Daily Market Update for 12/18
Trend lines drawn from the 10/30 bottom (35d), 12/14 (5d) and today 12/18 (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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Friday, December 18, 2020
How many roads must a man walk down
Facts: -0.07%, Volume higher, Closing range: 65%, Body: 32%
Good: Finished in upper half of range
Bad: Lower low, close below open, options expiration caused late day gains
Highs/Lows: Higher high, Lower low
Candle: Outside day with high closing range, long lower wick
Advance/Decline: 0.85, more declining stocks than advancing stocks
Sectors: Materials (XLB +0.45%) and Consumer Staples (XLP +0.22%) were top sectors. Real Estate (XLRE -1.73%) and Energy (XLE -1.67%) were bottom sectors.
Expectation: Sideways or Higher
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Market Overview
The Nasdaq gave us one more all-time high to finish the week, and then reversed for most of the day as the bears took over. The day ended with 10 minutes of buying, likely to cover futures and options contracts that expired today. The index ended with a -0.07% loss on higher volume, a mostly sideways move for the end of the week. The closing range of 65% was at the bottom of a 32% red body. There were more declining stocks than advancing stocks.
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Indexes and Sectors
All indexes rose to new all-time highs before selling off the rest of the day. The S&P 500 (SPX -0.35%), Dow Jones Industrial (DJI -0.41%) and Russell 2000 (RUT -0.41%) closed lower for the day.
Materials (XLB +0.45%) and Consumer Staples (XLP +0.22%) were the top sectors for the day. Utilities (XLU -0.86%) led in the morning but then sold off, a common occurrence this week. The bottom two sectors were Real Estate (XLRE -1.73%) and Energy (XLE -1.67%).
The VIX volatility index declined -1.64% but was higher most of the day.
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Market Indicators
Yields on US 30y, 10y, and 2y treasury bonds rose for the day. Spreads loosened between the 30y and 10y, while they tightened between the 10y and 2y.
Corporate bond prices rose for the day while 3-7 treasury bond prices dropped. Corporate bond yield spread tightened.
The US dollar (DXY +0.22%) advanced for the day. It is right at a support/resistance area from the first quarter of 2018.
Silver (SILVER -0.82%) and Gold (GOLD -0.21%) declined. Crude Oil (CRUDEOIL1! +1.38%) gained for the day. Timber (WOOD -0.59%) pulled back a bit. Copper (COPPER1! +1.00%) continues to rise on high demand. Aluminum (ALI1! +0.50%) is back on the rise.
The put/call ratio rose to 0.596, still a very bullish reading. 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
The biggest four mega-caps all had losses for the day. Apple (AAPL -1.59%) and Microsoft (MSFT -0.38%) traded above their 21d EMA line. Amazon (AMZN -1.06%) dropped below the 50d MA, tested the 21d EMA, but closed above them both. Alphabet (GOOGL -0.82%) is trading below its 21d EMA, but above its 50d MA. These key moving average lines act as both support and resistance for stocks.
Telsa (TSLA +5.96%) led the mega-caps for the day, although it was losing before the last 10 minutes of the trading session. Likely a large amount of options expired today as investors anticipated bet on price increases before Monday's addition to the S&P 500. Adobe (SDBE +1.53%), Master Card (MA +1.02%), and Coca-Cola (KO +0.88%) were at the top of a short list of mega-cap gainers for the day. Nike (NKE -2.29%) dropped ahead of their earnings report but is up 5.44% after hours on beating expectations. Fedex (FDX -5.71%) dropped after not providing full-year guidance in their earnings report.
Several growth stocks had big days including Crowdstrike (CRWD +9.99%), DoorDash (DASH +7.87%), AirBnb (ABNB +6.97%), and Digital Turbine (APPS +7.42%). Moderna (MRNA -2.62%) declined for the day but is up after hours on the FDA approval for distribution of their vaccine.
Bank stocks including Bank of America (BAC -0.55%) and JP Morgan Chase (JPM -0.49) are up 4.39% and 5.77% are up afterhours. The Fed completed its bank stress test and determined that banks can resume stock buy-back programs but still need to keep dividends at reduced levels.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
No major economic news is scheduled for Monday.
On Friday, congress passed a temporary bill to fund the government for two more days, but the larger funding bill including stimulus is still being debated. If the bill does not pass by Sunday, that would obviously be big premarket news that would impact Monday's open.
There are no notable earnings releases on Monday for the daily market update.
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Trends, Support and Resistance
The five-day trend and the longer trend from the 9/20 bottom point to a +0.82% gain.
The one-day trend points the other direction, a -0.81% loss.
Any stimulus news could be a catalyst in either direction. Good news is assumed to already be priced in while bad news could cause a significant pullback. Support level is still around 12,250, but looks like a new level could be building at around 12,400-12,450. Another test would confirm that level.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It was a strange end of the week where all the indexes dropped, while several growth stocks moved the opposite direction for big gains. The late afternoon lows were reversed in the last 10 mins as the quadruple witching day came to a close and the expiration of options and futures contracts caused a surge in buying.
All eyes are on the stimulus negotiations over the weekend. I'm cautiously optimistic that leaders on both sides in DC do not want their constituents going through the holidays worried about the lack of support for the unemployed, for job retention and survival of small businesses.
