Morning Notes – Monday July 12, 2021

Directional Bias For The Day:

  • S&P Futures are lower after recovering from a greater loss;
  • The odds are for a sideways to an up day from the pre-open levels around 4355.00 — watch for a break below 4343.25 for a change of sentiments
  • No key economic data report due during the day:

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 4359.98, 4345.87, and 4329.38
  • Critical resistance levels for S&P 500 are 4371.60, 4384.32, and 4399.06
  • Key levels for E-mini futures: break above 4357.75, the high of 3:00 AM and break below 4343.50, the low of 6:00 AM


  • On Friday at 4:00 PM, S&P futures (September 2021) closed at 4360.25 and the index closed at 4369.55 – a spread of about -9.25 points; futures closed at 4360.00 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are mixed – at 8:30 AM, S&P 500 futures were down by -5.00; Dow down by -137, and NASDAQ up by +57.75

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai closed down;
  • European markets are mixed – the UK, France, and France are down; Germany, Itlay, Switzerland, and STOXX 600 are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are mixed
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.341%, down -19.5 basis points from two weeks ago;
    • 30-years is at 1.970%, down -19.9 basis points;
    • 2-years yield is at 0.217%, down -6.1 basis points;
    • The 10-Year-&-2-Year spread is at 1.124, down from 1.258
  • VIX
    • At 17.37 @ 7:00 AM; up from the last close; above 5-day SMA;
    • Recent high =  21.82 on June 21; low =  14.10 on June 29
    • Sentiment: Risk-Off

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

  • Confirmed Uptrend
  • May 2021 was a Doji with a small upper shadow and a long lower shadow; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 80; broke above a downtrend line from January 2018
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows
  • The week ending on July 9 was a long-legged Doji like candle with a small upper shadow
    • Stochastic (9,1, 3): %K is above %D; near 100
    • RSI (9) is just above 70
  • The week was up +17.21 or +0.4%; the 5-week ATR is 83.35
  • An up week; fourth in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4343.51, R1=4397.64, R2=4425.74; S1=4315.41, S2=4261.28; S1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
  • A relatively large green candle with almost no upper and lower shadow at all-time highs;
    • %K crossed above %D; above 90
    • RSI-9 turned up from near 60 to near 70; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Rising since 8:00 AM on July 8 from near 4280.00; retracing since 6:00 PM on Sunday from all-time high;
    • RSI-21 declined from above 75 to just above 60
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Retracing a bit since 6:00 PM from 4365.25 to around 4355.00
    • RSI-21 declined from above 65 to around 55
    • Above EMA20, which is Above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting down since 10:30 PM
  • The Bollinger Band is expanding a bit since 3:45 AM
    • Stochastic (9, 1, 3): %K is above %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Friday, July 9 in lower volume. Major indices opened higher and then for rest of the day traded higher. S&P 500 and Wilshire 5000 Total Market Index made all-time closing and intraday high. Dow Jones Industrial Average and NASDAQ Composite closed at all-time highs.

For the week, the major US indices closed mixed in mixed volume. Russell 2000, Dow Jones Transportation Average, and NYSE Composite closed lower. Asian markets were mostly down and European markets were mixed. The dollar index was down so were energy futures and most of the soft commodities. Precious metals were mixed but industrial metals were up for the week. All but three S&P sectors – Energy, Financials, and Telecom – closed up.


U.S. stocks and Treasury yields staged a strong reversal on Friday, with the S&P 500 rallying 1.1% to intraday and closing record highs and the 10-yr yield rebounding seven basis points to 1.36%. The Nasdaq Composite (+1.0%) and Dow Jones Industrial Average (+1.3%) also closed at record highs while the Russell 2000 (+2.0%) outperformed.


All 11 S&P 500 sectors finished in positive territory, 28 of the 30 Dow components closed higher, and advancing issues outpaced declining issues by a 4:1 margin at the NYSE and a 3:1 margin at the Nasdaq.

The financials (+2.9%), materials (+2.0%), energy (+2.0%), and industrials (+1.6%) sectors advanced the most after entering the session as weekly laggards. Bank stocks and energy stocks received additional support from a wider 2s10s spread in the Treasury market and higher oil prices ($74.56/bbl, +1.58, +2.2%).


The 2-yr yield increased three basis points to 0.22%.

Friday’s economic data was limited to Wholesale Inventories for May, which increased 1.3% m/m in May ( consensus 1.1%) following a revised 1.1% increase (from +0.8%) in April. Investors will not receive any notable economic data on Monday.

  • S&P 500 +16.3% YTD
  • Russell 2000 +15.5% YTD
  • Nasdaq Composite +14.1% YTD
  • Dow Jones Industrial Average +13.9% YTD
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