Market Remarks

Morning Notes – Friday July 23, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for a sideways to an up day — watch for a break below 4368.00 and a break above 4383.00 for clarity
  • Key economic data report due during the day:
    • Flash Manufacturing PMI ( 62.0 est.; prev. 62.1 ) at 9:45 AM
    • Flash Services PMI  ( 64.6 est.; prev. 64.6 ) at 9:45 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Side-Up
  • 30-Min: Up
  • 15-Min: Up
  • 6-Min: Up

Key Levels:

  • Critical support levels for S&P 500 are 4364.17, 4350.06, and 4342.12
  • Critical resistance levels for S&P 500 are 4382.28, 4393.68, and 4400.00
  • Key levels for E-mini futures: break above 4383.00, the high of 5:45 AM and break below 4368.00, the low of 12:00 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (September 2021) closed at 4359.75 and the index closed at 4367.48 – a spread of about -7.75 points; futures closed at 4359.50 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +19.75; Dow by +184, and NASDAQ by +49.50

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Hong Kong closed lower; Tokyo was closed for trading
  • European markets are higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • INR/USD
  • Commodities (from two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are mostly higher
    • Most soft commodities are higher
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.265%, down -2.3 basis points from two weeks ago;
    • 30-years is at 1.902%, down -0.8 basis points;
    • 2-years yield is at 0.211%, up +1.5 basis points;
    • The 10-Year-&-2-Year spread is at 1.054, down from 1.092
  • VIX
    • At 17.08 @ 7:15 AM; down from the last close; below 5-day SMA;
    • Recent high =  25.09 on July 19; low =  15.94 on July 13
    • Sentiment: Risk-On

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

Monthly
  • 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
Weekly:
  • The week ending on July 16 was a Bearish Engulfing with almost no lower shadow
    • Stochastic (9,1, 3): %K crossed below %D; near 90
    • RSI (9) is just turned below 70
  • The week was down – 42.39 or -1.0%; the 5-week ATR is 89.31
  • A down week; second in the last five weeks, and fourth in the last ten weeks
  • The weekly pivot point=4347.79, R1=4373.05, R2=4418.94; S1=4301.90, S2=4276.64; No pivot levels were breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A small green candle with small upper and lower shadows;
    • %K is above %D; above 80
    • RSI-9 is nearing 60 from near 35; above 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Bouncing up since 2:00 PM on July 19 from a low of 4224.00 to near 4360.00; at the all-time highs
    • RSI-21 moving around 70
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Trending up since 2:00 PM on July 19
    • RSI-21 is moving along around 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is drifting up since 3:00 PM
  • The Bollinger Band is narrowing since 7:00 AM;
    • Stochastic (9, 1, 3): %K crossed above %D at 7:30 AM
  • Bias: Up

Previous Session

Major U.S. indices closed mixed on Thursday, July 22 in mostly lower volume. Russell 2000, Dow Jones Transportations Average, and NYSE Composite closed lower. Russell 2000 traded in higher volume. The day’s range was small but the overall bias was up.

From Briefing.com:

The large-cap indices closed slightly higher on Thursday, holding onto their recent rebound gains largely due to strength in the mega-cap stocks. The S&P 500 (+0.2%), Nasdaq Composite (+0.4%), and Dow Jones Industrial Average (+0.1%) increased between 0.1-0.4% while the Russell 2000 pulled back 1.6%. […]

Declining issues outpaced advancing issues by a 2:1 margin at the NYSE and Nasdaq, with energy and financial stocks being among the biggest losers after being the biggest winners yesterday. The S&P 500 financials (-1.0%) and energy (-1.1%) sectors each declined about 1%. Energy stocks struggled despite higher oil prices ($71.92/bbl, +1.64, +2.3%).

[…]

In the Treasury market, the 10-yr yield flirted with 1.32%, then slipped to 1.23% in the hours following the weekly initial claims report, and finally settled two basis points below yesterday’s settlement at 1.27%. The 2-yr yield was unchanged at 0.21%. The U.S. Dollar Index increased 0.1% to 92.85.

[…]
  • Initial claims for the week ending July 17 increased by 51,000 to 419,000 (Briefing.com consensus 360,000). Continuing claims for the week ending July 10 decreased by 29,000 to 3.236 million, which is the lowest level since March 21, 2020.
  • […]
  • Existing home sales increased 1.4% m/m in June to a seasonally adjusted annual rate of 5.86 million (Briefing.com consensus 5.90 million) from a downwardly revised 5.78 million (from 5.80 million) in May. Total sales in June were up 22.9% from a year ago.
  • […]
  • The Conference Board’s Leading Economic Index (LEI) increased 0.7% in June (Briefing.com consensus 0.9%) after increasing a downwardly revised 1.2% (from 1.3%) in May.
[…]
  • S&P 500 +16.3% YTD
  • Nasdaq Composite +13.9% YTD
  • Dow Jones Industrial Average +13.8% YTD
  • Russell 2000 +11.4% YTD

Overseas: 

  • Europe: DAX +0.6%, FTSE -0.4%, CAC +0.3%
  • Asia: Nikkei CLOSED, Hang Seng +1.8%, Shanghai +0.3%

Commodities: 

  • Crude Oil +1.71 @ 71.99
  • Nat Gas +0.05 @ 4.00
  • Gold +3.60 @ 1807.10
  • Silver +0.16 @ 25.43
  • Copper +0.05 @ 4.33
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