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Daily Market Update for 9/28Summary: Stocks fell on Tuesday among fears that the US government could shut down and default on its debt if there is no agreement in Congress to raise the debt ceiling this week. Treasury yields rose while interest-rate sensitive Technology stocks led markets lower.
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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Tuesday, September 28, 2021
Facts: -2.83%, Volume higher, Closing Range: 2%, Body: 87% Red
Good: Support above 14,500
Bad: Gap down at open, sell-off thru morning, close below key moving averages
Highs/Lows: Lower high, Lower low
Candle: Mostly red body, small upper wick, smaller lower wick
Advance/Decline: 0.17, almost six declining stocks for every advancing stock
Indexes: SPX (-2.04%), DJI (-1.63%), RUT (-2.25%), VIX (+23.93%)
Sector List: Energy (XLE +0.34%) and Real Estate (XLRE -0.60%) at the top. Communications (XLC -2.44%) and Technology (XLK -2.96%) at the bottom.
Expectation: Lower
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Market Overview
Stocks fell on Tuesday among fears that the US government could shut down and default on its debt if there is no agreement in Congress to raise the debt ceiling this week. Treasury yields rose while interest-rate sensitive Technology stocks led markets lower.
The tech-heavy Nasdaq declined -2.83% for the day. Volume was higher than the previous day. The candle is 87% red body with small upper and lower wicks, and the closing range is 2%. There were nearly six declining stocks for every advancing stock.
The Russell 2000 (RUT) declined -2.25%. The S&P 500 (SPX) fell -2.04%. The Dow Jones Industrial Average (DJI) lost -1.63%. The VIX Volatility Index soared +23.93%.
Energy (XLE +0.34%) was the only sector to gain for the day. Real Estate (XLRE -0.60%) was the next best sector but declined more than a half percent. The worst two sectors for the day were Communications (XLC -2.44%) and Technology (XLK -2.96%).
Consumer Sentiment released in the morning came in lower than forecast. Jerome Powell and Janet Yellen warned Congress that an economic crisis would occur if politicians did not agree to raise the debt ceiling.
The US Dollar index (DXY) rose to its highest in 2021 with a +0.34% gain today. The US 2y Treasury Yield rose to its highest point since March 2020, while the 30y and 10y yields reached their highest level in three months. High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices dropped sharply.
Gold declined as the US dollar strengthened. Crude Oil Futures continue to rise. Timber fell significantly for the day. Aluminum Futures reached back to record highs.
The put/call ratio (PCCE) rose to 0.836. the CNN Fear & Greed index moved back toward Extreme Fear but remained in the Fear range.
The largest four mega-caps led the market lower, with all four closing below their 21d EMA and 50d MA lines in a clear breakdown of support. Only two mega-caps, Alibaba (BABA) and Exxon Mobil (XOM), gained on the day. Nvidia (NVDA) incurred the most significant loss with a -4.44% decline. Technology and Communications stocks dominated the bottom of the mega-cap list.
Alibaba was also the only gainer in the daily update growth list. Cloudflare (NET) was the biggest loser in the list, with a -7.92% decline.
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Looking ahead
Pending Home Sales and Crude Oil Inventories become available after the market opens. The more important news will be any progress in Washington toward raising the debt ceiling.
Jabil (JBL) releases earnings before the market opens.
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Trends, Support, and Resistance
The Nasdaq dipped well below its 21d EMA and 50d MA before getting support above the 14,500 area.
The one-day trend line points to another -0.61% decline for tomorrow.
A return to the five-day trend line ends with a +1.05% advance.
Getting back to the trend line from the 9/20 low would result in a +1.98% gain on Wednesday.
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Wrap-up
When we approached the Fed's tapering decision last week, I thought we might see higher yields and a 2-3% or worse decline following the news. Instead, it's taken the fear of a government default on debt to scare investors out of stocks and bonds finally.
What can we expect from here? As with all politics, we can expect a lot of drama and a long, drawn-out decision. Unless surprise progress is made, fears will only grow as we approach Janet Yellen's estimate of October 18th as the day the government will run out of funding. Yields will continue to rise as investors demand higher returns for higher risk as the government heads toward possible default. Technology and Growth stocks will continue to head lower.
The expectation for tomorrow is lower.
Stay healthy and trade safe!
Daily Market Update for 9/27Summary: Despite gains in the broader market, the technology sector weighed down the Nasdaq as Treasury yields increased. Core Durable Goods orders exceeded pre-pandemic levels and showed high demand for transportation items such as airplanes.
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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Monday, September 27, 2021
Facts: -0.52%, Volume higher, Closing Range: 76%, Body: 11% Green
Good: Rebound off the intraday low at the 50d MA
Bad: Close below the 21d EMA, decline on higher volume
Highs/Lows: Lower high, Lower low
Candle: Thin green body in upper half of the candle
Advance/Decline: 1.26, more advancing than declining stocks
Indexes: SPX (-0.28%), DJI (+0.21%), RUT (+1.46%), VIX (+5.69%)
Sector List: Energy (XLE +3.56%) and Financials (XLF +1.36%) at the top. Health (XLV -1.42%) and Real Estate (XLRE -1.66%) at the bottom.
Expectation: Sideways
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Market Overview
Despite gains in the broader market, the technology sector weighed down the Nasdaq as Treasury yields increased. Core Durable Goods orders exceeded pre-pandemic levels and showed high demand for transportation items such as airplanes.
The Nasdaq closed the day with a -0.52% decline after dipping more than one percent in the morning. Volume was higher than the previous day. After the morning dip, the index trended up for the rest of the day before pulling back from the late-afternoon intraday high. The thin green body in the upper half of the candle shows an indecisive day for the Nasdaq while the broader stock market rose. There were more advancing stocks than declining stocks.
The Russell 2000 (RUT) rallied in the morning as investors rotated into small caps. The index rose +1.46% for the day. The Dow Jones Industrial Average (DJI) also gained for the day, advancing +0.21%. The S&P 500 (SPX) declined -0.28%, weighed down by Technology mega-caps.
Cyclical sectors dominated the top of the sector list, with Energy (XLE +3.56%) and Financials (XLF +1.36%) leading the way. Consumer Discretionary (XLY +0.54%) was the only non-cyclical sector to gain for the day. Defensive sectors were at the bottom of the list, with Health (XLV -1.42%) and Real Estate (XLRE -1.66%) having the most significant losses.
Durable Goods Orders rose 1.8% in August compared to the forecast of 0.7%. However, Core Durable Goods Orders, which excludes transportation items, rose only 0.2% compared to a forecast of 0.5%. Demand for transportation items rebounded to exceed pre-pandemic levels.
The US Dollar index (DXY) rose by +0.14%. Treasury Yields on both long-term and short-term notes rose while the gap tightened. Both High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices fell. Crude Oil Futures headed higher for the day, while aluminum futures fell back from record highs.
The put/call ratio declined to 0.518, a very bullish level. The CNN Fear & Greed index is in the center of the Fear range.
All four largest mega-caps declined for the day, moving back below critical moving average lines. Of the four, Microsoft (MSFT) had the most significant decline, losing -1.73%. Alibaba (BABA) was at the top of the mega-cap list with a +3.52% gain, followed by Energy and Financial mega-caps that gained over 2%. At the bottom of the list was Adobe, with a -3.06% decline.
The daily update growth list had mixed results. The best performer for the day was GrowGeneration (GRWG), which gained +4.77%. CloudFlare (NET) was the biggest loser, declining -5.79%.
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Looking ahead
Consumer Confidence data will be in the spotlight tomorrow after the market opens. Other data released in the morning includes Goods Trade Balance and Retail Inventories. The API Weekly Crude Oil Stock numbers will be available after the market closes.
The Fed's Jerome Powell will update Congress on the economic recovery and Fed monetary policy.
There are no relevant earnings reports for the daily update for Tuesday.
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Trends, Support, and Resistance
The Nasdaq tested the 50d MA and closed below the 21d EMA.
After the morning dip, the index trended up for the rest of the day. If the one-day trend were to continue, it would lead to a +0.58% gain for tomorrow.
The five-day trend line and the trend line from the 9/20 low point to a +0.97% gain for Tuesday.
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Wrap-up
Higher yields and a strengthening USD are both going to place downward pressure on Technology stocks. The economic context that's creating the rising yields and dollar is supportive to small-caps and cyclicals.
Based on the indecisive candle with a small green body, the expectation for tomorrow is Sideways.
Stay healthy and trade safe!
Daily Market Update for 9/24Summary: Markets rallied for a third day on an improved economic outlook, bolstered by the Fed's Jerome Powell, who stated the economic decline and rally back to health is without modern precedent.
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, September 24, 2021
Facts: -0.03%, Volume lower, Closing Range: 84%, Body: 71% Green
Good: Close above 21d EMA, support in the ~15,000 area
Bad: Close lower, lower high
Highs/Lows: Lower high, Higher low
Candle: Inside day, mostly green body
Advance/Decline: 0.55, two declining stocks for every advancing stock
Indexes: SPX (+0.15%), DJI (+0.10%), RUT (-0.49%), VIX (-4.72%)
Sector List: Communications (XLC +0.82%) and Energy (XLE +0.75%) at the top. Health (XLV -0.41%) and Real Estate (XLRE -1.14%) at the bottom.
Expectation: Sideways or Higher
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Market Overview
Markets rallied for a third day on an improved economic outlook, bolstered by the Fed's Jerome Powell, who stated the economic decline and rally back to health is without modern precedent.
The Nasdaq closed slightly lower and on lower volume than the previous day. Although a lower close, the day was dominated by buyers after a dip at open. The closing range of 84% shows buyers took the day. However, there were two declining stocks for every advancing stock, indicating investors were very particular on where to place investments.
The S&P 500 (SPX) gained +0.15% for the day while the Dow Jones Industrial Average (DJI) advanced +0.10%. The Russell 2000 (RUT) declined -0.49%, pulling back from two days of significant gains.
Communications (XLC +0.82%) and Energy (XLE +0.75%) were the top sectors for the day. Defensive sectors were at the bottom of the list again, with Health (XLV -0.41%) and Real Estate (XLRE -1.14%) having the worst losses.
New Home Sales exceed forecasts. The reported 740,000 sales compared to the estimates of 714,000. Jerome Powell spoke in the morning on the economy, and he highlighted how businesses are working around the challenges of the pandemic.
