June 21 Market Update | Technical, Fundamental, News

Description:

An analysis for the week ahead.

Points of Interest:

4-Day Island; Gap; 4-Day Balance.

Technical:

Mixed messages provided after equity indices broke the short-term, momentum driven uptrend, and corrected on June 11. Overall, the island of balance left behind, after the market sold-off, is still intact and will offer resistance on upward auctions. If the market trades through that area, then sentiment has changed and the initiative activity that drove prices lower is no longer present.

Monday displayed a rejection of lower prices after overnight activity started off weak, on a gap down, but quickly corrected into the regular trading session, impulsing higher, through the $3,000 S&P 500 level.

Tuesday’s trade blew through most of the resting offers overnight, into a low-volume area, on a record increase in U.S. retail sales. Later on, after a choppy open, the market established good excess on the lower extreme, and pinned near the $3,100 level.

Wednesday and Thursday’s action was fairly muted as the market continued digesting the upward correction going into Friday’s simultaneous expiry of options and futures tied to index products.

Despite gapping to the high end of the week-long balance overnight, Friday’s trade was volatile and lacked conviction to continue into the resting liquidity at and above the $3,135 area.

Putting everything together, the picture points to the potential for a volatile week ahead. With the removal of S&P open interest, gamma (i.e., the sensitivity of options to changes in underlying price) imbalances and hedging activity could heighten volatility. If liquidation continues into the coming week and value moves lower, then the near-term bullish narrative is no longer intact.

Scroll to bottom of document for non-profile charts.

Key Events:

Existing Home Sales; National Activity Index; Building Permits; PMIs; New Home Sales; Home Prices; Q1 GDP; Durable Goods; Trade Balance; Trade Inventories; Initial Claims; Continued Claims; Personal Income; Personal Consumption; PCE; UoM Sentiment June Final.

Fundamental:

Mortgage applications jumped for the 11th week in a row. bit.ly/37Jm1f2

Traffic at supermarkets and merchandise stores near normal. bit.ly/2CqCtoW

Oil prices will average less than $60 to ensure production. reut.rs/2YfVra6

U.S. and Canadian oil and gas rig count falls to record lows. reut.rs/3fGTSb9

On June 26, Russell will implement a record index reconstitution. bit.ly/2V3iBOX

China stressed as repo rates and yields climb, liquidity thins out. bloom.bg/3hL8Wq7

Fed shifts away from bond ETFs to a special, diversified index. bloom.bg/3hL8Wq7

ECB’s boost to pandemic bond buying isn’t enough. bloom.bg/2zRUwU4

No indication BOE will renew its asset-purchase program. bloom.bg/2NehaJh

Companies to ditch revenue focus, hone in on market share growth. bit.ly/2CllxQt

Facebook Inc (NASDAQ: FB) acquired a mapping technology company. bit.ly/3fFAbAy FB

Square Inc (NYSE: SQ) acquired a Spanish P2P payments app. bit.ly/3fFAbAy SQ

Apple Inc (NASDAQ: AAPL) closes stores due to resurgence of COVID-19. reut.rs/2YRhbrX AAPL

Kroger Co (NYSE: KR) posts stronger sales, profit amid pandemic. on.wsj.com/2YipJsZ KR

Unemployment claims decline, but at a slower rate. bit.ly/3dl3aYX

Shopper engagement is higher with mobile ecommerce apps. bit.ly/2BlJlmW

High-yield downgrades drop from March and April readings. bit.ly/3fMEQ3P

MIT, Harvard, and others on how capitalism will emerge after COVID-19. bit.ly/3dileCZ

Startups focused on saving time and money may thrive. bit.ly/2V5030Z

Walmart Inc (NYSE: WMT), Shopify Inc (NYSE: SHOP) partnership a credit positive. bit.ly/37O0bXz WMT

Facebook Inc’s (NASDAQ: FB) Brazil payments service cuts into bank profits. bit.ly/37O0bXz FB

GrubHub Inc (NYSE: GRUB) acquisition a credit negative for U.S. online food-delivery. bit.ly/37M9qaN $NYSE:GRUB

EU solvency rule amendments to improve bank capital ratios and support the economy. bit.ly/37M9qaN

No-deal Brexit to compound risks for sectors hit by pandemic disruption. bit.ly/37M9qaN

Americans increased spending while working from home. bit.ly/3dn8rPA

France lifts most of its COVID-19 restrictions. on.ft.com/2Cu5uAd

AT&T Inc’s (NYSE: T) sale of Warner Bros. would fetch around $4 billion. cnb.cx/2YjfsNe T

USD to weaken as Fed commits to QE infinity. bit.ly/3fGs0Ut

ARM-based Macs to expand Apple Inc’s (NASDAQ: AAPL) PC market share. bit.ly/2YQC9HG AAPL

U.S. natural gas extraction efficiency improves, increasing production rates. bit.ly/3ei9XDS UNG

Air maintenance firms brace for a 75% sales decline this year. reut.rs/3hMvFSI

The U.S. weighs a $1 trillion infrastructure plan to spur the economy back to life. bloom.bg/3hPYcXI

Loan default rate approaches 4% on imminent energy bankruptcies. bit.ly/2YirpCD

Airports resilient despite pandemic fallout. bit.ly/3fJKGD2 JETS

Sentiment: 24.4% Bullish, 27.8% Neutral, 47.8% Bearish as of 6/20/2020. bit.ly/330VhEp

Gamma Exposure: (Trending Lower) 2,194,659,186 as of 6/20/2020. bit.ly/2UpgtRE

Dark Pool Index: (Trending Higher) 52.5% as of 6/20/2020. bit.ly/2UpgtRE

Product Analysis:

S&P 500 (ES): SPY SPX
Nasdaq 100 (NQ): QQQ NDX
Russell 2000 (RTY): IWM RUT

Gold (GC): GLD
Crude Oil (CL): USO DBO USL
Treasury Bonds (ZB): TLT

Disclaimer:

This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve, especially me.

In no way should this post be construed as investment advice.