Daily Market Update for 8/13Summary: Consumer Sentiment data released this morning was lower than during the height of the pandemic, signaling the public is exhausted from wave after wave of COVID cases. The market didn't overreact to the surprisingly low data, but caution was present with yields dropping and sectors used as defensive investments soaring.
Notes
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Friday, August 13, 2021
Facts: +0.04%, Volume higher, Closing range: 48%, Body: 4%
Good: Higher high, higher low
Bad: Very low A/D ratio, couldn't hold intraday high
Highs/Lows: Higher high, higher low
Candle: Indecisive doji star candle with thin red body
Advanced/Decline: 0.36, almost three declining stocks for every advancing stock
Indexes: SPX (+0.16%), DJI (+0.04%), RUT (-0.93%), VIX (-0.77%)
Sectors: Consumer Staples (XLP +0.83%) at Utilities (XLU +0.70%) at the top. Financials (XLF -0.75%) and Energy (XLE -1.18%) at the bottom.
Expectation: Sideways
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Market Overview
Consumer Sentiment data released this morning was lower than during the height of the pandemic, signaling the public is exhausted from wave after wave of COVID cases. The market didn't overreact to the surprisingly low data, but caution was present with yields dropping and sectors used as defensive investments soaring.
The Nasdaq closed with a slight +0.04% gain. Volume was a bit higher than the previous day. The doji star candle has a small thin body sitting in the middle of two equal-length wicks. The candle shows indecision and is often a bearish reversal in an uptrend. There were almost three declining stocks for every advancing stock.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) could still close with another set of records. The S&P 500 gained +0.16% while the Dow Jones advanced +0.04%. The Russell 2000 (RUT) declined -0.93%
The VIX volatility index declined -0.77%.
The defensive sectors topped the sector list today, with Consumer Staples (XLP +0.83%) and Utilities (XLU +0.70% leading the way. Cyclical sectors did not do well, with Financials (XLF -0.75%) and Energy (XLE -1.18%) sitting at the bottom of the sector list.
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Economic Indicators
Export Price Index data was higher than expected, while Import Price Index data was lower than expected. The big surprise was the Consumer Expectations and Consumer Sentiment data, which dropped lower than 2020 and the lowest point in a decade.
The US Dollar (DXY) declined -0.51%.
The US 30y, 10y, and 2y Treasury yields declined for the day.
The gap between long and short-term yields tightened.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices advanced for the third day.
Silver (SILVER) and Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) prices declined.
Timber (Wood) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) advanced.
Bitcoin (BTCUSD) advanced +7.40%. Ethereum (ETHUSD) advanced +9.11%. (Time of writing)
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Market Leaders
Three of the four largest mega-caps advanced today. Microsoft (MSFT) led the way with a +1.05% gain, closing at another all-time high. Alphabet (GOOGL) rose +0.39%. Amazon (AMZN) continues to barely stay above its 200d simple moving average line, declining -0.29%.
Pfizer (PFE), Nvidia (NVDA), Salesforce.com (CRM), and Microsoft led the mega-cap list today. At the bottom of the list is JP Morgan (JPM), Bank of America (BAC), Wells Fargo (WFC), and Alibaba (BABA).
The daily update growth list had more losers than gainers, but the top gainers did very well. Robinhood (HOOD), DataDog (DDOG), and DoorDash (DASH) all had greater than 3% gains. Snowflake (SNOW) was the fourth best of the day. GrowGeneration (GRWG) dropped almost 12%, moving nearly 30% lower over the last two days. Digital Turbine (APPS), Ehang Holdings (EH), and Enphase (ENPH) round out the bottom four in the list.
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Investor Sentiment
The put/call ratio dropped to 0.644. The put/call ratio (PCCE) is a contrarian indicator of overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is in the Fear range, moving toward neutral.
The NAAIM exposure index remained about the same at 97.55.
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Looking ahead
Manufacturing data from New York will be available before the market open on Monday.
Roblox (RBLX), Paysafe (PSFE), Niu Tech (NIU), and Porch Group (PRCH) are a few of the interesting earnings reports for Monday.
There are many earnings reports next week. Keep an eye out for reports from companies in your portfolio.
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Trends, Support, and Resistance
The Nasdaq moved sideways today and gave a bearish signal with a red doji star candle.
The trend from the 7/19 low points to a +0.56% gain for Monday.
The one-day trend line points to a -0.11% decline.
The five-day trend line ends with a -0.38% decline.
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Wrap-up
The Consumer Sentiment data slowed down the market rally but didn't reverse trends today. While the S&P 500 and Dow Jones set new records, the Nasdaq signaled a possible reversal. We'll have to wait until Monday to find out if the signal is confirmed. Investors got cautious heading into the weekend, dropping yields and giving a boost to the defensive sectors.
The doji style candle is possibly a bearish reversal signal in an uptrend, but the trend right now is more sideways. It's a weak signal, so the expectation for Monday is set to Sideways, and we let the market tell us what it wants to do.
Stay healthy and trade safe!