US Treasury Yields rose for a second day. The gap between long and short-term notes expanded. The US Dollar index gained +0.21%. High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices declined to the day. Crude Oil prices continued to march higher.
The Put/Call ratio (PCCE) rose to 0.696. The CNN Fear & Greed Index remains in the Fear area, moving back toward Neutral. The NAAIM money manager exposure index declined to 77.7 from 87.02 the previous week.
Three of the four largest mega-caps are trading above the 21d EMA and 50d MA lines. Only Apple (AAPL) remains below the key moving averages. Alphabet (GOOGL) gained +0.71%, helping the communications sector rise to the top of the sector list.
Costco (COST) was the top mega-cap for the day, gaining +3.31% after announcing it was putting purchase limits back on some items such as toilet paper. The problem is not just over-purchasing, as seen earlier in the pandemic, but also because of shipping delays and supply chain disruptions.
Nike (NKE) declined -6.26% and ended the day at the bottom of the mega-cap list. The company announced earnings that showed excellent growth but lowered sales forecasts due to supply chain issues.
The daily update growth list was dominated by decliners today. SNAP (SNAP) ended the day as the top stock in the list with a +4.71% gain, lifting higher with the rest of the communications sector. Gains quickly tapered off into losses as we moved down the ranking. UP Fintech (TIGR) was the worst-performing stock in the list, declining -7.34%.
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Looking ahead
Durable Goods Orders for August will be available on Monday morning. John Williams and Lael Brainard of the FOMC are to make comments later in the morning.
There are no interesting earnings reports for the Daily Update on Monday.
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Trends, Support, and Resistance
The Nasdaq dipped below the 21d EMA in the morning but could recover and close above the line in the afternoon.
The five-day trend line and the trend line from the 9/20 low point to a +0.98% gain on Monday.
The one-day trend line ends with a +0.52% gain.
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Wrap-up
Today marks one year for the Daily Market Update. It started out looking very different, but I'm proud to have written an update every single trading day for the past year, learning a ton along the way. Still learning a lot every day. Thanks to those who've read, liked, and commented on the updates this past year.
Despite some profit-taking ahead of the weekend, Friday was not a bad way to close a choppy week which started with a very bearish move on Monday. The pivot was undoubtedly the Fed's statements on Wednesday that showed optimism for the economy while still not signaling an overly rushed bond tapering.
Based on today's result, the expectation for Monday is sideways or higher.
Stay healthy and trade safe!
Nasdaq trend analysisHello, everyone! This week, the price action was very interesting, with Nasdaq going down as much us 3% and filling the gap days later! Now let's take a look at the chart. We formed a short term uptrend and we are almost at the strong resistance point. If the market decides to go for a run again we will see a breakout. And that is likely. But i wouldn't recommend you to put your buy orders yet. Wait for the confirmation candle and then make your moves! Good luck!
Daily Market Update for 9/23Summary: The Fed's reassurances on the economic outlook from Wednesday turned investors optimistic and sent indexes higher. Energy and Financials topped the sector list for a second day, two sectors that often lead the market out of a slump.
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, September 23, 2021
Facts: +1.04%, Volume lower, Closing Range: 78%, Body: 60% Green
Good: High A/D ratio, mostly green body
Bad: Nothing
Highs/Lows: Higher high, Higher low
Candle: Mostly green body with small upper and lower wicks
Advance/Decline: 2.05, two advancing stocks for every declining stock
Indexes: SPX (+1.21%), DJI (+1.48%), RUT (+1.82%), VIX (-10.73%)
Sector List: Energy (XLE +3.50%) and Financials (XLF +2.45%) at the top. Real Estate (XLRE -0.49%) and Utilities (XLU -0.53%) at the bottom.
Expectation: Higher
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Market Overview
The Fed's reassurances on the economic outlook from Wednesday turned investors optimistic and sent indexes higher. Energy and Financials topped the sector list for a second day, two sectors that often lead the market out of a slump.
The Nasdaq ended the day with a +1.04% gain. Volume was lower than the previous day. The 78% closing range is above a 60% green body surrounded by short upper and lower wicks. The upper wick formed as the index faded from the intraday high in the afternoon. The morning rally was enough to get the Nasdaq back above its 21d EMA line and remain above the critical support line in the afternoon.
Small-caps led the day with a gain of +1.82% for the Russell 2000 (RUT). The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) gained +1.21% and +1.48%, respectively. The VIX Volatility Index tumbled -10.73%.
Energy (XLE +3.50%) and Financials (XLF +2.45%) were at the top of the sector list for a second day. Defensive sectors went to the bottom of the list, with Real Estate (XLRE -0.49%) and Utilities (XLU -0.53%) being the only two declining sectors today. Cyclicals dominated the top of the list as we move out of the slump, and investors see more growth in the near term.
Initial Jobless Claims were higher than expected, but not enough to raise concern. The Manufacturing and Services PMI were just below targets but not too far off to cause an issue. Overall, things look optimistic for the economy, supporting the Fed's outlook on the recovery.
US 30y, 10y, and 2y Treasuries all rose sharply for the day. The US Dollar index declined -0.38%. High Yield (HYG) Corporate Bond prices rose for the day while Investment Grade (LQD) Corporate Bond prices fell.
Crude Oil prices were higher on Thursday. Timber continues to climb. Aluminum Futures is making new record highs. Copper declined slightly after a sharp advance yesterday.
The put/call ratio (PCCE) declined to 0.571 for the day as investors grew bullish. The CNN Fear & Greed index moved back into the Fear area after dipping into Extreme Fear earlier in the week. The NAAIM money manager exposure index declined to 77.7 from 87.02 the previous week.
All four largest mega-caps advanced for the day. Microsoft (MSFT) and Alphabet (GOOGL) climbed back above their 21d EMA. Apple (AAPL) and Amazon (AMZN) are approaching their key moving average lines but still closed below them today.
Salesforce.com (CRM) updated guidance in the morning, which sent the stock to the top of the mega-cap list with a +7.21% gain. Big Banks and Big Oil dominated the other top mega-cap spots. Only four mega-caps declined, with Alibaba (BABA) having the worst performance of the day, declining -0.46%.
The daily update growth list had a great day, but not all stocks enjoyed the rally. At the top of the list were Palantir (PLTR) and Digital Turbine (APPS), with gains of over 4.5%. The worst-performing stock in the list was RobinHood (HOOD) which declined -2.01% after soaring more than 10% yesterday.
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Looking ahead
New Home Sales data becomes available after the market opens on Friday morning.
The Fed's Jerome Powell is scheduled to speak at 10a on Friday morning.
Friday's earning reports include Carnival Corp (CCL).
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Trends, Support, and Resistance
The Nasdaq rose above the 15,000 support area and its 21d EMA today.
The trend line from the 9/20 low points to another +1.13% gain for tomorrow.
The one-day trend line ends with a +0.58% gain.
The five-day trend line shows a -0.68% decline for tomorrow, a move back below the 21d EMA.
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Wrap-up
New optimism helped close the gap from Monday's open, and we are just barely in the positive for the week. One more day of gains could turn what felt like a bearish week earlier into quite a constructive week to build on in the rest of September.
We have Energy and Financials leading us out of a slump. We have good breadth across the market, with small-caps outperforming. Volume remains elevated as we move higher, with higher highs and higher lows the last three days. All that momentum sets an expectation for Higher tomorrow. Knock on wood.
Stay healthy and trade safe!
Daily Market Update for 9/22Summary: The Fed's optimistic view on the economy and reluctance to set an exact timeline for bond tapering got a positive reaction from investors. The US Dollar strengthened while the Treasury yield curve flattened.
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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Wednesday, September 22, 2021
Facts: +1.02%, Volume higher, Closing Range: 71%, Body: 53% Green
Good: Gain on higher volume, high closing range with close above 50d moving average
Bad: Longer upper wick from fade after intraday high, but not terrible
Highs/Lows: Higher high, Higher low
Candle: Large green body under a long upper wick
Advance/Decline: 1.85, almost two advancing stocks for every declining stock
Indexes: SPX (+0.95%), DJI (+1.00%), RUT (+1.48%), VIX (-14.33%)
Sector List: Energy (XLE +3.08%) and Financials (XLF +1.67%) at the top. Communications (XLC -0.05%) and Utilities (XLU -0.06%) at the bottom.
Expectation: Sideways or Higher
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Market Overview
The Fed's optimistic view on the economy and reluctance to set an exact timeline for bond tapering got a positive reaction from investors. The US Dollar strengthened while the Treasury yield curve flattened.
The Nasdaq closed with a +1.02% gain. Volume was higher than the previous day. The candle has a 53% green body with a 71% closing range. The upper wick is longer than the lower wick and formed after a fade from the intraday high set in the mid-afternoon. The morning half of the session was very bullish and brought the index above the 50d moving average line. There were almost two advancing stocks for every declining stock.
The Russell 2000 (RUT) outperformed with a +1.48% gain. The Fed's outlook is particularly supportive to small caps as big tech and large caps benefited from the slump last year. The Dow Jones Industrial Average (DJI) gained +1.00%. The S&P 500 (SPX) advanced +0.95%.
Energy (XLE +3.08%) and Financials (XLF +1.67%) were the top sectors for the day. Communications (XLC -0.05%) and Utilities (XLU -0.06%) were the only two declining sectors.
The Fed reiterated previous comments that the economy is still progressing despite headwinds from the Delta variant and that inflation remains transitory in their view. They will begin bond tapering soon, and more Fed officials see an interest rate hike in 2022 to be likely, with another in 2023. The fact that the fed did not announce a firm date on bond tapering while still maintaining a positive outlook on the economy is the likely cause of the very positive reactions from the market.
The announcement that Evergrande in China would make its bond interest payment this week, after announcing earlier that it would delay the payment, gave investors confidence heading into the morning.
The US Dollar (DXY) strengthened another +0.26%. 30y and 10y Treasury Yields dropped sharply while the 2y Treasury yield gained, flattening the yield curve. Both High Yield (HYG) and Investment Grade (LQD) Investment Bonds prices gained for the day. Crude Oil, Timber, Copper, and Aluminum all gained with Aluminum Futures shooting back to a new record high.
The put/call ratio rose for the day, ending at 0.729. The higher ratio is likely from speculative bets placed before the Fed's announcement. The CNN Fear & Greed index moved back into Fear but remained near the Extreme Fear level.
