as “modest.” Most Districts reported a slight increase in sales of retail goods while vehicle sales were little changed. Tourism was described as “broadly solid” while reports concerning the transportation sector were mixed. Home sales increased slightly while construction was little changed. Loan demand increased in all but two Districts.
• The weekly MBA Mortgage Applications Index declined 1.1% following a 2.4% decline in the prior week.