Market Commentary
Equity index futures sideways overnight.
- Bond and equity volatility diverge.
- Ahead: Claims, PPI, and WASDE.
What Happened: U.S. stock index futures auctioned sideways to higher after the release of Consumer Price Index (CPI) data and progress on stimulus.
Ahead is data on jobless claims, as well as the PPI and latest WASDE report.
What To Expect: As of 6:45 AM ET, Thursdayโs regular session (9:30 AM – 4:00 PM EST) in the S&P 500 will likely open inside of prior-range and -value, suggesting a limited potential for immediate directional opportunity.
Adding, during the prior dayโs regular trade, the best case outcome occurred, evidenced by initiative trade above the $4,422.75 balance area high (BAH), to the $4,443.50 overnight high (ONH). Thereafter, the S&P 500, in particular, traded sideways on strong intraday breadth, evidenced by an inflow into stocks that were up versus down.
Overnight Rally Highs (Lows): Typically, there is a low historical probability associated with overnight rally-highs (lows) ending the upside (downside) discovery process.
In comparison to the stronger S&P 500, Russell 2000, and Dow Jones Industrial Average, the Nasdaq 100 traded to a new two-day low, this week, amidst a divergence in equity and bond market volatility, as well as a general rise in rates.
Notwithstanding, despite the S&P 500 continuing to make higher highs in the face of strong inflows and equity buybacks, among other things, trade has been mechanical, halting short of visual references.
Given that this trade suggests the participants involved are short-term (i.e., technically driven) in nature, caution exists on the entry of longer-term, fundamentally driven participants who deem prices to be too high and unfair.
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 $4,434.75 low volume area (LVNode) pivot puts in play the $4,443.50 overnight high (ONH). Initiative trade beyond the ONH could reach as high as the Fibonacci extensions at $4,446.25 and $4,449.25.
In the worst case, the S&P 500 trades lower; activity below the $4,434.75 LVNode puts in play the $4,429.25 high volume area (HVNode). Initiative trade beyond the HVNode could reach as low as the $4,422.75 balance area high (BAH) and $4,415.75 LVNode.
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. Initiative Buying (Selling): Buying (selling) within or above (below) the previous dayโs value area.
News And Analysis
China goes after online insurance amid wide crackdown.
U.S. infrastructure bill to provide a small boost to growth.
Traders brace for a debt ceiling โhot potatoโ rattling rates.
China has partly shut down the worldโs third-busiest port.
Delta variant is bringing a midsummer pause for airfares.
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About
After years of self-education, strategy development, and trial-and-error, Renato Leonard Capelj began trading full-time and founded Physik Invest to detail his methods, research, and performance in the markets.
Additionally, Capelj is a finance and technology reporter. Some of his biggest works include interviews with leaders such as John Chambers, founder and CEO, JC2 Ventures, Kevin OโLeary, businessman and Shark Tank host, Catherine Wood, CEO and CIO, ARK Invest, among others.
Disclaimer
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.