The largest four mega-caps gained for the day but still have some work to do to get above their key moving average lines. Nvidia (NVDA) and Netflix (NFLX) were the leading mega-caps of the day, gaining more than 3%. Facebook (FB) tumbled -3.99% after the company admitted that Apple's privacy changes are impacting its business. Adobe (ADBE) also lost more than -3.07% despite a strong earnings report that beat estimates. Investors took some profits while some analysts still believe the stock is overpriced.
The majority of stocks in the daily update growth list gained for the day. RobinHood (HOOD) topped the list with a +10.85% gain after it announced it would add cryptocurrency wallets to its offering. Digital Turbine (APPS) was second in the list with a +7.48% gain. Peloton (PTON) was at the bottom of the list with a -6.31% decline.
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Looking ahead
Initial Jobless Claims data will be available on Thursday. Manufacturing and Services PMI will give an indication of economic activity.
Nike (NKE), Accenture (CAN), and Costco (COST) will release earnings on Thursday.
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Trends, Support, and Resistance
The Nasdaq rallied in the morning to rise above its 50-day moving average line. It neared the 15,000 support/resistance, setting the intraday high just after the Fed's announcement. It closes the day just above the 50-day moving average line.
The one-day trend line points to a +0.76% gain for tomorrow to continue the rally.
If the index returns to its downtrend, the trend line from the 9/7 high points to a -1.27% decline. The five-day trend line ends with a -1.69% gain.
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Wrap-up
The Fed has carried a careful tone throughout the pandemic. While delivering a positive outlook for the economy, the Fed's Jerome Powell noted that much still depends on the pandemic. He announced that bond tapering would start soon but did not set a hard date for beginning or a deadline for when to complete the tapering. Although interest rate hikes are now likely in 2022, officials still see the 2022 and 2023 interest rate rises to be small.
The higher close on higher volume today and closing above the 50d moving average line show strength. There was resistance in the ~15,000 area, which may continue in tomorrow's session. The expectation is for Sideways or Higher tomorrow.
Stay healthy and trade safe!
Daily Market Update for 9/21Summary: Equity markets chopped up and down to end sideways while Treasury yields rose as investors remained cautious ahead of the Fed announcements on Wednesday.
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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Tuesday, September 21, 2021
Facts: +0.22%, Volume lower, Closing Range: 33%, Body: 38% Red
Good: Higher high, higher low
Bad: Choppy day, faded into close
Highs/Lows: Higher high, Higher low
Candle: Small body in between two equal size wicks
Advance/Decline: 0.94, more declining stocks than advancing stocks.
Indexes: SPX (-0.08%), DJI (-0.15%), RUT (+0.18%), VIX (-5.25%)
Sector List: Energy (XLE +0.23%) and Health (XLV +0.15%) at the top. Communications (XLC -0.42%) and Industrials (XLI -0.53%) at the bottom.
Expectation: Sideways
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Market Overview
Equity markets chopped up and down to end sideways while Treasury yields rose as investors remained cautious ahead of the Fed announcements on Wednesday.
The Nasdaq closed the day with a +0.22% gain. Volume was lower than the previous day. The 38% red body sits in the middle of the candle with equal-sized upper and lower wicks. The closing range is 33%. There were more declining stocks than advancing stocks.
The Russell 2000 (RUT) ended the day with an advance, gaining +0.18%. The S&P 500 (SPX) declined -0.08%, and the Dow Jones Industrial Average (DJI) was off -0.15%. The VIX Volatility Index fell -5.25%.
Five sectors ended the day with gains. Energy (XLE +0.23%) and Health (XLV +0.15%) were at the top of the sector list. Communications (XLC -0.42%) and Industrials (XLI -0.53%) at the bottom.
Building Permits and Housing Starts showed a more bullish outlook for the economy, with both exceeding forecast. API Weekly Crude Oil Stock also showed higher demand than expected.
The US Dollar weakened slightly, with the index declining -0.02%. The US 30y and 10y Treasury Yields rose for the day while the 2y remained flat. High Yield (HYG) Corporate Bond prices rose for the day while Investment Grade (LQD) Corporate Bond prices remained the same.
Gold and Silver both rose for the day. Copper and Aluminum futures continue to drop. Timber prices rose, likely on the positive Building Permits data. Bitcoin (BTCUSD) and Ethereum (ETHUSD) declined the last two days sharply, likely from investors positioning for a strengthening US Dollar.
The put/call (PCCE) ratio dropped to 0.604. The CNN Fear & Greed index remained in the Extreme Fear area.
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Looking ahead
US Existing Home Sales data and Crude Oil Inventories updates come in the morning. The Bank of Japan will make a Monetary Policy Statement overnight.
This week, nothing is more significant than the Fed meeting and the statements coming at 2p on economic projects and interest rate decisions. Investors are looking for comments on when bond tapering will begin.
General Mills will release earnings on Wednesday.
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Trends, Support, and Resistance
The Nasdaq chopped up and down in today's session, showing indecision in the market ahead of the Fed announcements.
The one-day trend line points to another gain of +0.20% tomorrow.
The trend line from the 9/7 high ends with a -0.19% decline.
The five-day trend line shows a -1.06% decline.
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Wrap-up
Tomorrow is the big day. The Fed will likely make a firm announcement around bond tapering, and we'll get an update on when Fed officials see interest rate hikes happening. But just as important will be the Economic Projections and the Fed's view on inflation which some experts see as easing for the remainder of the year.
What should happen after that is the US Dollar strengthening and Treasury Yields rising. Those two moves will put downward pressure on mega-caps and growth stocks. We'll likely get another 2-3% decline in the indexes over the subsequent two trading sessions. If the reaction is worse, we could see the Nasdaq visit the 200-day moving average, which it has not touched since April 2020.
There is the possibility that investors already priced in some of this news. It shouldn't come as a surprise to them that bond tapering will begin, and interest rate timing estimates will likely be pulled forward. If the Fed is more dovish than expected, we could have an opposite reaction and see a rally through the end of the week.
That leads to the chart and the indecision in today's candle. The indecision in the candle and big economic event tomorrow leads to an expectation for Sideways, only because I don't allow myself to put an "I don't know." :)
Stay healthy and trade safe!
Daily Market Update for 9/20Summary: The narrow gains that held up markets last week turned into broad selling today, causing a sharp decline in all four major indexes. Fears that China's Evergrande would default on credit obligations exasperated worries over the health of the economy.
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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Monday, September 20, 2021
Facts: -2.19%, Volume lower, Closing Range: 59%, Body: 14% Red
Good: Support at 14,500 turned to late afternoon rally
Bad: Gap-down, selling all-day
Highs/Lows: Lower high, Lower low
Candle: Thin red body with a longer lower wick
Advance/Decline: 0.14, seven declining stocks for every advancing stock
Indexes: SPX (-1.70%), DJI (-1.78%), RUT (-2.44%), VIX (+23.55%)
Sector List: Utilities (XLU -0.93%) and Real Estate (XLRE -1.24%) at the top. Financials (XLF -2.74%) and Energy (XLE -4.22%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
The narrow gains that held up markets last week turned into broad selling today, causing a sharp decline in all four major indexes. Fears that China's Evergrande would default on credit obligations exasperated worries over the health of the economy.
The Nasdaq closed -2.19% lower, after plunging almost -3.5% intra-day. The gap-down at open put the index below its 50d moving average line. After the morning sell-off, a rally in the last hour of trading brought the index back to a 59% closing range. The result is a small red body in the middle of a short upper and long lower wick. Volume was higher than average, albeit lower than Friday's extraordinarily high volume.
The Russell 2000 (RUT) performed the worst among the major indexes, declining -2.44%. The S&P 500 (SPX) fell -1.70%, and the Dow Jones Industrial Average (DJI) dropped -1.78%. The VIX Volatility index was up 38.41% intraday but ended the day with a +23.65% gain.
All sectors declined for the day. Utilities (XLU) and Real Estate (XLRE) were the best performing sectors as investors turned to safe-havens. Financials (XLF) and Energy (XLE) were the bottom two sectors for the day. During the rally in the final hour, Financials and Energy performed best as they attempted recovery from significant losses.
US Treasury Yields declined for the day as the gap continues to close between long-term and short-term yields. High Yield (HYG) corporate bonds sold off sharply while Investment Grade (LQD) corporate bond prices increased. Commodities were down across the board except for Gold which rose for the day.
The put/call ratio rose to 0.833. The CNN Fear & Greed index moved into Extreme Fear.
Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) all gapped down at open. Only Microsoft and Alphabet (GOOGL) closed the day above their 50d moving average. Only two mega-caps, Pfizer (PFE) and Eli Lilly (LLY) gained for the day. The worst performing mega-cap was Alibaba (BABA), declining more than -5%.
The daily update growth list also had only two advancing stocks, Paycom (PAYC) and Chewy (CHWY). Chinese stocks UP Fintech (TIGR) and NIU (NIU) were the worst performers in the list, declining -8.6% and -9.2%, respectively.
China's Evergrande made public over the weekend that they may not meet debt obligations due on Thursday. Some compare the possible default of the property giant with the failures of Lehman Brothers in the financial crisis. However, many experts believe the speculative comparison is incorrect. Nonetheless, it gave investors another thing to worry about on Monday.
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Looking ahead
Building Permits and Housing Starts data will be available on Tuesday.
Adobe (ADBE), FedEx (FDX), and AutoZone (AZO) are earnings reports to watch out for on Tuesday.
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Trends, Support, and Resistance
The Nasdaq dove well below its 50d moving average line. The selling continued until just above the 14,500 area. A rally in the last hour recovered some of the losses.
The trend line from the 9/7 high points to a +0.50% gain for tomorrow.
The five-day trend line ends with a -0.02% decline. Such a sideways move for the index would be a welcome pause.
The one-day trend line leads to another -2.27% decline for Tuesday.
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Wrap-up
Fears on top of a weak market last week turned into panic on Monday. It seemed some sanity entered back into the picture with the final hour of buying. Maybe the economy is ok. Maybe Evergrande isn't so much of a doomsday event. Maybe, but we'll have to see how the market carries itself tomorrow ahead of the Fed's announcements on Wednesday.
The expectation is for Sideways or Lower on Tuesday.
Stay healthy and trade safe!
