Daily Market Update for 1/13
Updated
Trend lines drawn from the 10/30 bottom (51d), 1/7 (5d) and today 1/13 (1d).
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.
I'm working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.
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Wednesday, January 13, 2021
Facts: +0.43%, Volume lower, Closing range: 65%, Body: 34%
Good: Never revisited morning low, close in upper half of candle
Bad: Nothing, just not exciting
Highs/Lows: Higher high, Higher low
Candle: Medium to small body with longer upper wick than lower wick
Advance/Decline: 0.85, more declining stocks than advancing stocks
Indexes: SPX (+0.04%), DJI (+0.19%), RUT (+1.77%), VIX (-3.11%)
Sectors: Utilities (XLU +1.95%) and Real Estate (XLRE +1.37%) were top. Industrials (XLI -0.86%) and Materials (XLB -1.02%) were bottom.
Expectation: Sideways
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Market Overview
It was not a very exciting session for the Nasdaq today, but there were certainly pockets of excitement in parts of the market. The brief climb in the morning for Nasdaq turned to a sideways movement for the rest of the day. The good news is that the index never went back down towards the morning low. However, the gains for mega-caps and some growth stocks were not broadly shared across the market, keeping the index from closing closer to the intraday highs.
The index closed with a +0.43% gain on lower volume. The closing range was 65% with a green body covering 34% of the candle. More stocks declined than advanced on the Nasdaq. Another way to see the influence of the mega caps today is to look at the cap weighted QQQ (+0.68%) vs the equal weight QQQE (-0.01%).
The S&P 500 (SPX) gained +0.23% while the Dow Jones Industrial lost (DJI) -0.10%. The Russell 2000 (RUT) lost -0.75% as money rotated into larger cap stocks today.
Utilities (XLU +1.95%) and Real Estate (XLRE +1.37%) were the top sectors. Often these sectors are at the top when investors get a bit nervous, but don't want to exit the equities market. The worst performing sectors were Utilities (XLU +1.95%) and Real Estate (XLRE +1.37%).
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Economic Indicators
The US Dollar (DXY) rose for the day. Likewise, US Treasury 30y (US30Y), 10y (US10Y) bond yields continued to pull back from recent gains. Corporate Bonds (HYG) prices gained for a second day.
Silver (SILVER) and Gold (GOLD) both dropped today, but have seemed to hit a support area after the declines last week. Crude Oil (CRUDEOIL1!) pulled back just a bit. Timber (WOOD), Copper (COPPER1!) and Aluminum (ALI1!) all declined for the day.
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Investor Sentiment
The put/call ratio rose considerably to 0.738, a move toward bearish sentiment. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four of the biggest mega-caps gained for the day. Microsoft (MSFT), Amazon (AMZN) and Alphabet (GOOGL) area all trading at or below their 50d MA. Apple (AAPL) is trading above both the key moving averages that I track which are 21d EMA and 50d MA. In recent memory, having the mega-caps participate in a sustained rally was critical. Bulls will be looking for these four to continue gains.
Intel (INTC) topped the mega-cap high performers after announcing a new CEO. Alibaba (BABA), PayPal (PYPL) and Netflix (NFLX) round out the top four performing mega-caps for the day. The majority of mega-caps gained for the day.
Many mid-cap Growth stocks did well. Peloton (PTON) gained +7.29% on analyst upgrades. Chewy (CHWY) gained +7.98%. Chewy co-founder Ryan Cohen was among three activist investors added to Gamestop (GME) which gained 57.39% in a massive short-squeeze fueled by the news.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Before market opens on Thursday, Export/Import price index data for December will be released. Initial Jobless Claims will also be announced with the expectation that it's slightly lower than previous weeks.
In the early afternoon, Jerome Powell will speak. His comments can impact Treasury Bonds and the value of the US Dollar. In turn, those impacts will be translated into equity market moves.
Taiwan Semiconductor (TSM), Delta Air Lines (DAL), Blackrock (BLK) will announce earnings before market opens. All three will be initial looks into performance of influential stocks in their respective industry groups.
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Trends, Support and Resistance
The long trend line from the 10/30 bottom point to a +0.89% gain.
The five day trend line points to a +0.09% gain, while the one-day trend is in-between the other two pointing to a +0.60% gain.
On the downside, 13,000 seems to be holding up well for the index. The 21d EMA is nearly 2.5% below the index which should be an area of support if there's a further downside move. The index also held the 12,550 area recently. If it passes that area, the next support area is 12,250.
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Wrap-up
A bit of rotation and a bit of nervousness was mixed into today's session. The movement back into mega-caps and mid-cap growth stocks was apparent. But nervousness showed itself with Utilities and Real Estate topping the sector list. Corporate bonds were bought on confidence while Treasury bonds were bought on caution. The Put/Call ratio rose above 0.700 for the first time since early December.
Some caution can be constructive for building a base of support in the market. It does not signal a need to be overly defensive, but certainly offers a chance to double check your plan for multiple possibilities as we head into the last two days of the trading week.
