US Market Review 7th July 2021

by Charalambos Constantinides

The S&P500 registered its first red candle following 7 straight green trading days. The index registered a new high at 4348.00 before dropping lower by the closing on July 6th . The candle formed is a “hanging man” ,which if followed by a bearish candle today might signal a reversal of the bull trend.
The 50 Day Moving Average (MA50) is crossed above the 100 Day Moving Average (MA100), and both are sloping upwards, indicating a bullish tendency. The Relative Strength Index (RSI) is in bullish territory above the mid-50 level and just below the overbought level 70, sloping upwards and also indicating a bullish tendency. The price is hovering just below yesterday’s highs at the 4340.00 area, just below the 161.8% Fibonacci extension level of the last downward move.
For the bulls, important resistance points exist at 161.8% Fibonacci extension level at 4367.50, also at the 200% Fibonacci extension level at 4447.25, and finally at the 261.8% Fibonacci extension level at price 4576.50.
For the bears, important support levels exist at 4258.25 derived from the June 15th top, also at 4133.75 derived from the June 21st bottom that coincides with the 50% Fibonacci retracement level of the last major downward move, and finally at 4029.25 derived from the May 13th bottom.

• A relatively busy day lies ahead on the US Continent. From the U.S, JOLT’s job openings are due out. There will likely be some apprehension ahead of the FOMC meeting minutes due out after the European close. From Canada, IVEY PMI is also due.

• U.S. stocks were mixed after the close on Tuesday, as gains in the Consumer Services, Technology and Utilities sectors led shares higher while losses in the Oil & Gas, Basic Materials and Consumer Goods sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average declined 0.60%, while the S&P 500 index lost 0.20%, and the NASDAQ Composite index climbed 0.17%.

• The United States Services Purchasing Managers' Index dropped 3.9 points from its all-time high in May to 60.1 in June, the Institute for Supply Management (ISM) reported on Tuesday. The reading indicates the 13th consecutive month of growth.
The Business Activity Index fell 5.8 percentage points to 60.4%, while the New Orders' one slipped 1.8% to 62.1%. The Employment Index tumbled 6.0% to 49.3%, indicating a slight contraction after five months of growth. The Backlog of Orders Index was up 4.7% to 65.8%, while Prices Index decreased 1.1% to 79.5%.

• June PMI data indicated a further marked upturn in business activity across the U.S. service sector, supported by a substantial rise in client demand. Business confidence in the outlook also improved to the second-highest in seven years. Rates of output and new order growth eased from May's record highs, however, and capacity constraints meant backlogs of work grew at the quickest rate for ten months.
The seasonally adjusted final IHS Markit US Services PMI Business Activity Index registered 64.6 in June, down from 70.4 in May and slightly below the earlier released 'flash' estimate of 64.8.
Important Daily Events:
• At 14:00 (GMT) Canada IVEY Purchasing Managers' Index (PMI) is expected. This indicator is a Survey of about 175 purchasing managers, selected geographically and by sector of activity to match the economy as a whole, which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.

• At 14:00 (GMT) US Job Openings and Labor Turnover Survey (JOLTS) is also due. This indicator is showing the number of job openings during the reported month, excluding the farming industry.

• At 18:00 (GMT) US Federal Open Market Committee (FOMC) Meeting Minutes will be publicised. This is a detailed record of the FOMC's most recent meeting, providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.

• At 19:30 (GMT) US Federal Reserve Bank of Atlanta President Raphael Bostic is due to speak about inflation, the economy, and the Federal Reserve System at a webinar hosted by the National Association of Black Journalists Business Journalism. Audience questions expected.

US Indices Yesterday:

• Dow Jones -0.60%
• S&P 500 -0.20%
• Nasdaq +0.17%