Market Week in Review - 9/13/2021 - 9/17/2021Summary: Positive economic news couldn't break through the September blues, making for a choppy week in the markets. Investors are balancing good economic data with the possibility that Fed may start bond tapering soon.
Notes
The Market Week in Review is my weekend homework where I look over what happened in the previous week and what might come in the next week.
I occasionally have some errors or typos and will correct them in my blog or the comments on TradingView. I do not have an editor and do this in my free time.
If you find this helpful, please let me know in the comments. I am also more than happy to add new perspectives and data points if you have ideas.
The structure is the following:
A recap of the daily updates that I do here on TradingView.
View on the past week
What's coming in the next week
The Bullish View, The Bearish View
Key index levels to watch out for
Wrap-up
If you have been following my daily updates, you can skip down to "View on the Week." If not, then this first part is a great play-by-play recap for the week. Click the daily charts for more detail on sectors, indexes, and market leaders each day.
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Monday, September 13, 2021
Facts: -0.07%, Volume higher, Closing Range: 40%, Body: 57% Red
Good: Closed above the 21d EMA
Bad: Two dips below 21d EMA, couldn't hold intraday high at open
Highs/Lows: Lower high, Lower low
Candle: Red body in upper half of candle with a long lower wick
Advance/Decline: 0.73, more declining than advancing
Indexes: SPX (+0.23%), DJI (+0.76%), RUT (+0.59%), VIX (-7.54%)
Sector List: Energy (XLE +2.87%) and Financials (XLF +1.14%) at the top. Utilities (XLU -0.18%) and Health (XLV -0.62%) at the bottom.
Expectation: Sideways or Lower
The OPEC Monthly Report provided a positive outlook for the economy, stating that oil demand would exceed pre-pandemic levels next year. That sent oil futures and the Energy sector higher and turned investors more optimistic on value stocks and the re-opening trade.
The Nasdaq closed the day with a -0.07% decline. Volume was higher than the previous day. The index started with a gain but quickly sold as investors rotated out of growth stocks and back into value stocks. The Nasdaq dipped below its 21d exponential moving average twice but was able to close above the line. The closing range of 40% is under a red body that covers more than half of the candle. There is a long lower wick with a tiny upper wick. More stocks declined than advanced on the Nasdaq. Notably, there were two advancing stocks for every declining stock on the New York Stock Exchange.
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Tuesday, September 14, 2021
Facts: -0.45%, Volume lower, Closing Range: 17%, Body: 76% Red
Good: Support above 15,000
Bad: Mostly red body, lower high, lower low. a/d ratio
Highs/Lows: Lower high, Lower low
Candle: Mostly red body with small upper and lower wicks
Advance/Decline: 0.28, more than three declining stocks for every advancing stock
Indexes: SPX (-0.57%), DJI (-0.84%), RUT (-1.37%), VIX (+0.46%)
Sector List: Health (XLV -0.02%) and Technology (XLK -0.13%) at the top. Financials (XLF -1.34%) and Energy (XLE -1.44%) at the bottom.
Expectation: Lower
US Treasury Yields slid after the morning's consumer price index data added more confusion to the economic picture. Is lower than expected inflation a good thing or a bad thing? What does it mean for Fed monetary policy? The unanswered questions equate to risk for investors, sending them to safer bets.
The Nasdaq closed with a -0.45% decline. Volume was lower than the previous day. The 76% red body represents a bearish day ending with the closing range of 17%. There were more than three declining stocks for every advancing stock.
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Wednesday, September 15, 2021
Facts: +0.82%, Volume lower, Closing Range: 93%, Body: 48% Green
Good: Support at 15,000 sent started a rally into afternoon
Bad: Could not break above yesterday's high
Highs/Lows: Lower high, Lower low
Candle: Long lower wick formed from morning sell, green upper body
Advance/Decline: 1.31, more advancing than declining stocks
Indexes: SPX (+0.85%), DJI (+0.68%), RUT (+1.11%), VIX (-6.58%)
Sector List: Energy (XLE +3.74%) and Industrials (XLI +1.10%) at the top. Consumer Staples (XLP +0.36%) and Utilities (XLU -0.13%) at the bottom.
Expectation: Sideways or Higher
Stocks rose on Wednesday after Crude Oil supplies signaled much higher demand than expected. That boosted the Energy sector by more than 3.5%, and the improved optimism drove broad gains across the market.
The Nasdaq gained +0.82% for the day after getting support at 15,000 in the morning. The 48% green body led to a 93% closing range. Volume was lower than the previous day, and there were more advancing stocks than declining stocks. The index could not break yesterday's high, so it is still in a downtrend, but the long lower wick formed from the bounce off 15,000 led to a rally in that afternoon that has potential.
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Thursday, September 16, 2021
Facts: +0.13%, Volume lower, Closing Range: 85%, Body: 39% Green
Good: Higher high, good closing range
Bad: Dip below 21d EMA, low A/D ratio
Highs/Lows: Higher high, Higher low
Candle: Short body in upper half of candle, long lower wick
Advance/Decline: 0.81, more declining than advancing stocks
Indexes: SPX (-0.16%), DJI (-0.18%), RUT (-0.07%), VIX (+2.81%)
Sector List: Consumer Discretionary (XLY +0.46%) and Real Estate (XLRE +0.19%) at the top. Materials (XLB -1.08%) and Energy (XLE -1.13%) at the bottom.
Expectation: Sideways
Better than expected Retail Sales data help the Consumer Discretionary sector advance to the top of the sector list. However, rising Treasury Yields subdued other sectors and sent three of the four major indexes to losses for the day.
The Nasdaq closed the day with a +0.13% gain after dipping in the morning. The 39% green body is in the upper half of the candle, with a long lower wick representing the morning decline. After hitting the intraday low, the index rose through the afternoon to end with an 85% closing range. Volume was lower than the previous day, and there were more declining stocks than advancing stocks.
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Friday, September 17, 2021
Facts: -0.91%, Volume higher, Closing Range: 27%, Body: 71% Red
Good: Support at 15,000
Bad: Close below 21d EMA, lower high
Highs/Lows: Lower high, Lower low
Candle: Mostly red body with a small lower wick
Advance/Decline: 0.82, more declining stocks than advancing stocks
Indexes: SPX (-0.91%), DJI (-0.48%), RUT (+0.18%), VIX (+11.34%)
Sector List: Health (XLV +0.10%) and Consumer Discretionary (XLY -0.35%) at the top. Technology (XLK -1.56%) and Materials (XLB -2.06%) at the bottom.
Expectation: Sideways or Lower
Indexes closed lower while volume soared on quadruple-witching Friday. Only the Russell 2000 was able to end the day with gains.
The Nasdaq moved back below its 21d EMA with a -0.91% decline today. Volume was more than 50% over average daily volume due to index and stock options expiration. The candle is primarily red body with a small lower wick. The closing range of 27% came after a rally before close. There were more declining stocks than advancing stocks.
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View on the Week
Positive economic news couldn't break through the September blues, making for a choppy week in the markets. Investors are balancing good economic data with the possibility that Fed may start bond tapering soon.
The week opened with the OPEC monthly report stating that oil demand will meet or exceed pre-pandemic levels by next year. That was a more robust outlook for oil and translates to a better global economic outlook. The new optimism focused investors on value and reopening stocks.
As the week progressed, however, the better economic data for the US raised expectations that the Fed would begin tapering bond purchasing soon. While inflation data on Tuesday was slightly below forecasts, it was still high. Retail sales data on Wednesday was better than forecast and Crude Oil inventories on Thursday showed higher demand than expected.
After Treasury Yields dipped on Monday and Tuesday, they turned sharply higher through the rest of the week. The US Dollar also strengthened significantly on Thursday and Friday, with the DXY dollar index climbing +0.84% over the two days. The next Fed meeting comes next week and investors are positioning for the news on bond tapering.
Equities continue to slump as investors focus on specific safe bets and value stocks. The Advance/Decline ratio for the Nasdaq has only been above 1.0 once in the past ten trading days. However, there has not been a rotation into defensive sectors. Utilities declined 3% this week. The past two weeks looks more like a typical September slump than the start of a correction.
The Nasdaq declined -0.47% for the week. Volume was higher than the previous week because of a spike in volume on quadruple-witching Friday. The closing range is 26%, the second week in a row of low closing range.
Small-caps in the Russell 2000 (RUT) outperformed this week, advancing +0.42% and ending the week with a 74% closing range. The Dow Jones Industrial Average (DJI) lost only -0.07% for the week. The S&P 500 (SPX) declined -0.57%.
The VIX volatility index declined -0.67%.
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Sectors
Energy ( XLE ) topped the sector list this week after the OPEC Monthly Report on Monday projected that demand for oil would exceed pre-pandemic levels by next year. The sector also got a boost from Crude Oil Inventories data released on Wednesday that showed much higher demand than expected.
Consumer Discretionary ( XLY ) moved into second place after great Retail Sales data on Thursday.
Utilities ( XLU ) and Materials ( XLB ) were the bottom two sectors for the week. Although markets were lower this week, investors did not flee to defensive sectors.
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Economic Indicators
The US Dollar (DXY) advanced +0.65% for the week.
US Treasuries 30y yield declined for the week. The 10y and 2y yield both rose. The 2y yield also rose. The 30/5 spread declined for a second week.
High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices advanced for the week.
Silver and Gold fell for another week. Crude Oil rose for the week on a improved outlook from OPEC and better than expected demand in Crude Oil inventories deata.
Timber declined for the week. Copper and Aluminum futures declined this week after big moves last week. Aluminum is still near record highs.
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Investor Sentiment
The put/call ratio (PCCE) bounced up and down this week, ending the week at 0.747.
The CNN Fear & Greed Index moved back to Fear and is approaching Extreme Fear.
The NAAIM money manager exposure index rose to 87.02 from 84.68 the previous week.
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Big Four
Microsoft (MSFT) had an all-time record close on Thursday before selling off on Friday. The stock is up +1.41% for the week and trading above key moving average lines. Amazon (AMZN) and Alphabet (GOOGL) declined this week but remain above their 10w and 40w moving average lines. Apple (AAPL) moved below its 10w moving average line with a -1.95% decline this week.
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Cryptocurrency
Bitcoin (BTCUSD) was the only of the four cryptocurrency to gain for the week, advancing +2.68%. Litecoin (LTCUSD) soared on fake news that Walmart would establish a relationship with the digital currency. The gains were quickly given back after Walmart acknowledges the news was false. The currency ended the week with a -3.94% decline.
