Daily Market Update for 12/15
Trend lines drawn from the 10/30 bottom (32d), 12/9 (5d) and today 12/15 (1d).
If you have ideas to make the daily update better, please let me know in the comments.
I do occasionally have some errors or typos and will correct them in my blog or in the comments on TradingView. I do not have an editor and do this in my free time.
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Tuesday, December 15, 2020
Hey, Mr. Tambourine Man, play a song for me
Facts: +1.25%, Volume lower, Closing range: 99%, Body: 40%
Good: HH/HL, recovered from mornings lows, closing range
Bad: Lower volume
Highs/Lows: Higher high, Higher low
Candle: Good sized body in upper half over long lower wick
Advance/Decline: 2.31, more than two advancing stocks for every declining stock
Sectors: Utilities (XLU +1.97%), Energy (XLE +1.97%) were top. Consumer Staples (XLP +0.24%) was bottom.
Expectation: Higher
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Market Overview
The Nasdaq started with a small gap up on Tuesday, dipped to a morning low and then gained, never looking back and closing near the all-time high set last week. The index closed with a +1.25% gain, a closing range of 99% and a 40% body in the upper half of a bullish candle. The morning selling by the bears was turned into afternoon buying by the bulls. Optimism for a stimulus and good news on Apple production increase for the first half of 2021 helped fuel the gains. Volume was lower than the previous day. Breadth was good with more than two advancing stocks for every declining stock.
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Indexes and Sectors
The Russell 2000 (RUT +2.40%) was back as the top performing major index with a very bullish candle body and no lower wick. The S&P 500 (SPX +1.29%) and Dow Jones Industrial (DJI +1.13%) also had gains for the day. Both the SPX and DJI candles were inside bullish days. Look for a confirmation with a higher high tomorrow.
All sectors gained for the day. Utilities (XLU +1.97%) led for most of the day. Energy (XLE +1.97%) also gained the same percentage for the day. Intraday, Real Estate (XLRE +1.75%) had the biggest gains. Consumer Staples (XLP +0.24%) and Communications (XLC +0.82%) were the bottom performers, but still had good gains.
The VIX volatility index declined -7.40%.
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Market Indicators
Yields on the US 30y, 10y and 2y treasury bonds all rose for the day with the spreads between long term and short bonds widening slightly. A signal that investors are feeling more comfortable with riskier bets.
Corporate bond yields dropped for the day while short term (3-7y) treasury bond yields rose. The tightening spread represents movement from the safer treasury bond to riskier corporate bonds as investor's optimism builds for a stimulus package bill to pass in congress.
The US dollar (DXY -0.26%) declined for the day.
Silver (SILVER +2.77%) and Gold (GOLD +1.38%) as the GOLDSILVER ratio continues to decline from a 9/23 pivot. Crude Oil (CRUDEOIL1! +1.60%) gained for the day. Timber (WOOD +2.25%) continues to climb. Copper (COPPER1! -0.08%) moved sideways for a second day. Aluminum (ALI1! -1.22%) has been going up and down the last several days.
The put/call ratio rose to 0.628, but still showing bullish optimism among investors. 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
Apple (AAPL +5.01%) took the lead among the four biggest mega-caps, after reports it would increase production for the first part of 2021. Amazon (AMZN +0.26%) and Alphabet (GOOGL +0.5%) also gained for the day. Amazon is trading below its 50d MA and Alphabet is trading below its 21d EMA. Microsoft (MSFT -0.03%) had a small loss but was able to close above the 21d EMA and 50d MA lines after dipping below them in the morning.
Other top gaining mega-caps included Walt Disney (DIS +2.74%) and Nike (NKE +2.28%). JP Morgan (JPM +1.71%) and Bank of America (BAC +1.49%) also were top mega-cap gainers. Tesla (TSLA -1.04%) pulled back a bit while Pfizer (PFE -1.28%) continues to drop back from highs (sell the news?).
