Market Remarks

Morning Notes – Thursday, July 14, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:00 AM; moving sideways to down since 4:30 AM
  • The odds are for a down day with elevated volatility – watch for a break above 3769.25 for a change of sentiments
  • The key economic data report due during the day:
    • PPI ( 1.1% vs. 0.8% est.; prev. 0.8%) at 8:30 AM
    • Core CPI ( 0.4% vs. 0.5% est.; prev. 0.5%) at 8:30 AM
    • Unemployment Claims ( 244K vs. 235Kest.; prev. 235K) at 8:30 AM

Directional Bias Before Open:

  • Weekly: In Correction
  • Daily: Uptrend Under Pressure
  • 120-Min: Side-Down
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for S&P 500 are 3759.07, 3743.64, and 3738.67
  • Critical resistance levels for S&P 500 are 3792.23, 3797.91, and 3815.44
  • Key levels for E-mini futures: break above 3769.25, the high at 6:00 AM and a break below 3743.50, the low at 8:00 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2022) closed at 3803.00, and the index closed at 3801.78 – a spread of about +1.25 points; the futures closed at 3804.50; the fair value is -1.50
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -49.00, Dow by -496; and NASDAQ by -100.00

Markets Around The World

  • Markets in the East closed mostly down – Tokyo and Sydney closed  up
  • European markets are down
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 2.991%, down -10.2 basis points from two weeks ago;
    • The 30-year is at 3.143%, down -6.9 basis points;
    • The 2-year yield is at 3.153%, up +10.0 basis points;
    • The 10-Year-&-2-Year spread is at -0.162, up from 0.040
    • The 30-Year-&-10-Year spread is at 0.152, up from 0.119
  • VIX
    • At 28.05 @ 8:15 AM; up from the last close; above the 5-day SMA;
    • Recent high = 35.05 on June 13; low = 24.43 on July 8
    • Sentiment: Risk-Off

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

Weekly:
  • The week ending on July 8 was a green candle with a small lower shadow and a smaller upper shadow
    • Stochastic (9,1, 3): %K is above %D; around 40
    • RSI-9 is above 40 after making a Bullish Divergence on June 13
  • The week was up +74.05 or +1.9%; the 5-week ATR  is 231.01
  • An up week; second in the least five weeks and third in the previous ten weeks; 11 of the last 14 weeks were down
  • The weekly pivot point=3853.31, R1=39648.57, R2=4029.75; S1=3788.13, S2=3676.87; no pivot levels were breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A relatively small green Spinning Top candle
    • Stochastic (9, 1, 3): %K is below %D;
    • RSI-9 is just above 40; below 8-day EMA;
  • Below 20-day EMA; below 50-day EMA, 200-day SMA, and 100-day SMA;
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving down from 10 AM on July 8 high of 3922.00 to the lows of July 5 around 3750.00; near the lower bound of a Descending Triangle.
    • RSI-21 is just above 30; potential Bullish Divergence
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (E-mini futures)
  • Trending down since 11:00 AM on July 8;
    • RSI-21 is moving between 40 and 30
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving down since 2:30 AM
  • The Bollinger Band is contracting since 8:00 AM
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Wednesday, July 13, in mixed volume. Dow Jones Industrial Average and Dow Jones Transportation Average traded in lower volume.  The market gapped down at the open but made the day’s low in the first half hour of trading and turned up. Most indices advanced to green territory by the mid-afternoon before declining in the final hour of trading.

From Briefing.com:

[…]

There was a lot of seller conviction in the morning with decliners leading advancers by a 6-to-1 margin at the NYSE and a 3-to-1 margin at the Nasdaq. The advance-decline line showed mixed interest at the close. Decliners led advancers by roughly an 11-to-10 margin at both the NYSE and Nasdaq.

[…]

Only two of the 11 S&P 500 sectors closed in the green, consumer discretionary (+0.9%) and consumer staples (+0.1%). The other sectors showed losses ranging from 0.1% (energy) to 1.2% (industrials).

[…]

Oil prices saw some volatility today with WTI crude oil futures settling the session down 0.9% to $96.38/bbl. Natural gas futures rose 9.0% to $6.57/mmbtu. Unleaded gasoline futures fell 0.5% to $3.24/gal.

The 2s10s spread became more inverted today, reaching its lowest level since late 2000. The 2-yr note yield rose 10 basis points to 3.13% and the 10-yr note yield fell five basis points to 2.90%.

[…]
  • Total CPI increased 1.3% month-over-month in June (Briefing.com consensus 1.1%) after increasing 1.0% in May. Core CPI, which excludes food and energy, increased 0.7% month-over-month in June (Briefing.com consensus 0.6%) after increasing 0.6% in May.
  • On a year-over-year basis, total CPI was up 9.1%, versus 8.6% in May, and core CPI was up 5.9%, versus 6.0% in May.
  • […]
  • Weekly MBA Mortgage Applications -1.7%; Prior -5.4%
[…]
  • Dow Jones Industrial Average: -15.3% YTD
  • S&P 400: -19.6% YTD
  • S&P 500: -20.2% YTD
  • Russell 2000: -23.1% YTD
  • Nasdaq Composite: -28.1% YTD

Overseas: 

  • Europe: DAX -1.2%, FTSE -0.7%, CAC -0.7%
  • Asia: Nikkei +0.5%, Hang Seng -0.2%, Shanghai +0.1%

Commodities: 

  • Crude Oil +0.90 @ 96.38
  • Nat Gas +0.54 @ 6.56
  • Gold +8.80 @ 1734.40
  • Silver +0.26 @ 19.14
  • Copper +0.04 @ 3.31
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