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The Week Ahead
Monday
There is not much economic news scheduled for Monday. Watch for news on the $3.5 trillion budget that will include a corporate tax hike.
There are no relevant earnings reports for Monday.
Tuesday
Building Permits and Housing Starts data will be available on Tuesday.
Adobe (ADBE), FedEx (FDX) and AutoZone (AZO) are earnings reports to watch out for on Tuesday.
Wednesday
US Existing Home Sales data and Crude Oil Inventories updates come in the morning. The Bank of Japan will make a Monetary Policy Statement overnight.
Nothing is more important this week than the Fed meeting and the statements to be made at 2p on economic projects and interest rate decisions. Investors are looking for statements on when bond tapering will begin.
General Mills will release earnings on Wednesday.
Thursday
Initial Jobless Claims data will be available on Thursday. Manufacturing and Services PMI will give an indication on economic activity.
Nike (NKE), Accenture (CAN), and Costco (COST) will release earnings on Thursday.
Friday
New Home Sales data becomes available after the market opens on Friday morning.
The Fed's Jerome Powell is scheduled to speak at 10a on Friday morning.
Friday's earning reports include Carnival Corp (CCL).
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The Bullish Side
Economic data this past week shows that despite a soaring number of COVID cases in the US, the economy continued to march forward. Retail sales data in August was higher than expected, showing positive signs of growth for the US. And the forecast from OPEC is a continuing rise in demand for oil, providing an optimistic outlook for the global economy.
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The Bearish Side
Although the data is a positive sign for the economy, the equities markets may react in a very different way. Bond tapering signals and end to easy money policy and the path toward higher interest rates. In addition, investors are bracing for the $3.5 trillion budget passing with an increase in corporate taxes. Despite the potential for growth in the economy, high valuations in the S&P 500 and Nasdaq will need to correct for all these headwinds.
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Key Nasdaq Levels to Watch
The Nasdaq closed below its 21d EMA, but found support at 15,000 during several dips. If support at 15,000 is broke, there is another 1% to 2.5% drop before an additional support area created by trading in July and August. It's easier to see on the QQQ chart, with a volume profile.
On the positive side, the levels are:
The 10d moving average is at 15,191.90.
This week's high is at 15,215.44.
The all-time high is at 15,403.44.
The index met several days of resistance around 15,400.
15,500 may be the next area of resistance.
On the downside, there are a few key levels:
The 21d EMA is at 15,090.88.
15,000 is an area of support, tested several times this week.
The low of the week is 14,984.68, just below Friday's close.
The 50d MA is at 14,875.47.
14,423.16 is the low of the most recent pullback.
14,200 remains a critical level if the index moves downward.
14,000 has been an area of support/resistance.
There is a pivot at 13,903.73.
A further pullback would likely hit the 200d moving average at 13,844.89. The index hasn't approached this line since rising above it in April 2020.
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Wrap-up
The September slump continues, but so far the markets are holding up well. The momentum will almost certainly move in one direction or the other after the Wednesday afternoon Fed comments on the economy and interest rate hikes. More important in the immediate future is any decisions they make on bond purchase tapering.
Good luck, stay healthy, and trade safe!
Daily Market Update for 9/17
Summary: Indexes closed lower while volume soared on quadruple-witching Friday. Only the Russell 2000 was able to end the day with gains.
Notes
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
The Daily Market Update growth list is here: www.tradingview.com It is not a list of all growth stocks, and the stocks in the list are not recommendations.
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Friday, September 17, 2021
Facts: -0.91%, Volume higher, Closing Range: 27%, Body: 71% Red
Good: Support at 15,000
Bad: Close below 21d EMA, lower high
Highs/Lows: Lower high, Lower low
Candle: Mostly red body with a small lower wick
Advance/Decline: 0.82, more declining stocks than advancing stocks
Indexes: SPX (-0.91%), DJI (-0.48%), RUT (+0.18%), VIX (+11.34%)
Sector List: Health (XLV +0.10%) and Consumer Discretionary (XLY -0.35%) at the top. Technology (XLK -1.56%) and Materials (XLB -2.06%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
Indexes closed lower while volume soared on quadruple-witching Friday. Only the Russell 2000 was able to end the day with gains.
The Nasdaq moved back below its 21d EMA with a -0.91% decline today. Volume was more than 50% over average daily volume due to index and stock options expiration. The candle is primarily red body with a small lower wick. The closing range of 27% came after a rally before close. There were more declining stocks than advancing stocks.
The Russell 2000 (RUT) was the only index to gain for the day, advancing +0.18%. The S&P 500 (SPX) declined -0.91%, and the Dow Jones Industrial Average (DJI) fell -0.48%. The VIX Volatility index rose +11.34%.
Only the Health (XLV +0.10%) sector ended the day with gains. Consumer Discretionary (XLY -0.35%) was the second-best sector but declined for the day. Technology (XLK -1.56%) and Materials (XLB -2.06%) were at the bottom of the sector list.
Michigan Consumer Sentiment data was slightly lower than expected. The US Dollar strengthened by +0.41%. Treasury Yields continue to rise as bond investors anticipate the Fed to begin tapering bond purchases later this year. Both High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices tracked along with Treasury prices to close lower.
Silver dropped another -2.33%, while Gold remained about the same. Timber declined -1.40%. Aluminum is holding near record-high levels.
The put/call ratio (PCCE) rose 0.747. The CNN Fear & Greed index moved closer to Extreme Fear.
The NAAIM money manager exposure index rose to 87.02 from 84.68 the previous week.
All of the four largest mega-caps declined. Microsoft (MSFT) closed just above its 21d EMA. Amazon (AMZN) also is above its 21d EMA and 50d MA. Alphabet (GOOGL) dropped below its 21d EMA, and Apple (AAPL) moved below its 50d MA.
The mega-cap list had only ten advancing stocks for the day. Thermo Fisher Scientific (TMO) was the top gainer with a 6.49% advance. The company provided strong guidance on growth at its investor's day event. PayPal (PYPL) was at the bottom of the list, declining -2.34%. Digital Turbine (APPS) was the top gainer in the daily update growth list.
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Looking ahead
There is not much economic news scheduled for Monday. Watch for news on the $3.5 trillion budget that will include a corporate tax hike. Also, look for any signs from the Fed that bond tapering will begin.
There are no relevant earnings reports for Monday.
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Trends, Support, and Resistance
The Nasdaq moved back below the 21d EMA but found support above 15,000.
If the five-day trend line continues into Monday, it will end with a +0.22% gain.
The trend line from the 9/7 high points to a -0.48% decline.
The one-day trend line ends with a -0.75% decline.
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Wrap-up
A broad sell-off comes during a week of ups and downs among robust economic data. A positive for the economy, the data raises the possibility of the Fed tapering bond purchases faster. The result is rising yields on Treasury bonds and a strong US dollar, and both apply downward pressure on big tech and growth stocks.
Add to that the potential for increased corporate taxes eating into earnings, and investors can expect further declines in the major indexes.
The expectation for Monday is sideways or lower.
Stay healthy and trade safe!
Nasdaq: is the top in?Completed count with technical top, from ATL to ATH, extended fifth wave from March 2020 low, 200% of the move from ATL to year 2000 ATH.
Daily Market Update for 9/16
Summary: Better than expected Retail Sales data help the Consumer Discretionary sector advance to the top of the sector list. However, rising Treasury Yields subdued other sectors and sent three of the four major indexes to losses for the day.
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, September 16, 2021
Facts: +0.13%, Volume lower, Closing Range: 85%, Body: 39% Green
Good: Higher high, good closing range
Bad: Dip below 21d EMA, low A/D ratio
Highs/Lows: Higher high, Higher low
Candle: Short body in upper half of candle, long lower wick
Advance/Decline: 0.81, more declining than advancing stocks
Indexes: SPX (-0.16%), DJI (-0.18%), RUT (-0.07%), VIX (+2.81%)
Sector List: Consumer Discretionary (XLY +0.46%) and Real Estate (XLRE +0.19%) at the top. Materials (XLB -1.08%) and Energy (XLE -1.13%) at the bottom.
Expectation: Sideways
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Market Overview
Better than expected Retail Sales data help the Consumer Discretionary sector advance to the top of the sector list. However, rising Treasury Yields subdued other sectors and sent three of the four major indexes to losses for the day.
The Nasdaq closed the day with a +0.13% gain after dipping in the morning. The 39% green body is in the upper half of the candle, with a long lower wick representing the morning decline. After hitting the intraday low, the index rose through the afternoon to end with an 85% closing range. Volume was lower than the previous day, and there were more declining stocks than advancing stocks.
The S&P 500 (SPX) declined -0.16%. The Dow Jones Industrial Average (DJI) lost -0.18%. The Russell 2000 (RUT) fell just -0.07%. The VIX Volatility Index rose +2.81%.
Consumer Discretionary (XLY +0.46%) was at the top of the sector list after the positive Retail Sales data in the morning. Real Estate (XLRE +0.19%) was the second-best sector. Technology (XLK +0.06%) was the only other sector with gains. Materials (XLB -1.08%) and Energy (XLE -1.13%) were the worst-performing sectors for the day.
Retail Sales grew +1.8% for August, while analysts expected a -0.1% decline for the month. The Philadelphia Manufacturing Index was 30.7, compared to the 18.8 expectation. Initial Jobless Claims were slightly higher than expected but not alarming. Altogether, the data showed a more optimistic view of economic growth. However, that also raises questions of when the Fed will begin bond tapering.
Treasury Yields rose for the day, with the spread between long-term and short-term notes narrowing. Yields move opposite to prices, signaling bond investors are selling treasuries ahead of bond tapering. The US Dollar strengthened for the day, with the DXY index rising +0.42%. Silver and Gold dropped sharply, declining -3.92% and -2.26%, respectively. Crude Oil futures continue to rise.
The put/call ratio declined to 0.621 for the day. The CNN Fear & Greed index remained in the Fear Zone. The NAAIM money manager exposure index rose to 87.02 from 84.68 the previous week.
Amazon (AMZN) helped push the consumer discretionary sector higher with a +0.36$ advance today. Microsoft (MSFT) also ended the day with gains while Apple (AAPL) and Alphabet (GOOGL) declined.
