Morning Notes – Monday July 6, 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 3165.00; elevated volatility – watch for break below 3157.75 for change of sentiments
  • Key economic data due:
    • Final Services PMI (47.0 est.; prev. 46.7) at 9:45 AM
    • ISM Non Manufacturing PMI ( 50.0 est.; prev. 45.4) at 10:00 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 3124.52, 3114.61 and 3101.27
  • Critical resistance levels for S&P 500 are 3181.49, 3189.64 and 3213.79
  • Key levels for E-mini futures: break above 3172.75, the high of 6:00 AM and break below 3157.75, the low of 5:00 AM


  • On Thursday at 4:00 PM, S&P futures (September 2020) closed at 3121.50 and the index closed at 3130.01 – a spread of about -8.50 points; futures closed at 3129.00 for the day; the fair value is +2.50
  • Pre-NYSE session open, futures are higher – at 9:15 AM, S&P 500 futures were up by +37.75; Dow by +364 and NASDAQ by +120.75

Markets Around The World

  • Markets in East closed mostly higher – Sydney was down
  • 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
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Cotton
    • Crude Oil
    • Sugar
    • Coffee
    • Cocoa
  • Bond
    • 10-yrs yield closed at 0.701%, up from July 2 close of 0.669%;
    • 30-years is at 1.466% up from 1.429%
    • 2-years yield is at 0.157% up from 0.156%
    • The 10-Year-&-2-Year spread is at 0.544 up from 0.513
  • VIX
    • Is at 27.41; down -0.2 from July 2 close; 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:

  • 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
  • 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
  • A relativey small red candle with almost no lower shadow and small upper shadow; 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 up since 10:00 PM on June 15; moving up since 6:00 PM on June 28 from 3004.75
    • RSI-21 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 3170.00;
    • 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 sidewasy since 1:15 AM
  • The Bollinger Band is stable
    • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Thursday, July 2 in lower Volume. All but two S&P sectors – Real Estate and Telecom – closed higher.

For the week, U.S. indices closed higher higher in lower volume. Europe was up and most markets in Asia closed higher. Japan was down. All S&P sectors closed up. US Dollar and Japanese yen closed lower for the week. Crude Oil, gold and most commodities closed up. US Treasry yields were up for the week.


The S&P 500 increased 0.5% on Thursday amid positive labor market data, although it was up as much as 1.6% in early action. The Nasdaq Composite (+0.5%), Dow Jones Industrial Average (+0.4%), and Russell 2000 (+0.3%) also finished near session lows, but the Nasdaq did notch another record close.


Every sector in the S&P 500 was on pace to close in positive territory following the data, but a late fade in the market took several sectors into the red. The cyclical materials (+1.9%), energy (+1.1%), and industrials (+0.8%) sectors set the performance pace, while the real estate (-0.3%) and communication services (-0.1%) sectors closed lower.


U.S. Treasuries finished little changed. The 2-yr yield declined one basis point to 0.15%, and the 10-yr yield was unchanged at 0.68%. The U.S. Dollar Index was also little changed at 97.22. WTI crude rose 1.7%, or $0.66, to $40.42/bbl.

  • June nonfarm payrolls increased by 4.800 million ( consensus 3.50 million). June private sector payrolls increased by 4.767 million ( consensus 3.00 million). June unemployment rate was 11.1% ( consensus 12.6%), versus 13.3% in May. June average hourly earnings declined 1.2% ( consensus -1.0%) versus a 1.0% decline in May.
    • The key takeaway from the report as far as the market is concerned is that it reflects an economy that is bouncing back from the depths of the COVID-19 shutdown period. There are still far too many people unemployed (17.750 million), yet the June numbers are moving in the right direction.
  • Initial jobless claims for the week ending June 27 decreased by 55,000 to 1.427 million ( consensus 1.355 million).
    • The key takeaway from the report is that initial claims remain at an alarmingly high level and will continue to be a drag on economic activity.
  • The Trade Balance report for May showed a widening in the deficit to -$54.6 billion ( consensus -$53.0 billion) from a downwardly revised $49.8 billion (from -$49.4 billion).
    • The key takeaway from the report is that exports (-$6.6 billion) and imports (-$1.8 billion) both declined in May, underscoring the adverse impact of the coronavirus on the global economy.
  • New orders for manufactured goods increased 8.0% m/m in May ( consensus 7.2%) following a downwardly revised 13.5% decline (from -13.0%) in April.
    • The key takeaway from the report is that it reflects a recovery in new order activity following the depths of the COVID-19 shutdown period.
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