Daily Market Update for 2/11Trend lines drawn from the 10/30 bottom (71d), 2/5 (5d) and today 2/11 (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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Thursday, February 11, 2021
Facts: +0.38%, Volume higher, Closing range: 77%, Body: 14%
Good: Finished higher, after selling pressure in morning
Bad: Long lower shadow for second day showing more selling pressure
Highs/Lows: Lower high, higher low
Candle: Inside day with long lower shadow, small negative body in upper half of candle
Advance/Decline: 0.54, two declining stocks for every advancing stock
Indexes: SPX (+0.17%), DJI (-0.02%), RUT (+0.13%), VIX (-3.37%)
Sectors: Technology (XLK +1.10%) and Health (XLV +0.19%) were top. Energy (XLE -1.54%) was the bottom sector.
Expectation: Sideways
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Market Overview
The Nasdaq moved sideways with an inside day as the fight between buyers and sellers created a second day of choppiness. The morning sell-off was possibly prompted by disappointing employment data and a continued outlook from the Fed of an economy that needs support.
The index closed with a +0.38% gain on slightly higher volume than the previous day. The inside day, marked by a lower high and a higher low, saw a big dip in the morning and another dip in the afternoon before bulls took prices higher into close and ended the day with a slight gain. The action resulted in a closing range of 77% and a small 14% red body in the upper half of the candle. There were two declining stocks for every advancing stock.
The buyer-seller indecision was best represented by the doji-style candle on the Russell 2000 (RUT) where the open and close were nearly the same. The RUT ended the day with a +0.13%. The S&P 500 (SPX) gained +0.17%, while the Dow Jones Industrial (DJI) declined a slight -0.02%. The VIX volatility index dropped -3.37% despite the intraday volatility.
Technology (XLK +1.10%) and Health (XLV +0.19%) were the only sectors to outperform the broader S&P 500 index. Energy (XLE -1.54%) was the bottom sector.
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Economic Indicators
The US Dollar (DXY) has been even the past two days with -0.01% declines each day. The US 30y, 10y and 2y treasury bond yields were all higher as investors sold the bonds. High Yield Corporate Bond (HYG) prices also advanced while Investment Grade (LQD) corporate bond prices declined.
Silver (SILVER) and Gold (GOLD) both declined. Crude Oil (CRUDEOIL1!) futures finally pulled back after several days of advancing. Timber (WOOD) continued to advanced. Copper (COPPER1!) dropped while Aluminum (ALI1!) advanced.
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Investor Sentiment
The put/call ratio dropped to 0.500. 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.
The CNN Fear & Greed index is about at the mid-point between fear and greed. The NAAIM exposure index is back up to 110 as money managers are well into leverage in their portfolios.
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Market Leaders
Microsoft (MSFT) and Alphabet (GOOGL) both advanced for the day while Apple (AAPL) and Amazon (AMZN) declined. Amazon closed below its 21d EMA, a key line of support and resistance.
ASML Holding (ASML), Taiwan Semiconductor (TSM), Nvidia (NVDA) and Intel (INTC) led the mega-caps with the biggest gains. Toyota Motor (TM) gave back some of the gains from yesterday with a -1.62% gain. Exxon Mobil (XOM) was the worst performing mega-cap for the day, leading the Energy sector lower.
Fiverr (FVRR), Zynga (ZNGZ), Pinterest (PINS), Magnite (MGNI) were up more than 7% each, leading the popular growth stocks. GrowGeneration (GRWG) joined the sell-off of most marijuana related stocks with a -12.90% decline.
After hours DataDog (DDOG) and Cloudflare (NET) were down -2.76% and -7.39% after hours despite beating analyst estimates in earnings and revenue. Although beating on results, the outlook for 2021 was disappointing for investors. Walt Disney (DIS) was up after hours, surprising investors with stronger than expected subscription growth.
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Looking ahead
Consumer Expectations, Sentiment and Inflation data will be release tomorrow morning.
NTT Docomo (DMCYY) and MercadoLibre (MELI) are among several companies to release earnings before the opening bell tomorrow.
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Trends, Support and Resistance
The five-day trend line points to a +0.48% gain for Friday. That would be just below the all-time high set earlier this week.
The one-day trend is pointing to a -0.66% decline. The long-term trend line from the 10/30 bottom points to a smaller decline of -0.40%.
If there is further downside, the 21d EMA line offers an area of support and is -3.26% below Wednesday'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
Yesterday's action set expectations for a sideways move today and the expectation is still at a sideways move for tomorrow. The expectation could be broken to the upside or the downside and would indicate direction heading into next week.
After Thursday's close, the weekly chart for the Nasdaq shows as bullish. A sideways or positive move for tomorrow would both be equally as good to close the week. However, with the three day weekend it wouldn't be a huge surprise if there is a small pullback on Friday.
Stay healthy and take care!