Salesforce.com (CRM) was the top mega-cap for today, advancing +1.64%. Ely Lilly (LLY) was at the bottom of the list, losing -1.15%. There were plenty of winners in the daily update growth list. Palantir (PLTR) and DoorDash (DASH) topped the list with over 5.5% gains. FUTU Holdings (FUTU) and UP Fintech (TIGR) were at the bottom of the list.
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Looking ahead
Initial Consumer Sentiment data for September, released on Friday, will hopefully improve over the previous month.
Friday is a quadruple witching day when stock futures, index futures, stock options, and index options all expire on the same day, causing a higher than average volume.
There are no relevant earnings reports for Friday.
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Trends, Support, and Resistance
The Nasdaq dipped below the 21d EMA before rallying into the afternoon and closing higher.
If the one-day trend line continues, it shows a +0.85% gain for tomorrow.
The five-day trend line points to a -0.92% decline.
The trend line from the 9/7 high ends with a -1.25% decline for Friday.
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Wrap-up
Bond investors saw today's positive Retail Sales data as more support for the Fed to begin bond tapering. Bond tapering will mean lower prices and higher yields, and higher yields could put some downward pressure on growth sectors.
The expectation for tomorrow is Sideways.
Stay healthy and trade safe!
Daily Market Update for 9/15Summary: Stocks rose on Wednesday after Crude Oil supplies signaled much higher demand than expected. That boosted the Energy sector by more than 3.5%, and the improved optimism drove broad gains across the market.
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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Wednesday, September 15, 2021
Facts: +0.82%, Volume lower, Closing Range: 93%, Body: 48% Green
Good: Support at 15,000 sent started a rally into afternoon
Bad: Could not break above yesterday's high
Highs/Lows: Lower high, Lower low
Candle: Long lower wick formed from morning sell, green upper body
Advance/Decline: 1.31, more advancing than declining stocks
Indexes: SPX (+0.85%), DJI (+0.68%), RUT (+1.11%), VIX (-6.58%)
Sector List: Energy (XLE +3.74%) and Industrials (XLI +1.10%) at the top. Consumer Staples (XLP +0.36%) and Utilities (XLU -0.13%) at the bottom.
Expectation: Sideways or Higher
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Market Overview
Stocks rose on Wednesday after Crude Oil supplies signaled much higher demand than expected. That boosted the Energy sector by more than 3.5%, and the improved optimism drove broad gains across the market.
The Nasdaq gained +0.82% for the day after getting support at 15,000 in the morning. The 48% green body led to a 93% closing range. Volume was lower than the previous day, and there were more advancing stocks than declining stocks. The index could not break yesterday's high, so it is still in a downtrend, but the long lower wick formed from the bounce off 15,000 led to a rally in that afternoon that has potential.
Small-caps in the Russell 2000 (RUT) led the day, with the index advancing +1.11%. The S&P 500 (SPX) gained +0.85%, while the Dow Jones Industrial Average (DJI) climbed +0.68%. The VIX Volatility Index dropped -6.58%.
Energy (XLE +3.74%) and Industrials (XLI +1.10%) are the best sectors for the day. The only sector to decline was Utilities (XLU -0.13%). Consumer Staples (XLP +0.36%) was the second worst-performing sector but did gain for the day.
Crude Oil Inventories released at 10:30 am were -6.422m barrels compared to an expectation of -3.544m barrels showing much higher demand than forecasted.
The US Dollar weakened, with the DXY index dropping 0.20% for the day. The US 30y Treasury yield remained about the same while the 10y and 2y Treasury yields climbed. High Yield (HYG) Corporate Bond prices rose, setting a new post-pandemic high.
Crude Oil Futures rose on the news of higher demand. The improved economic outlook from higher oil demand also signals higher demand for materials. Timber, Copper, and Aluminum all climbed higher today.
The put/call ratio declined to 0.649. The CNN Fear & Greed index moved closer to Neutral but remained in Fear.
Exxon Mobil (XOM) topped the mega-cap list for the day. Comcast (CMCSA) was the second-best performer on the list after dipping yesterday. Microsoft (MSFT) gapped up in the morning and had a record close. All four largest mega-caps are above their 50d MA. Only Apple (AAPL) remains below its 21d EMA.
RobinHood (HOOD) was the top growth stock in the daily update list. The list is primarily gainers today. At the bottom of the list was Sumo Digital (SUMO).
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Looking ahead
On Thursday, we will get Retail Sales data for August. Initial Jobless Claims will also be available in the morning.
There are no relevant earnings reports for Thursday.
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Trends, Support, and Resistance
The Nasdaq bounced off the 15,000 support area and then rallied on optimism, generated by the Crude Oil numbers, for the remainder of the day.
If the one-day trend line continues into tomorrow, the index will gain +1.28%.
The trend line from the 9/7 top and the five-day trend line point to a -1.31% decline tomorrow.
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Wrap-up
The Crude Oil inventories data gave investors a shot of optimism that caused a market rally today. However, only the S&P 500 was able to reverse the trend fully and beat yesterday's high. The Nasdaq remains in a downtrend, but the long lower wick shows the strong reversal off the 15,000 support area and could be enough to boost prices further tomorrow.
The expectation for tomorrow is Sideways or Higher.
Stay healthy and trade safe!
Current IXIC opinion and forecastsThe SPY's daily graph isn't looking as good with a few indicators that look very bearish on the daily graph. The NASDAQ on the other hand appears to have rallied out of its slump from the beginning of the day, providing a breath of relief for bullish investors, however, this trend has not been confirmed yet and suggests merely a temporary shift before continuation of the larger trend.
For the current market environment, I won't be relying too much on the RSI as it provides too many signals and that becomes unreliable if you want to swing trade with minimal trades. Although using indicators the shorter time frames are a bit more unclear and speculative, what is certain is in the longer time frames, especially the monthly graph for both NASDAQ and S&P which both suggests that the markets have reached significantly overbought levels since the COVID declines; this may indicate that the markets are more than ready for a good correction to reset before more upside momentum can be made. In the daily graphs, I can currently see a bearish divergence in the peaks of the price action, in the troughs nothing has been confirmed yet as this will build itself in the next few days; this can be supported by decreasing volume over time (this I had to source from QQQ since the index's do not have volume) which indicates there are fewer participants in the uptrend. Thus, allowing me to assert some bearish sentiment for this trend as many are no longer exposing themselves to higher prices.
With all that being said there isn't too much new relevant information to analyze but the most recent trading sessions help us gauge that investors are not ready to give up their optimistic perspective of the financial markets as there is yet not much pessimistic news to allow that sentiment to change. However, with important events lined up for the next few periods that may change in that time. Until then very I am neutral due to the fact that everything can change at a moment's notice. I AM leaning more towards the downside as valuations peaked and investor perspectives grow more irrational.
Have fun!
Henry
Daily Market Update for 9/14Summary: US Treasury Yields slid after the morning's consumer price index data added more confusion to the economic picture. Is lower than expected inflation a good thing or a bad thing? What does it mean for Fed monetary policy? The unanswered questions equate to risk for investors, sending them to safer bets.
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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Tuesday, September 14, 2021
Facts: -0.45%, Volume lower, Closing Range: 17%, Body: 76% Red
Good: Support above 15,000
Bad: Mostly red body, lower high, lower low. a/d ratio
Highs/Lows: Lower high, Lower low
Candle: Mostly red body with small upper and lower wicks
Advance/Decline: 0.28, more than three declining stocks for every advancing stock
Indexes: SPX (-0.57%), DJI (-0.84%), RUT (-1.37%), VIX (+0.46%)
Sector List: Health (XLV -0.02%) and Technology (XLK -0.13%) at the top. Financials (XLF -1.34%) and Energy (XLE -1.44%) at the bottom.
Expectation: Lower
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Market Overview
US Treasury Yields slid after the morning's consumer price index data added more confusion to the economic picture. Is lower than expected inflation a good thing or a bad thing? What does it mean for Fed monetary policy? The unanswered questions equate to risk for investors, sending them to safer bets.
The Nasdaq closed with a -0.45% decline. Volume was lower than the previous day. The 76% red body represents a bearish day ending with the closing range of 17%. There were more than three declining stocks for every advancing stock.
The Russell 2000 (RUT) declined the most among the major indexes, losing -1.37% today. The Dow Jones Industrial Average (DJI) declined -0.84%. The S&P 500 (SPX) fell -0.57%.
All sectors declined today. The sectors that fell the least were Health (XLV -0.02%) and Technology (XLK -0.13%) at the top. Investors see mega-caps in the Technology sector as resilient in the current uncertain environment. The heaviest falls came at the bottom of the sector list in Financials (XLF -1.34%) and Energy (XLE -1.44%). The Financial sector is impacted by the drop in treasury yields that will lower interest rates on lending instruments.
The consumer price index (CPI) data came in at 5.3% against an expectation of 5.4%. The Core CPI data, which excludes food and energy, showed prices rose only 0.1%, where the expectation was 0.3%.
The US Dollar rose slightly by +0.05%. The US30y, US10y, and US2y treasury yields all declined significantly. High Yields Corporate Bond (HYG) prices declined while Investment Grade Corporate Bond (LQD) prices increased. Gold moved higher. Timber, Copper, and Aluminum all dropped, with Aluminum falling back from recent record highs.
The put/call ratio rose to 0.791. The CNN Fear & Greed index moved closer to Extreme Fear.
Microsoft (MSFT) was the top mega-cap for the day, gaining +0.94%. Comcast (CMCSA) declined -7.30%, putting it at the bottom of the mega-cap list. The stock sold off severely after comments made by the CFO at an investor conference that revealed a grim outlook for the third quarter.
ZoomInfo Technologies (ZI) was the top gaining growth stock for the daily update list, advancing +3.75% today and briefly breaking out from a cup-with-handle. GrowGeneration (GRWG) dropped another -8.99% today and is down over 63$ from its 52w high.
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Looking ahead
Export and Import Price Index data and the NY Empire State Manufacturing Index will be available on Wednesday. Crude Oil Inventories will be available after the market opens.
There are no relevant earnings reports for Wednesday.
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Trends, Support, and Resistance
The Nasdaq closed below its 21d exponential moving average but stayed above 15,000 today, which becomes a critical support area for tomorrow.
The trend line from the 9/7 high and the five-day trend line point to a -0.37% decline for Wednesday.
