Morning Notes – Tuesday July 7, 2020

Directional Bias For The Day:

  • S&P Futures are lower
  • The odds are for a down to sideways day; elevated volatility – watch for break above 3167.50 for change of sentiments
  • No key economic data due:

Directional Bias Before Open:

  • Weekly: Uptrend since March 23 under pressure
  • Daily: Uptrend since March 23 under pressure
  • 120-Min: Side-Up
  • 30-Min: Up-Side
  • 15-Min: Side-Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for S&P 500 are 3155.29, 3124.52 and 3114.61
  • Critical resistance levels for S&P 500 are 3182.59, 3189.64 and 3213.79
  • Key levels for E-mini futures: break above 3167.50, the high of 1:00 AM and break below 3138.25, the low of 6:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (September 2020) closed at 3169.25 and the index closed at 3179.72 – a spread of about -10.50 points; futures closed at 3172.00 for the day; the fair value is -2.75
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were dwon by -23.25; Dow by -229 and NASDAQ by -33.00

Markets Around The World

  • Markets in East closed mostly lower – Shanghai and Mumbai closed up
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • NatGas
    • Platinum
    • Sugar
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Palladium
    • Cotton
    • Coffee
    • Cocoa
  • Bond
    • 10-yrs yield closed at 0.684%, up from July 2 close of 0.669%;
    • 30-years is at 1.443% up from 1.429%
    • 2-years yield is at 0.161% up from 0.156%
    • The 10-Year-&-2-Year spread is at 0.523 up from 0.513
  • VIX
    • Is at 28.14; up +0.2 from July 6 close; at/below 5-day SMA;
    • Recent high 44.44 on June 15; low 23.54 on June 5
    • Sentiment: Risk-Neutral

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

Monthly
  • Uptrend under pressure
  • June 2020 was a green spinning candle with largeĀ  upper and lower shadows;
    • Stochastic %K is above %D and above 60; %K Bearish Divergence in January
    • RSI-9 turning up after declining to 34.91, the lowest level since April 2009, from above 75 in January and Bearish Divergence
    • Regaining the middle band of the 120-month regression channel after only third break of channel since 2009 and first close below it
  • Sequence of higher highs and higher lows broken
Weekly:
  • The week ending on July 3 was a near Bullsih Reversal candle, which gapped up at the week’s open
    • Stochastic (9,1, 3): %K is above %D;
    • RSI (9) is above 50
  • The week was up +120.96 or +4.0%; the 5-week ATR is 187.01
  • The weekly pivot point =3098.52, R1=3197.30, R2=3264.59; S1=3031.23, S2=2932.45; No pivot levels were breached
  • An up week; third in last five weeks and sixth in last ten weeks
  • All time high of 3393.52, the last swing high, was during the week of February 17; broke below the low of the week of December 24, 2018; support near 2193.81, the high during the week of August 15, 2016; sequence of higher highs and higher lows broken
  • Above 10-week EMA, 39-week SMA and 89-week SMA
  • Uptrend since March 23 is under pressure
Daily
  • A relativey small green candle with almost no upper and lower shadows; above a symmetrical triangle and a downtrend line from high of June 8
    • %K is above %D; near 100
    • RSI-9 above 60; above 8-day RSI;
  • Above 20-day EMA; above 200-day SMA, above 50-day EMA; above 100-day
  • Uptrend since March 23 is under pressure
2-Hour (E-mini futures)
  • Moving sideways to up since 10:00 PM on June 15; moving up since 6:00 PM on June 28 from 3004.75
    • RSI-21 declined to near 45 from above 75 and Bearish Divergence at 6:00 PM on July 7
    • %K is crisscrossing %D lower
  • Above EMA20, whcih is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving down since 8:30 PM on Monday from 3184.00 to below 3150.00;
    • RSI-21 declined to near 45 from near 54 and Bearish Divergence
    • %K is above %D;
  • Below EMA20, which is below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving down since 12:00 AM
  • The Bollinger Band is stable but large
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Monday, July 6 in mostly lower volume. NASDAQ Composite traded in higher volume. Most indices are breaking above congestion area. All but one – Utilities – S&P sectors closed up.

From Briefing.com:

The S&P 500 rose 1.6% on Monday in a bullish start to the week, but it was the Nasdaq Composite (+2.2%) and Dow Jones Industrial Average (+1.8%) that gained the advantage today. The Nasdaq closed at another record high, while the Russell 2000 underperformed the large-cap indices with a 0.8% gain.

Ten of the 11 S&P 500 sectors finished in positive territory, including the consumer discretionary (+3.2%), communication services (+2.2%), financials (+2.0%), and information technology (+1.8%) sectors atop the standings. The utilities sector (-1.3%) was the lone holdout with a 1.3% decline.

[…]

U.S. Treasuries finished slightly lower in a tight-ranged session. The 2-yr yield increased one basis point to 0.16%, and the 10-yr yield increased two basis points to 0.68%. The U.S. Dollar Index declined 0.4% to 96.75. WTI crude declined 0.2% to $40.51/bbl.

[…]
  • The ISM Non-Manufacturing Index for June increased to 57.1% (Briefing.com consensus 49.0%) from 45.4% in May. A reading above 50.0% connotes an expansion in activity. June represented the first month of expanding activity since March.
    • Survey responses reflect changes, if any, in the current month compared to the previous month. The key takeaway, then, is that the June report can’t be taken at face value as a “strong” report so much as it can be taken as a report showing stronger activity relative to the depressed activity in May.
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