Expect some more caution heading into the three-day weekend before inauguration day.
Stay healthy and take care!
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.
I'm working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wednesday, January 13, 2021
Facts: +0.43%, Volume lower, Closing range: 65%, Body: 34%
Good: Never revisited morning low, close in upper half of candle
Bad: Nothing, just not exciting
Highs/Lows: Higher high, Higher low
Candle: Medium to small body with longer upper wick than lower wick
Advance/Decline: 0.85, more declining stocks than advancing stocks
Indexes: SPX (+0.04%), DJI (+0.19%), RUT (+1.77%), VIX (-3.11%)
Sectors: Utilities (XLU +1.95%) and Real Estate (XLRE +1.37%) were top. Industrials (XLI -0.86%) and Materials (XLB -1.02%) were bottom.
Expectation: Sideways
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
It was not a very exciting session for the Nasdaq today, but there were certainly pockets of excitement in parts of the market. The brief climb in the morning for Nasdaq turned to a sideways movement for the rest of the day. The good news is that the index never went back down towards the morning low. However, the gains for mega-caps and some growth stocks were not broadly shared across the market, keeping the index from closing closer to the intraday highs.
The index closed with a +0.43% gain on lower volume. The closing range was 65% with a green body covering 34% of the candle. More stocks declined than advanced on the Nasdaq. Another way to see the influence of the mega caps today is to look at the cap weighted QQQ (+0.68%) vs the equal weight QQQE (-0.01%).
The S&P 500 (SPX) gained +0.23% while the Dow Jones Industrial lost (DJI) -0.10%. The Russell 2000 (RUT) lost -0.75% as money rotated into larger cap stocks today.
Utilities (XLU +1.95%) and Real Estate (XLRE +1.37%) were the top sectors. Often these sectors are at the top when investors get a bit nervous, but don't want to exit the equities market. The worst performing sectors were Utilities (XLU +1.95%) and Real Estate (XLRE +1.37%).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) rose for the day. Likewise, US Treasury 30y (US30Y), 10y (US10Y) bond yields continued to pull back from recent gains. Corporate Bonds (HYG) prices gained for a second day.
Silver (SILVER) and Gold (GOLD) both dropped today, but have seemed to hit a support area after the declines last week. Crude Oil (CRUDEOIL1!) pulled back just a bit. Timber (WOOD), Copper (COPPER1!) and Aluminum (ALI1!) all declined for the day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose considerably to 0.738, a move toward bearish sentiment. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four of the biggest mega-caps gained for the day. Microsoft (MSFT), Amazon (AMZN) and Alphabet (GOOGL) area all trading at or below their 50d MA. Apple (AAPL) is trading above both the key moving averages that I track which are 21d EMA and 50d MA. In recent memory, having the mega-caps participate in a sustained rally was critical. Bulls will be looking for these four to continue gains.
Intel (INTC) topped the mega-cap high performers after announcing a new CEO. Alibaba (BABA), PayPal (PYPL) and Netflix (NFLX) round out the top four performing mega-caps for the day. The majority of mega-caps gained for the day.
Many mid-cap Growth stocks did well. Peloton (PTON) gained +7.29% on analyst upgrades. Chewy (CHWY) gained +7.98%. Chewy co-founder Ryan Cohen was among three activist investors added to Gamestop (GME) which gained 57.39% in a massive short-squeeze fueled by the news.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Before market opens on Thursday, Export/Import price index data for December will be released. Initial Jobless Claims will also be announced with the expectation that it's slightly lower than previous weeks.
In the early afternoon, Jerome Powell will speak. His comments can impact Treasury Bonds and the value of the US Dollar. In turn, those impacts will be translated into equity market moves.
Taiwan Semiconductor (TSM), Delta Air Lines (DAL), Blackrock (BLK) will announce earnings before market opens. All three will be initial looks into performance of influential stocks in their respective industry groups.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The long trend line from the 10/30 bottom point to a +0.89% gain.
The five day trend line points to a +0.09% gain, while the one-day trend is in-between the other two pointing to a +0.60% gain.
On the downside, 13,000 seems to be holding up well for the index. The 21d EMA is nearly 2.5% below the index which should be an area of support if there's a further downside move. The index also held the 12,550 area recently. If it passes that area, the next support area is 12,250.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
A bit of rotation and a bit of nervousness was mixed into today's session. The movement back into mega-caps and mid-cap growth stocks was apparent. But nervousness showed itself with Utilities and Real Estate topping the sector list. Corporate bonds were bought on confidence while Treasury bonds were bought on caution. The Put/Call ratio rose above 0.700 for the first time since early December.
Some caution can be constructive for building a base of support in the market. It does not signal a need to be overly defensive, but certainly offers a chance to double check your plan for multiple possibilities as we head into the last two days of the trading week.
Expect some more caution heading into the three-day weekend before inauguration day.
Stay healthy and take care!
Note
The indexes are listed correctly in the chart, but incorrectly in the text: Indexes: SPX (+0.23%), DJI (-0.10%), RUT (-0.75%), VIX (-4.80%)
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