Growth stock Chewy (CHWY +10.05%) took another big step up. Solar Edge (SEDG +6.97%) and NIO (NIO +6.15%) were among top growth stock performers, likely getting a boost from the confirmation of President-elect Biden and a bright future for alternative energy. Moderna (MRNA -5.06%) joins Pfizer in the sell-the-news slide from highs after vaccines are becoming available.
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Looking ahead
Retail sales data for November will be released before the market opens tomorrow. Mid-morning an update on Crude Oil Inventories will be released.
In the afternoon, FOMC will make statements about economic projections and announce any interest rate changes. No interest rate change is expected, but the remarks may have an impact, good or bad, on investor confidence.
There are no notable earnings announcements on Wednesday for the daily market update.
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Trends, Support and Resistance
The trend line from the 10/30 bottom points to a +0.90% which would bring the index back to new all-time highs. The one-day trend line points to just below that point but still an all-time high.
The five-day trend line is pointing to a -0.58% loss.
The index is well above the 12,250 support area, but it did go that distance last Wednesday after making a new all-time high. If the index passes through the 12,250 support area and the 21d EMA, then the next support area is the November support around 12,000. A drop tomorrow beyond that point should raise the alarm.
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Wrap-up
The market was mostly back to its current bullish rally characteristics today. Small-caps are leading the Russell 2000 to new all-time highs, Energy is a leading sector and there is a good amount of breadth across the market gains. The only unusual thing for today was also having Utilities and Real Estate at the top of the sector performance list. This has only been the case in recent months when the markets were not doing well.
We won't overthink it. We have a new high and a new low on the Nasdaq for the third day in a row. The trend is up. Investors are selling Treasury Bonds and buying Corporate Bonds. The US Dollar is dropping more which can help US equity markets. The gold/silver ratio is declining. World governments are continuing to roll out the vaccine. And the its looking more likely the US stimulus bill will pass through congress.
Stay healthy and take care!
If you have ideas to make the daily update better, please let me know in the comments.
I do occasionally have some errors or typos and will correct them in my blog or in the comments on TradingView. I do not have an editor and do this in my free time.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Tuesday, December 15, 2020
Hey, Mr. Tambourine Man, play a song for me
Facts: +1.25%, Volume lower, Closing range: 99%, Body: 40%
Good: HH/HL, recovered from mornings lows, closing range
Bad: Lower volume
Highs/Lows: Higher high, Higher low
Candle: Good sized body in upper half over long lower wick
Advance/Decline: 2.31, more than two advancing stocks for every declining stock
Sectors: Utilities (XLU +1.97%), Energy (XLE +1.97%) were top. Consumer Staples (XLP +0.24%) was bottom.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The Nasdaq started with a small gap up on Tuesday, dipped to a morning low and then gained, never looking back and closing near the all-time high set last week. The index closed with a +1.25% gain, a closing range of 99% and a 40% body in the upper half of a bullish candle. The morning selling by the bears was turned into afternoon buying by the bulls. Optimism for a stimulus and good news on Apple production increase for the first half of 2021 helped fuel the gains. Volume was lower than the previous day. Breadth was good with more than two advancing stocks for every declining stock.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
The Russell 2000 (RUT +2.40%) was back as the top performing major index with a very bullish candle body and no lower wick. The S&P 500 (SPX +1.29%) and Dow Jones Industrial (DJI +1.13%) also had gains for the day. Both the SPX and DJI candles were inside bullish days. Look for a confirmation with a higher high tomorrow.
All sectors gained for the day. Utilities (XLU +1.97%) led for most of the day. Energy (XLE +1.97%) also gained the same percentage for the day. Intraday, Real Estate (XLRE +1.75%) had the biggest gains. Consumer Staples (XLP +0.24%) and Communications (XLC +0.82%) were the bottom performers, but still had good gains.
