Daily Brief For July 9, 2021

Daily commentary for U.S. broad market indices.

Market Commentary

U.S. equity index futures diverge in their attempt to discover fair prices for two-sided trade.

  • Volatility on COVID, growth concerns.
  • Today: ECB minutes, May inventories.
  • SPX, RUT, DJI firm. NDX tad weaker.

What Happened: U.S. stock index futures explored above and below yesterday’s cash-session close.

That said, a meaningful divergence can be observed with the Nasdaq 100 trading relatively weak, in comparison to its peers. This comes as rates on the 10 Year T-Note rebounded after testing trend support the session prior.

Ahead is the publication of ECB minutes. Prior to the open, participants will also be provided data on U.S. May wholesale inventories. Additionally, there is a G-20 meeting between finance ministers and central bankers.

Graphic updated 7:00 AM ET.

What To Expect: Friday’s regular session (9:30 AM – 4:00 PM EST) in the S&P 500 will likely open outside of prior-range and -value, suggesting a higher potential for directional opportunity.

Adding, during the prior day’s regular trade, the best case outcome occurred, evidenced by responsive buying above the $4,285.00 micro-composite high volume area (HVNode). Thursday’s intraday recovery, followed by the overnight session, found participants recovering over 50% of the liquidation. 

Volume Areas: A structurally sound market will build on past areas of high volume. Should the market trend for long periods of time, it will lack sound structure (identified as a low volume area which denotes directional conviction and ought to offer support on any test). 

If participants were to auction and find acceptance into areas of prior low volume, then future discovery ought to be volatile and quick as participants look to areas of high volume for favorable entry or exit.

Further, conditions aren’t as dire, today. Ahead, trade ought to be volatile but not that substantive as participants position themselves with respect to the weekly options expiration (OPEX) and weekend. 

Options Expiration (OPEX): Option expiries mark an end to pinning (i.e, the theory that market makers and institutions short options move stocks to the point where the greatest dollar value of contracts will expire worthless) and the reduction dealer gamma exposure.

Further, for today, participants can trade from the following frameworks. 

In the best case, the S&P 500 trades sideways or higher; activity above the $4,319.00 low volume area (LVNode) pivot puts in play the $4,340.75 HVNode, a 100% retracement of yesterday’s liquidation. Initiative trade beyond $4,340.75 could reach as high as the minimal excess overnight high (ONH) at $4,353.00.

Excess: A proper end to price discovery; the market travels too far while advertising prices. Responsive, other-timeframe (OTF) participants aggressively enter the market, leaving tails or gaps which denote unfair prices.

Overnight Rally Highs (Lows): Typically, there is a low historical probability associated with overnight rally-highs (lows) ending the upside (downside) discovery process.

In the worst case, the S&P 500 trades lower; activity below $4,319.00 puts in play the $4,303.25 LVNode. Trade beyond $4,303.25 could reach as low as the $4,291.00 untested Point of Control (POC) and $4,263.25 LVNode.

POCs: POCs are valuable as they denote areas where two-sided trade was most prevalent. Participants will respond to future tests of value as they offer favorable entry and exit.
Graphic: 65-minute profile chart of the Micro E-mini S&P 500 Futures.
Graphic: Daily candlestick charts of the S&P 500 (top left), Nasdaq 100 (top right), Russell 2000 (bottom left), and Dow Jones Industrial Average (bottom right).
Graphic: SHIFT search suggests participants were most interested in call strikes at and below the price in the cash-settled S&P 500 (INDEX: SPX), yesterday. On the Nasdaq 100 (INDEX: NDX), on the other hand, there was a meaningful shift in sentiment evidenced by increased activity in long-dated put options.

News And Analysis

Politics | U.S. set to add more Chinese companies to blacklist. (REU)

Economy | China’s central bank pivots to easing as risks build. (BBG)

COVID | Americans to need masks indoors amid COVID surge. (CNBC)

Economy | Attitudes about buying and selling homes diverging. (MND)

Politics | Biden issuing executive order on shipping consolidation. (Hill)

Markets | Technical factors pull the 10-YR Treasury yield lower. (Moody’s)

Politics | Biden will encourage the FCC to reinstate net neutrality. (Axios)

Economy | The explosion in used car prices is finally stalling out. (Axios)

What People Are Saying

Innovation And Emerging Trends

FinTech | London fintech funding soars in first half of the year. (REU)

FinTech | Robinhood compliance issues show fintech hazards. (Axios)


Renato founded Physik Invest after going through years of self-education, strategy development, and trial-and-error. His work reporting in the finance and technology space, interviewing leaders such as John Chambers, founder, and CEO, JC2 Ventures, Kevin O’Leary, businessman and Shark Tank host, Catherine Wood, CEO and CIO, ARK Invest, among others, afforded him the perspective and know-how very few come by.

Having worked in engineering and majored in economics, Renato is very detailed and analytical. His approach to the markets isn’t built on hope or guessing. Instead, he leverages the unique dynamics of time and volatility to efficiently act on opportunity.


At this time, Physik Invest does not manage outside capital and is not licensed. In no way should the materials herein be construed as advice. Derivatives carry a substantial risk of loss. All content is for informational purposes only.

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