The one-day trend line ends with a -0.78% loss for tomorrow.
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Wrap-up
It's interesting to see Technology outperform on a bearish day. Investors see it as a relatively safe trade during these times of uncertainty. The sector was resilient during much of the economic disruption in 2020. In addition, the lower Treasury yields and subdued inflation data are favorable for the sector, while the supply constraints impacting much of the economy are less worrisome for big tech.
If the Fed does start tapering, we can expect Treasury yields to rise, potentially a stronger dollar, and Technology becomes less attractive. At that point, we should hope other economic data such as Employment and Services activity show more positive signs for growth. Otherwise, there won't be many safe havens, and a further correction in stock markets is likely.
For tomorrow, the chart isn't showing any strength so expect a Lower move unless something changes the outlook.
Stay healthy and trade safe!
NASDAQ Elliott wave countLook like price want to break structure to correct impulse move, if it break 14000 is bearish
Daily Market Update for 9/13Summary: The OPEC Monthly Report provided a positive outlook for the economy, stating that oil demand would exceed pre-pandemic levels next year. That sent oil futures and the Energy sector higher and turned investors more optimistic on value stocks and the re-opening trade.
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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Monday, September 13, 2021
Facts: -0.07%, Volume higher, Closing Range: 40%, Body: 57% Red
Good: Closed above the 21d EMA
Bad: Two dips below 21d EMA, couldn't hold intraday high at open
Highs/Lows: Lower high, Lower low
Candle: Red body in upper half of candle with a long lower wick
Advance/Decline: 0.73, more declining than advancing
Indexes: SPX (+0.23%), DJI (+0.76%), RUT (+0.59%), VIX (-7.54%)
Sector List: Energy (XLE +2.87%) and Financials (XLF +1.14%) at the top. Utilities (XLU -0.18%) and Health (XLV -0.62%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
The OPEC Monthly Report provided a positive outlook for the economy, stating that oil demand would exceed pre-pandemic levels next year. That sent oil futures and the Energy sector higher and turned investors more optimistic on value stocks and the re-opening trade.
The Nasdaq closed the day with a -0.07% decline. Volume was higher than the previous day. The index started with a gain but quickly sold as investors rotated out of growth stocks and back into value stocks. The Nasdaq dipped below its 21d exponential moving average twice but was able to close above the line. The closing range of 40% is under a red body that covers more than half of the candle. There is a long lower wick with a tiny upper wick. More stocks declined than advanced on the Nasdaq. Notably, there were two advancing stocks for every declining stock on the New York Stock Exchange.
The Dow Jones Industrial Average (DJI) led the major indexes with a +0.76% gain. Small caps in the Russell 2000 (RUT) also did well, with the index gaining +0.59%. The S&P 500 (SPX) advanced +0.23%. The VIX Volatility Index (VIX) fell back -7.54%.
Energy (XLE +2.87%) was by far the top sector of the day. Financials (XLF +1.14%) ended the day in second place. Only three sectors declined, with Materials (XLB -0.02%), Utilities (XLU -0.18%), and Health (XLV -0.62%) at the bottom of the sector list.
The OPEC Monthly Report released early in the morning provided investors with a more optimistic outlook for 2022. The report said oil demand would exceed pre-pandemic levels by next year. The sent crude oil futures higher.
The US Dollar remained about the same with just a -0.03% decline in the index (DXY). The US 30y and 10y Treasury yields declined for the day. The US 2y Treasury yield remained flat. Both High Yield (HYG) and Investment Grade (LQD) bond prices increased.
Aluminum finally pulled back after nearly two weeks of exceptional gains. Timber and Copper also declined.
The Put/Call ratio (PCCE) declined to 0.673. The CNN Fear & Greed index is still in Fear but moved back toward Neutral.
Three of the four largest mega-caps gained for the day. Amazon (AMZN) was the only to decline, closing back below its 50d moving average line. The top mega-cap for the day was United Health (UNH), followed by Exxon Mobil (XOM). The daily update growth list was mostly losers for the day. Fiverr (FVRR) was the top gainer with a +4.82% advance. FUTU Holding (FUTU) was the biggest loser, declining -8.24%.
Pfizer (PFE) and Moderna (MRNA) declined after experts said booster shots were not widely required.
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Looking ahead
Inflation data will have everyone's attention on Tuesday with the release of August's consumer price index data.
There are no relevant earnings reports for Tuesday.
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Trends, Support, and Resistance
The Nasdaq dipped below the 21d exponential moving average twice during the session. It was able to close above the key moving average line after a late afternoon rally.
The trend line from the 9/7 high, the five-day trend line, and the one-day trend line all point to approximately the same place, which would result in a -0.42% decline tomorrow.
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Wrap-up
Value and re-opening stocks are back in play again as investors see the OPEC projection for oil demand as a leading indicator of economic activity. However, the optimism could end tomorrow if there are surprises with the consumer price index data.
The Nasdaq chart is in a clear downtrend, but the two mid-day rally attempts give some hope for a reversal. The expectation is for Sideways or Lower tomorrow.
Stay healthy and trade safe!
Market Week in Review - 9/7/2021 - 9/10/2021Summary: This week investors wrestled with worries over a slowing economic recovery and the timing of the Fed's bond tapering this fall. The short week opened with the Nasdaq reaching a new all-time high, but prices faded from that point through the end of the week. Glitches in cryptocurrency platforms sent Bitcoin and Ethereum lower, while NFTs sent Litecoin higher.
Notes
The Market Week in Review is my weekend homework where I look over what happened in the previous week and what might come in the next week.
I occasionally have some errors or typos and will correct them in my blog or the comments on TradingView. I do not have an editor and do this in my free time.
If you find this helpful, please let me know in the comments. I am also more than happy to add new perspectives and data points if you have ideas.
The structure is the following:
A recap of the daily updates that I do here on TradingView.
View on the past week
What's coming in the next week
The Bullish View, The Bearish View
Key index levels to watch out for
Wrap-up
If you have been following my daily updates, you can skip down to "View on the Week." If not, then this first part is a great play-by-play recap for the week. Click the daily charts for more detail on sectors, indexes, and market leaders each day.
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Tuesday, September 07, 2021
Facts: +0.07%, Volume lower, Closing Range: 52%, Body: 3% Red
Good: Higher high, higher low on increased volume
Bad: Low A/D ratio, thin red body in middle of candle signals indecision
Highs/Lows: Higher high, Higher low
Candle: Indecisive doji style candle shows buyers and sellers in market
Advance/Decline: 0.45, two declining stocks for every advancing stock
Indexes: SPX (-0.34%), DJI (-0.76%), RUT (-0.72%), VIX (+10.54%)
Sector List: Consumer Discretionary (XLY +0.29%) and Communications (XLC +0.23%) at the top. Utilities (XLU -1.32%) and Industrials (XLI -1.73%) at the bottom.
Expectation: Sideways or Lower
Markets closed the day with mixed results as investors worried about a slowing economy and uncertainty around when the Fed would start bond tapering. Big Tech were viewed as safe bets, helping keep the growth sectors and the Nasdaq in the positive for the day.
The Nasdaq ended the day with a +0.07% gain, setting a new all-time and another record close. The 3% red body rests in the middle of the candle, representing the indecision for buyers and sellers during the day. The closing range of 52% is ok. The fight between bulls and bears created a higher volume day than the previous day. There were over two declining stocks for every advancing stock.
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Wednesday, September 08, 2021
Facts: -0.57%, Volume higher, Closing Range: 52%, Body: 48% Red
Good: Climb back to 52% closing range after morning selling
Bad: Red body, lower high and close on higher volume
Highs/Lows: Lower high, Lower low
Candle: No upper wick, half red body and half lower wick
Advance/Decline: 0.31, more than three declining
Indexes: SPX (-0.13%), DJI (-0.20%), RUT (-1.14%), VIX (-0.99%)
Sector List: Utilities (XLU +1.79%) and Consumer Staples (XLP +0.86%) at the top. Materials (XLB -0.96%) and Energy (XLE -1.28%) at the bottom.
Expectation: Sideways or Lower
Investors were cautious on Wednesday, sending indexes lower over fears of a slowing economy. Defensive sectors led the day.
The Nasdaq closed with a -0.57% loss for the day. Volume was higher than the previous day. The closing range of 52% comes below a 48% red body that occupies the upper half of the candle. There is a long lower wick and no upper wick. More than three stocks declined for every advancing stock.
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Thursday, September 09, 2021
Facts: -0.25%, Volume lower, Closing Range: 3%, Body: 45% Red
Good: Closed above yesterday's low
Bad: Long upper wick formed after a failed morning rally
Highs/Lows: Lower high, Higher low
Candle: Inside day, long upper wick with very low closing range
Advance/Decline: 0.83, more declining stocks than advancing stocks
Indexes: SPX (-0.46%), DJI (-0.43%), RUT (-0.03%), VIX (+4.68%)
Sector List: Financials (XLF +0.29%) and Energy (XLE +0.21%) at the top. Health (XLV -1.15%) and Real Estate (XLRE -2.12%) at the bottom.
Expectation: Lower
Indexes declined today after a volatile day for bonds. Yields were rising in the early morning before a robust 30y Bond auction sent yields lower. Jobless claims data released in the morning hit another pandemic low, boosting the economic outlook but raising expectations for the Fed to start tapering bond repurchasing.
The Nasdaq closed with a -0.25% gain for the day. The index could not hold onto a morning rally that formed a long upper wick. The index faded after the rally to end the day with a 3% closing range and 45% red body. Volume was lower than the previous day, and the trading range was within the high and low of Wednesday. There were more declining stocks than advancing stocks.
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Friday, September 10, 2021
Facts: -0.87%, Volume higher, Closing Range: 2%, Body: 91% Red
Good: Stayed above 21d EMA, but maybe just because the market closed
Bad: Failed support at 15,200, all red body candle
Highs/Lows: Lower high, Lower low
Candle: Tiny upper wick and no lower wick, all red body
Advance/Decline: 0.36, three declining stocks for every advancing stock
Indexes: SPX (-0.77%), DJI (-0.78%), RUT (-0.96%), VIX (+11.44%)
Sector List: Materials (XLB -0.02%) and Energy (XLE -0.04%) at the top. Real Estate (XLRE -1.26%) and Utilities (XLU -1.40%) at the bottom.