The VIX volatility index declined -7.40%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Indicators
Yields on the US 30y, 10y and 2y treasury bonds all rose for the day with the spreads between long term and short bonds widening slightly. A signal that investors are feeling more comfortable with riskier bets.
Corporate bond yields dropped for the day while short term (3-7y) treasury bond yields rose. The tightening spread represents movement from the safer treasury bond to riskier corporate bonds as investor's optimism builds for a stimulus package bill to pass in congress.
The US dollar (DXY -0.26%) declined for the day.
Silver (SILVER +2.77%) and Gold (GOLD +1.38%) as the GOLDSILVER ratio continues to decline from a 9/23 pivot. Crude Oil (CRUDEOIL1! +1.60%) gained for the day. Timber (WOOD +2.25%) continues to climb. Copper (COPPER1! -0.08%) moved sideways for a second day. Aluminum (ALI1! -1.22%) has been going up and down the last several days.
The put/call ratio rose to 0.628, but still showing bullish optimism among investors. 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
Apple (AAPL +5.01%) took the lead among the four biggest mega-caps, after reports it would increase production for the first part of 2021. Amazon (AMZN +0.26%) and Alphabet (GOOGL +0.5%) also gained for the day. Amazon is trading below its 50d MA and Alphabet is trading below its 21d EMA. Microsoft (MSFT -0.03%) had a small loss but was able to close above the 21d EMA and 50d MA lines after dipping below them in the morning.
Other top gaining mega-caps included Walt Disney (DIS +2.74%) and Nike (NKE +2.28%). JP Morgan (JPM +1.71%) and Bank of America (BAC +1.49%) also were top mega-cap gainers. Tesla (TSLA -1.04%) pulled back a bit while Pfizer (PFE -1.28%) continues to drop back from highs (sell the news?).
Growth stock Chewy (CHWY +10.05%) took another big step up. Solar Edge (SEDG +6.97%) and NIO (NIO +6.15%) were among top growth stock performers, likely getting a boost from the confirmation of President-elect Biden and a bright future for alternative energy. Moderna (MRNA -5.06%) joins Pfizer in the sell-the-news slide from highs after vaccines are becoming available.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Retail sales data for November will be released before the market opens tomorrow. Mid-morning an update on Crude Oil Inventories will be released.
In the afternoon, FOMC will make statements about economic projections and announce any interest rate changes. No interest rate change is expected, but the remarks may have an impact, good or bad, on investor confidence.
There are no notable earnings announcements on Wednesday for the daily market update.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The trend line from the 10/30 bottom points to a +0.90% which would bring the index back to new all-time highs. The one-day trend line points to just below that point but still an all-time high.
The five-day trend line is pointing to a -0.58% loss.
The index is well above the 12,250 support area, but it did go that distance last Wednesday after making a new all-time high. If the index passes through the 12,250 support area and the 21d EMA, then the next support area is the November support around 12,000. A drop tomorrow beyond that point should raise the alarm.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
The market was mostly back to its current bullish rally characteristics today. Small-caps are leading the Russell 2000 to new all-time highs, Energy is a leading sector and there is a good amount of breadth across the market gains. The only unusual thing for today was also having Utilities and Real Estate at the top of the sector performance list. This has only been the case in recent months when the markets were not doing well.
We won't overthink it. We have a new high and a new low on the Nasdaq for the third day in a row. The trend is up. Investors are selling Treasury Bonds and buying Corporate Bonds. The US Dollar is dropping more which can help US equity markets. The gold/silver ratio is declining. World governments are continuing to roll out the vaccine. And the its looking more likely the US stimulus bill will pass through congress.
Stay healthy and take care!
Website: drewby.com
Twitter: twitter.com/drewrobbins
All ideas are for information purposes only. I may or may not invest in the stocks discussed. Before investing in any stock, do your research and trade using your rules.
Twitter: twitter.com/drewrobbins
All ideas are for information purposes only. I may or may not invest in the stocks discussed. Before investing in any stock, do your research and trade using your rules.
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Disclaimer
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