Daily Market Update for 2/8
Trend lines drawn from the 10/30 bottom (68d), 2/2 (5d) and today 2/8 (1d).
Ideas always welcome in the comments. Errors will be amended as comments on TradingView 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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Monday, February 8, 2021
Facts: +0.95%, Volume higher, Closing range: 100%, Body: 54%
Good: New all-time high, no upper wick, bullish into close
Bad: Small gap to fill
Highs/Lows: Higher high, higher low
Candle: Upper half of candle is body, lower wick from morning dip but did not fill gap
Advance/Decline: 3.36, more than three advancing stocks for every declining stock
Indexes: SPX (+0.74%), DJI (+0.76%), RUT (+2.53%), VIX (+1.77%)
Sectors: Energy (XLE +4.18%) and Financials (XLF +1.29%) were top. Utilities (XLU -0.77%) was the only losing sector.
Expectation: Higher
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Market Overview
There was a lot to be excited about in the market today. The Nasdaq gapped up at open, as investors had high optimism for a stimulus bill to pass through congress. Democrats added new details of more than 50b to go toward transportation industries. That not only sent airline stocks soaring, but also pumped up the Energy sector. When the Energy sector leads, in most cases, the whole market follows.
The Nasdaq closed with a +0.95% gain on a big spike in volume. There was a morning dip that nearly closed a gap-up at open, but bulls took over early and led the afternoon to a new all-time high and 100% closing range. The 54% green body in the upper half of the candle was the result of a rally into close. More than three stocks advanced for every stock that declined.
The S&P 500 (SPX) gained +0.74%, while the Dow Jones Industrial (DJI) advanced +0.76%. The small-caps were the big winners gain with the Russell 2000 (RUT) gaining +2.53% for the day. The Russell 2000 produced its third Marubozu White candle in a row. Those candles have no wicks, the open is the low and the close is the high.
The VIX volatility index rose +1.77%.
Energy (XLE +4.18%) was the top sector of the day, rallying off news of stimulus for the transportation industry. Financials (XLF +1.29%) ended the day in second. Materials (XLB +0.83) was in second most of the day, but faded to fifth in the afternoon rally. Utilities (XLU -0.77%) was the only losing sector.
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Economic Indicators
The US Dollar (DXY) declined -0.10% for the day. The US 30y treasury bond yields declined for the day while 10y treasury bond yields made a slight advance. The US 2y yields rose. High Yield Corporate Bond (HYG) prices continue to rise and are at their highest level since February.
Silver (SILVER) and Gold (GOLD) both advanced for the day. Crude Oil (CRUDEOIL1!) futures continued to climb higher. Timber (WOOD), Copper (COPPER1!), and Aluminum (ALI1!) all advanced. Bullish.
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Investor Sentiment
The put/call ratio declined to 0.546, continuing toward the overly bullish side. 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.
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Market Leaders
It was not a particularly exciting day for the four biggest mega-caps. Microsoft (MSFT) and Apple (APPL) both advanced +0.11% for the day. Alphabet (GOOGL) declined -0.21% while Amazon (AMZN) lost -0.87%. We're still waiting for Amazon to breakout of the pattern after smashing earnings and revenue estimates in last week's quarterly update.
NVIDIA (NVDA) was the winning mega-cap of the day with a +6.24% gain. Walt Disney (DIS +4.88%) and PayPal (PYPL +4.72%) also topped the mega-cap list. Exxon Mobil (XOM +4.30%) benefited from the transportation stimulus news that boosted the Energy sector.
FUTU Holdings (FUTU) made another big advanced with a +10.34% gain. Square (SQ) gained +8.15%. Mohawk Group (MWK) gained +20.48%. Many popular growth stocks had big advances for the day. Chegg (CHGG) is up 4% after hours upon beating earnings expectations.
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Looking ahead
Short-term energy outlook data will be released before market open tomorrow. Just after open the JOLTs Job Openings data for December will be released. FOMC Member Bullard will make comments in at noon. Weekly Crude Oil stock will be released after market close.
Cisco (CSCO) is the biggest company to release earnings tomorrow after market close. Twitter (TWTR) and Enphase (ENPH) will also announce earnings tomorrow. There are a large amount of earnings releases this week, so check your portfolio for earnings events so you are not surprised.
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Trends, Support and Resistance
The five-day trend line points to a +0.43% increase for Tuesday. There may be some resistance at the round number 14,000. However, more progress with the stimulus bill should get the index past that line.
The one-day trend line is pointing to a -0.31% loss. The regression trend line is nearly horizontal, offset by the morning gap and late afternoon rally.
The long-term trend line from the 10/30 bottom points to a small -1.03% pullback.
If there is further downside, the 21d EMA line offers an area of support and is -4% below Friday's close. The 13,000 level also seems to be an area of support. The index held the 12,550 area recently. If it passes that area, the next support area is 12,250.
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Wrap-up
Investors opened up the week with optimism and bullish action. The high-hopes for stimulus, with the addition of transportation industry support helped. In addition, FOMC Member Mester reinforced the message that monetary policy would continue until we are sure the economy is showing strong recovery.
