Daily Market Update for 2/17Summary: The Ukraine crisis continues to shift and cause volatility in the market. Safe haven metals and defensive sector stocks benefited from the investor flight to safety.
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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Thursday, February 17, 2022
Facts: -2.88%, Volume higher, Closing Range: 4%, Body: 91% Red
Good: Nothing
Bad: Distribution day, closing range, advance/decline ratio
Highs/Lows: Lower high, Lower low
Candle: Mostly red body, tiny upper and lower wicks.
Advance/Decline: 0.32, three declining for every advancing stock
Indexes: SPX (-2.12%), DJI (-1.78%), RUT (-2.46%), VIX (+15.73%)
Sector List: Consumer Staples (XLP +0.77%) and Utilities (XLU +0.06%) at the top. Consumer Discretionary (XLY -2.68%) and Technology (XLK -2.99%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
The Ukraine crisis continues to shift and cause volatility in the market. Safe haven metals and defensive sector stocks benefited from the investor flight to safety.
The Nasdaq declined -by 2.88%. Volume was higher than the previous day but lower than the 50-day average volume. The candle is 91% red body with tiny upper and lower wicks. The selling was steady throughout the day, leaving the candle with a 4% closing range. There were three stocks that declined for every advancing stock.
The Nasdaq had the largest loss, weighed down by big tech. The Russell 2000 (RUT) was next, giving up -2.36% today. The S&P 500 (SPX) declined -by 2.12% and the Dow Jones Industrial Average (DJI) lost -1.78%. The VIX Volatility Index (VIX) gained +15.73%.
Only two defensive sectors gained for the day, Consumer Staples (XLP +0.77%) and Utilities (XLU +0.06%). The worst-performing sectors were Consumer Discretionary (XLY -2.68%) and Technology (XLK -2.99%).
Building Permits for January were higher than expected while Housing Starts were lower than expected. The Philadelphia Fed Manufacturing Index for February was at 16, short of the forecasted 20. Weekly Initial Jobless Claims were higher than forecast. There were 248,000 claims compared to the expected 219,000.
The US Dollar index (DXY) was nearly flat, climbing just +0.02%. US Treasury Yields all declined and the curve flatted a bit on the near-term economic worries. High Yield (HYG) Corporate Bond prices declined while Investment Grade (LQD) Corporate Bond prices advanced. Gold prices rose sharply, gaining +1.56% today. Silver gained +1.08%.
The put/call ratio (PCCE) declined to 0.846. The CNN Fear & Greed index is still in the Fear range. The NAAIM Money Manager Exposure Index dropped to 53.49 from 66.8 the previous week.
All big six mega-caps declined for the day. Tesla (TSLA) dropped the most, declining -by 5.09%. Meta (FB) lost -4.08% and dropped below Taiwan Semiconductor (TSM) in market capitalization. The big six will exchange Nvidia (NVDA) for Meta (FB) starting next week, but TSM may pass Nvidia.
Walmart (WMT) was the top mega-cap, gaining +4.01% after an earnings beat and surprisingly positive outlook. Nvidia (NVDA) held above TSM in market cap despite declining by -7.56% today and landing at the bottom of the mega-cap list.
DoorDash (DASH) soared to the top of the Daily Update Growth List, gaining +10.69% after revealing strong growth in orders and providing positive guidance. Only two stocks in the growth list gained. The rest of the list saw some huge losses. Fastly (FSLY) dropped -33.63% after earnings. Earnings beat expectations but the guidance was much lower than street expectations.
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Looking ahead
The morning will bring Existing Homes Sales data for January. FOMC Member Williams is scheduled to speak tomorrow. He is typically more dovish than members such as Bullard who is calling for aggressive interest rate hikes.
Earnings reports tomorrow include Deere & Company (DE), Campbell Soup (CPB), and DraftKings (DKNG).
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Trends, Support, and Resistance
The Nasdaq dropped below the 13,800 support/resistance area.
If the index returns to the five-day trend line, it would mean a +1.44% advance for Friday.
A return to the trend line from the 2/10 high points to a +0.51% advance for tomorrow.
The one-day trend line ends with another -1.67% decline.
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Wrap-up
Most everything hinges on the shifting status of the crisis in Ukraine. Until that is fully resolved we can continue to expect volatility. Before Russia annexed Crimea in 2014, the Nasdaq hit an all-time high and then correct about -10% during the conflict. This year, the Nasdaq already corrected -20% so will it go lower or just stay around this level until the conflict is resolved?
The expectation for tomorrow is Sideways or Lower.
Stay healthy and trade safe!
