Morning Notes – Thursday July 2, 2020

Directional Bias For The Day:

  • S&P Futures are higher
  • The odds are for an up day with good chance of  sideways move from pre-open levels near 3145.00; elevated volatility – watch for break below 3123.75 for change of sentiments
  • Key economic data due:
    • Non-Farm Employment Change (4800K vs. 3037K est.; prev. 2509K) at 8:30 AM
    • Unemployment Rate (11.1% vs. 12.4% est.; prev. 13.3%) at 8:30 AM
    • Average Hourly Earnings (-1.2% vs. -0.8% est.; prev. -1.0%) at 8:30 AM
    • Unemployment Claims (1427K vs. 1350K est.; prve. 1480K) at 8:30 AM
    • Trade Balance ( -54.6B vs. -53.0B est.; prev. -49.4B) at 8:30 AM

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
  • 15-Min: Up
  • 6-Min: Up-Side

Key Levels:

  • Critical support levels for S&P 500 are 3114.61, 3101.27 and 3067.43
  • Critical resistance levels for S&P 500 are 3141.16, 3154.90 and 3181.49
  • Key levels for E-mini futures: break above 3126.25, the high of 4:30 AM and break below 3118.25, the low of 6:30 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (September 2020) closed at 3104.75 and the index closed at 3115.86 – a spread of about -11.00 points; futures closed at 3103.00 for the day; the fair value is +1.75
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +38.00; Dow by +376 and NASDAQ by +90.00

Markets Around The World

  • Markets in East closed higher
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • Dollar index
    • USD/CHF
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Cotton
    • Cocoa
    • Sugar
    • Coffee
  • Bond
    • 10-yrs yield closed at 0.682%, up from June 30 close of 0.653%;
    • 30-years is at 1.433% up from 1.409%
    • 2-years yield is at 0.172% up from 0.148%
    • The 10-Year-&-2-Year spread is at 0.510 up from 0.505
  • VIX
    • Is at 28.14; down -0.48 from July 1 close; below 5-day SMA;
    • Recent high 44.44 on June 15; low 29.26 on June 23
    • 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 large  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 June 26 was a red Dark Cloud Cover type of candle but not at the high with upper shadow one third of the real body and almost no lower shadow
    • Stochastic (9,1, 3): %K is below %D;
    • RSI (9) is near 50
  • The week was down 88.69 or -2.9%; the 5-week ATR is 176.44
  • The weekly week pivot point =3056.19, R1=3107.76, R2=3206.46; S1=2947.49, S2=2905.92; No pivot levels were breached
  • A down week; second in last five weeks and fifth 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
  • At/below 10-week EMA; at/above 39-week SMA; above 89-week SMA
  • Uptrend since March 23 is under pressure
Daily
  • A relativey small green candle with small upper and lower shadows; breaking above a symmetrical triangle and a downtrend line from high of June 8
    • %K is above %D; near 75
    • RSI-9 above 50; 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 down since 10:00 PM on June 15; mostly bounded between 3160.00 and 3000.00; moving up since 6:00 PM on June 28
    • RSI-21 rising since 4:00 PM on June 26 from near 25 to above 75
    • %K is crisscrossing %D
  • Above EMA20, whcih is aboveEMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving up since 6:00 PM on June 28 from 2983.50 to near 3130.00;
    • RSI-21 rising above 65
    • %K is crisscrossing %D;
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving up since 9:30 PM
  • The Bollinger Band was narrow from 3:30 PM to 3:00 AM; expanding since
    • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Up

Previous Session

Major U.S. indices closed mixed on Wednesday, July 1 in mostly lower. S&P 500, NASDAQ Composite, NYSE Composite and Russell 2000 closed up. Dow Jones Transportation Average traded in higher volume. Most indices are trying to break above a congestion area. NASDAQ Composite closed at all time high.

From Briefing.com:

The S&P 500 (+0.5%) and Nasdaq Composite (+1.0%) finished with decent gains on Wednesday amid positive economic data and upbeat vaccine news. It was also record close for the Nasdaq, but it was a negative day for the Dow Jones Industrial Average (-0.3%) and Russell 2000 (-1.0%).

The S&P 500 real estate (+2.6%), utilities (+2.3%), and communication services (+2.2%) sectors rose more than 2.0%, while the energy (-2.5%), financials (-1.0%), and materials (-0.5%) sectors closed in negative territory.

[…]

U.S. Treasuries finished with modest losses, pushing yields higher across the curve. The 2-yr yield increased two basis points to 0.17%, and the 10-yr yield increased three basis points to 0.68%. The U.S. Dollar Index declined 0.3% to 97.15. WTI crude declined 1.2%, or $0.48, to $39.76/bbl.

[…]
  • The ISM Manufacturing Index for June rose to 52.6% (Briefing.com consensus 49.2%) from 43.1% in May. This was the first reading above 50.0% in four months and the largest month-over-month increase since August 1980. The dividing line between expansion and contraction is 50.0%.
    • The key takeaway from the report is that it reflects a clear bounce back from the super depressed conditions seen in April and May. It’s a natural rebound so to speak as the economy reopens, but the key is its sustainability, which is still an open question.
  • Construction spending declined 2.1% m/m in May (Briefing.com consensus +1.1%) on the heels of a downwardly revised 3.5% decline (from -2.9%) in April.
    • The key takeaway from the report is that total construction spending has decelerated and is now up just 0.3% yr/yr, with a 4.7% yr/yr increase in total public construction spending helping to offset a 1.2% yr/yr decline in total private construction spending.
  • The ADP Employment Change report for June showed an estimated 2.369 million positions were added to private-sector payrolls. This was less than the Briefing.com consensus of 3.75 million. The data from May was revised higher to 3.065 million from -2.76 million.
Print Friendly, PDF & Email