Bullish optimism is high, which can be a sign of a pullback. Investors seem optimistic, but with one foot out the door. The expectation is the market would move higher tomorrow. However, caution is always necessary as a number of news catalyst could send the index in the other direction.
Stay healthy and take care!
Ideas always welcome in the comments. Errors will be amended as comments on TradingView 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=-
Monday, February 8, 2021
Facts: +0.95%, Volume higher, Closing range: 100%, Body: 54%
Good: New all-time high, no upper wick, bullish into close
Bad: Small gap to fill
Highs/Lows: Higher high, higher low
Candle: Upper half of candle is body, lower wick from morning dip but did not fill gap
Advance/Decline: 3.36, more than three advancing stocks for every declining stock
Indexes: SPX (+0.74%), DJI (+0.76%), RUT (+2.53%), VIX (+1.77%)
Sectors: Energy (XLE +4.18%) and Financials (XLF +1.29%) were top. Utilities (XLU -0.77%) was the only losing sector.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
There was a lot to be excited about in the market today. The Nasdaq gapped up at open, as investors had high optimism for a stimulus bill to pass through congress. Democrats added new details of more than 50b to go toward transportation industries. That not only sent airline stocks soaring, but also pumped up the Energy sector. When the Energy sector leads, in most cases, the whole market follows.
The Nasdaq closed with a +0.95% gain on a big spike in volume. There was a morning dip that nearly closed a gap-up at open, but bulls took over early and led the afternoon to a new all-time high and 100% closing range. The 54% green body in the upper half of the candle was the result of a rally into close. More than three stocks advanced for every stock that declined.
The S&P 500 (SPX) gained +0.74%, while the Dow Jones Industrial (DJI) advanced +0.76%. The small-caps were the big winners gain with the Russell 2000 (RUT) gaining +2.53% for the day. The Russell 2000 produced its third Marubozu White candle in a row. Those candles have no wicks, the open is the low and the close is the high.
The VIX volatility index rose +1.77%.
Energy (XLE +4.18%) was the top sector of the day, rallying off news of stimulus for the transportation industry. Financials (XLF +1.29%) ended the day in second. Materials (XLB +0.83) was in second most of the day, but faded to fifth in the afternoon rally. Utilities (XLU -0.77%) was the only losing sector.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) declined -0.10% for the day. The US 30y treasury bond yields declined for the day while 10y treasury bond yields made a slight advance. The US 2y yields rose. High Yield Corporate Bond (HYG) prices continue to rise and are at their highest level since February.
Silver (SILVER) and Gold (GOLD) both advanced for the day. Crude Oil (CRUDEOIL1!) futures continued to climb higher. Timber (WOOD), Copper (COPPER1!), and Aluminum (ALI1!) all advanced. Bullish.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio declined to 0.546, continuing toward the overly bullish side. 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
It was not a particularly exciting day for the four biggest mega-caps. Microsoft (MSFT) and Apple (APPL) both advanced +0.11% for the day. Alphabet (GOOGL) declined -0.21% while Amazon (AMZN) lost -0.87%. We're still waiting for Amazon to breakout of the pattern after smashing earnings and revenue estimates in last week's quarterly update.
NVIDIA (NVDA) was the winning mega-cap of the day with a +6.24% gain. Walt Disney (DIS +4.88%) and PayPal (PYPL +4.72%) also topped the mega-cap list. Exxon Mobil (XOM +4.30%) benefited from the transportation stimulus news that boosted the Energy sector.
FUTU Holdings (FUTU) made another big advanced with a +10.34% gain. Square (SQ) gained +8.15%. Mohawk Group (MWK) gained +20.48%. Many popular growth stocks had big advances for the day. Chegg (CHGG) is up 4% after hours upon beating earnings expectations.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Short-term energy outlook data will be released before market open tomorrow. Just after open the JOLTs Job Openings data for December will be released. FOMC Member Bullard will make comments in at noon. Weekly Crude Oil stock will be released after market close.
Cisco (CSCO) is the biggest company to release earnings tomorrow after market close. Twitter (TWTR) and Enphase (ENPH) will also announce earnings tomorrow. There are a large amount of earnings releases this week, so check your portfolio for earnings events so you are not surprised.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The five-day trend line points to a +0.43% increase for Tuesday. There may be some resistance at the round number 14,000. However, more progress with the stimulus bill should get the index past that line.
The one-day trend line is pointing to a -0.31% loss. The regression trend line is nearly horizontal, offset by the morning gap and late afternoon rally.
The long-term trend line from the 10/30 bottom points to a small -1.03% pullback.
If there is further downside, the 21d EMA line offers an area of support and is -4% below Friday's close. The 13,000 level also seems to be an area of support. The index 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
Investors opened up the week with optimism and bullish action. The high-hopes for stimulus, with the addition of transportation industry support helped. In addition, FOMC Member Mester reinforced the message that monetary policy would continue until we are sure the economy is showing strong recovery.
Bullish optimism is high, which can be a sign of a pullback. Investors seem optimistic, but with one foot out the door. The expectation is the market would move higher tomorrow. However, caution is always necessary as a number of news catalyst could send the index in the other direction.
Stay healthy and take care!
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