I'm happy to be done with a week of Dylan lyrics. The legend made great music but the lyrics are depressing, very hard to find happy messages during a week the market rallied. :)
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=-
Friday, December 18, 2020
How many roads must a man walk down
Facts: -0.07%, Volume higher, Closing range: 65%, Body: 32%
Good: Finished in upper half of range
Bad: Lower low, close below open, options expiration caused late day gains
Highs/Lows: Higher high, Lower low
Candle: Outside day with high closing range, long lower wick
Advance/Decline: 0.85, more declining stocks than advancing stocks
Sectors: Materials (XLB +0.45%) and Consumer Staples (XLP +0.22%) were top sectors. Real Estate (XLRE -1.73%) and Energy (XLE -1.67%) were bottom sectors.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The Nasdaq gave us one more all-time high to finish the week, and then reversed for most of the day as the bears took over. The day ended with 10 minutes of buying, likely to cover futures and options contracts that expired today. The index ended with a -0.07% loss on higher volume, a mostly sideways move for the end of the week. The closing range of 65% was at the bottom of a 32% red body. There were more declining stocks than advancing stocks.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
All indexes rose to new all-time highs before selling off the rest of the day. The S&P 500 (SPX -0.35%), Dow Jones Industrial (DJI -0.41%) and Russell 2000 (RUT -0.41%) closed lower for the day.
Materials (XLB +0.45%) and Consumer Staples (XLP +0.22%) were the top sectors for the day. Utilities (XLU -0.86%) led in the morning but then sold off, a common occurrence this week. The bottom two sectors were Real Estate (XLRE -1.73%) and Energy (XLE -1.67%).
The VIX volatility index declined -1.64% but was higher most of the day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Indicators
Yields on US 30y, 10y, and 2y treasury bonds rose for the day. Spreads loosened between the 30y and 10y, while they tightened between the 10y and 2y.
Corporate bond prices rose for the day while 3-7 treasury bond prices dropped. Corporate bond yield spread tightened.
The US dollar (DXY +0.22%) advanced for the day. It is right at a support/resistance area from the first quarter of 2018.
Silver (SILVER -0.82%) and Gold (GOLD -0.21%) declined. Crude Oil (CRUDEOIL1! +1.38%) gained for the day. Timber (WOOD -0.59%) pulled back a bit. Copper (COPPER1! +1.00%) continues to rise on high demand. Aluminum (ALI1! +0.50%) is back on the rise.
The put/call ratio rose to 0.596, still a very bullish reading. 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
The biggest four mega-caps all had losses for the day. Apple (AAPL -1.59%) and Microsoft (MSFT -0.38%) traded above their 21d EMA line. Amazon (AMZN -1.06%) dropped below the 50d MA, tested the 21d EMA, but closed above them both. Alphabet (GOOGL -0.82%) is trading below its 21d EMA, but above its 50d MA. These key moving average lines act as both support and resistance for stocks.
Telsa (TSLA +5.96%) led the mega-caps for the day, although it was losing before the last 10 minutes of the trading session. Likely a large amount of options expired today as investors anticipated bet on price increases before Monday's addition to the S&P 500. Adobe (SDBE +1.53%), Master Card (MA +1.02%), and Coca-Cola (KO +0.88%) were at the top of a short list of mega-cap gainers for the day. Nike (NKE -2.29%) dropped ahead of their earnings report but is up 5.44% after hours on beating expectations. Fedex (FDX -5.71%) dropped after not providing full-year guidance in their earnings report.
Several growth stocks had big days including Crowdstrike (CRWD +9.99%), DoorDash (DASH +7.87%), AirBnb (ABNB +6.97%), and Digital Turbine (APPS +7.42%). Moderna (MRNA -2.62%) declined for the day but is up after hours on the FDA approval for distribution of their vaccine.
Bank stocks including Bank of America (BAC -0.55%) and JP Morgan Chase (JPM -0.49) are up 4.39% and 5.77% are up afterhours. The Fed completed its bank stress test and determined that banks can resume stock buy-back programs but still need to keep dividends at reduced levels.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
No major economic news is scheduled for Monday.
On Friday, congress passed a temporary bill to fund the government for two more days, but the larger funding bill including stimulus is still being debated. If the bill does not pass by Sunday, that would obviously be big premarket news that would impact Monday's open.
There are no notable earnings releases on Monday for the daily market update.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The five-day trend and the longer trend from the 9/20 bottom point to a +0.82% gain.
The one-day trend points the other direction, a -0.81% loss.
Any stimulus news could be a catalyst in either direction. Good news is assumed to already be priced in while bad news could cause a significant pullback. Support level is still around 12,250, but looks like a new level could be building at around 12,400-12,450. Another test would confirm that level.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It was a strange end of the week where all the indexes dropped, while several growth stocks moved the opposite direction for big gains. The late afternoon lows were reversed in the last 10 mins as the quadruple witching day came to a close and the expiration of options and futures contracts caused a surge in buying.
All eyes are on the stimulus negotiations over the weekend. I'm cautiously optimistic that leaders on both sides in DC do not want their constituents going through the holidays worried about the lack of support for the unemployed, for job retention and survival of small businesses.
I'm happy to be done with a week of Dylan lyrics. The legend made great music but the lyrics are depressing, very hard to find happy messages during a week the market rallied. :)
Stay healthy and take care!
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