Expectation: Lower
Markets reacted on fears of a slowing economy while demand remains higher than supply in several parts of the economy, and indicators show continued inflation for producers. The day marks the fourth straight session of declines for equities.
The Nasdaq lost -0.87% for the day on a higher volume than average. The candle is 91% red body with a tiny upper wick and barely visible lower wick. The closing range was 2%. There were three declining stocks for every advancing stock.
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View on the Week
This week investors wrestled with worries over a slowing economic recovery and the timing of the Fed's bond tapering this fall. The short week opened with the Nasdaq reaching a new all-time high, but prices faded from that point through the end of the week. Glitches in cryptocurrency platforms sent Bitcoin and Ethereum lower, while NFTs sent Litecoin higher.
The previous Friday's employment data provided a sour outlook for investors looking for more robust economic growth. That disappointing news came amidst continued concerns over the spread of the Delta variant of COVID, causing more headwinds for the service industry. The result was investors buying up big tech at the beginning of the week. Big tech has shown resilience to the impacts of the pandemic.
The economic data brings up another concern for investors. When will the Fed start to taper bond purchases? At first glance, one could imagine that the slowing growth in payrolls would push tapering out further.
On the contrary, statements from the Fed this week indicated that the economy had recovered enough that bond tapering could still proceed in the short term.
The result was quite a bit of volatility in Treasury bonds. Volatility in the bond market is going to lead to volatility in equities. Both increase risk for large institutional investors who are inevitably going to reduce or hedge positions. So we have a week of distribution days across all the major indexes, with the huge drops coming in mid-day reactions.
The sell-off on Friday afternoon capped the bearish week and was likely investors positioning against further volatility over the weekend.
The Nasdaq declined -1.62% for the week. Volume was higher than the previous week. The closing range is 2%, reflecting the selling on Friday afternoon that continued into the market close.
The Dow Jones Industrial Average (DJI) fell -2.15% for the week. The S&P 500 (SPX) declined -1.69%. The Russell 2000 (RUT) lost -2.81% this week.
The VIX volatility index ended the week up +27.68% over the previous week.
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Sectors
All sectors declined this week as the S&P 500 pulled back from all-time highs. Consumer Discretionary ( XLY ) was poised to end the week with gains before losing those gains in Friday afternoon selling.
Real Estate ( XLRE ) was the worst-performing sector of the week after outperforming the market in the previous week. The sector erased all of last week's 4% gain as investors reversed the trade that is supposed to protect against inflation and benefit from low interest rates.
Utilities ( XLU ) took the top position on Wednesday but gave the lead back to Consumer Discretionary on Thursday.
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Economic Indicators
The US Dollar (DXY) advanced +0.57% for the week.
US Treasuries 30y yield declined this week after there was high demand in an auction on Thursday. The 10y yield rose for the third week. The 2y yield also rose. The 30/5 spread declined for the week.
High Yield (HYG) Corporate Bond prices declined this week while Investment Grade (LQD) Corporate Bond prices advanced.
Silver and Gold fell for the week. Crude Oil was up but has been sticking within a bound range since the end of August. Timber declined for the week.
The big moves in commodities were Copper and Aluminum futures. Copper was up +3.46% for the week. Aluminum soared +7.05% prices and has risen 15% over the past three weeks among reported supply issues.
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Investor Sentiment
The put/call ratio (PCCE) ended the week at 0.728. The level is not overly bearish but is much higher than a week ago when it was near 0.5.
The CNN Fear & Greed Index moved back to Fear and is approaching Extreme Fear.
The NAAIM money manager exposure index fell to 84.68 from 93.95 the previous week.
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Stocks of the Week
This week, Apple (AAPL) led the declines for the four largest mega-caps with a -3.45% loss. The sell-off on Friday came after a judge ruled Apple must loosen the strict rules for sellers in its app store. Microsoft (MSFT) and Alphabet (GOOGL) also ended the week with losses. The three stocks moved below their 21d exponential moving average on the daily chart but remained above the 10w moving average on the weekly chart. Amazon (AMZN) also declined but is trading above these moving averages for now.
Lululemon (LULU) climbed 14% intraday on Thursday before ending the week with a 10% gain. The company smashed earnings expectations and improved its outlook for the remainder of the year.
UP Fintech (TIGR) missed earnings expectations in their report this week but continues to impress investors with strong growth and potential for growth in the future. The stock was up 18% intraday on Friday before closing, with an 8.59% gain for the day.
Peloton (PTON) gained 16% for the week after announcing its private-label apparel brand. The news came on Wednesday, sending the stock 9% and 6% the following two days.
SUMO Digital dropped -14.91% this week despite beating revenue and earnings expectations this week. Analysts downgraded the stock because growth projections were primarily focused on one large customer. The stock is down 60% from its all-time high set in January of this year.
DraftKings (DKNG) and Penn National Gaming (PENN) continue to climb as the college and professional football seasons get underway, with many stadiums allowing near full capacity and bringing some added excitement back to the games and sports betting.
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Cryptocurrency
Bitcoin (BTCUSD) and Ethereum (ETHUSD) dropped sharply this week, declining -11.13% and -13.88% after the rollout of digital currency in El Salvador hit snags among glitches in major trading platforms such as Coinbase (COIN). Coinbase was also down nearly 11% for the week.
Litecoin (LTCUSD) got a boost, advancing +33.14% on the excitement of non-fungible tokens launching on the platform.
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The Week Ahead
Monday
OPEC's Monthly report is due on Monday morning. The Federal Budget Balance comes in the afternoon.
Oracle (ORCL) and H&R Block (HRB) report earnings on Monday.
Tuesday
Inflation data will have everyone's attention on Tuesday with the release of August's consumer price index data.
There are no relevant earnings reports for Tuesday.
Wednesday
Export and Import Price Index data and the NY Empire State Manufacturing Index will be available on Wednesday. Crude Oil Inventories will be available after the market opens.
There are no relevant earnings reports for Wednesday.
Thursday
On Thursday, we will get Retail Sales data for August. Initial Jobless Claims will also be available in the morning.
There are no relevant earnings reports for Thursday.
Friday
Initial Consumer Sentiment data for September, released on Friday, will hopefully improve over the previous month.
There are no relevant earnings reports for Friday.
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The Bullish Side
Investors have been dealing with worries over bond tapering for months. Good and bad economic news has had opposite impacts on markets as investors consider that the Fed might slow bond purchases quicker than previously expected. Each time that has caused a dip in the major indexes that recovers in the following week. While sentiment indicators show fear in the market, the market continues to climb higher on those fears.
Economic growth is being held back not by a lack of demand but a lack of supply across many parts of the economy. The labor market, raw materials, and transportation are all holding back the market from meeting demands. The only place not seeing a high demand now are pandemic-vulnerable segments in the service industry. The market will figure out how to meet demand, and the economy will move forward.
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The Bearish Side
The pending Fed bond purchase taper could be another painful lesson in how bond volatility impacts equity markets. Treasury yields will rise through the end of the year and potentially have an impact similar to when they rose in the first quarter. Expect a series of rotations as investors rebalance portfolios in anticipation of the changing dynamic.
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Key Nasdaq Levels to Watch
This week, the Nasdaq set another all-time high but closed the week lower, resting just above the 21d exponential moving average.
On the positive side, the levels are:
The 10d moving average is at 15,268.34.
A new all-time high was set on Monday at 15,403.44.
The index met several days of resistance around 15,400.
15,500 may be the next area of resistance.
On the downside, there are a few key levels:
The low of the week is 15,111.31, just below Friday's close.
The 21d EMA is at 15,081.46.
15,000 is an area of support.
The 50d MA is at 14,825.85.
14,423.16 is the low of the most recent pullback.
14,200 remains a critical level if the index moves downward.
14,000 has been an area of support/resistance.
There is a pivot at 13,903.73.
A further pullback would likely hit the 200d moving average at 13,771.69. The index hasn't approached this line since rising above it in April 2020.
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Wrap-up
September looks like it will live up to its reputation as the most bearish month of the year. The 2020 September correction took the Nasdaq to a 12% decline. It looks like this month will be a more typical 5-6% dip taking us back to the 14,500 area before getting support. Of course, some economic news could turn that around.
I don't think we are going to see a more severe correction at this point. Even when the Fed starts tapering, they will not be shutting off purchases all at once. It's a taper, not a termination. Interest rate hikes are still far in the future. Using lower borrowing rates on top of high cash accounts, Corporations will spend to meet high demands in the economy. Eventually, supply chain issues will diminish, and companies will show improving P/E ratios, allowing investors to be less concerned about an extended stock market.
Good luck, stay healthy, and trade safe!
Daily Market Update for 9/10Summary: Markets reacted on fears of a slowing economy while demand remains higher than supply in several parts of the economy, and indicators show continued inflation for producers. The day marks the fourth straight session of declines for equities.
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, September 10, 2021
Facts: -0.87%, Volume higher, Closing Range: 2%, Body: 91% Red
Good: Stayed above 21d EMA, but maybe just because the market closed
Bad: Failed support at 15,200, all red body candle
Highs/Lows: Lower high, Lower low
Candle: Tiny upper wick and no lower wick, all red body
Advance/Decline: 0.36, three declining stocks for every advancing stock
Indexes: SPX (-0.77%), DJI (-0.78%), RUT (-0.96%), VIX (+11.44%)
Sector List: Materials (XLB -0.02%) and Energy (XLE -0.04%) at the top. Real Estate (XLRE -1.26%) and Utilities (XLU -1.40%) at the bottom.
Expectation: Lower
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Market Overview
Markets reacted on fears of a slowing economy while demand remains higher than supply in several parts of the economy, and indicators show continued inflation for producers. The day marks the fourth straight session of declines for equities.
The Nasdaq lost -0.87% for the day on a higher volume than average. The candle is 91% red body with a tiny upper wick and barely visible lower wick. The closing range was 2%. There were three declining stocks for every advancing stock.
The Russell 2000 (RUT) led the losses for the day with a -0.96% decline. The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) lost -0.77% and -0.78%. The VIX Volatility Index (VIX) rose +11.44%.
All sectors declined today. Materials (XLB -0.02%) and Energy (XLE -0.04%) performed the best while Real Estate (XLRE -1.26%) and Utilities (XLU -1.40%) were at the bottom of the sector list. It's notable that after 13:00, when the afternoon selling began, Utilities and Consumer Staples outperformed the other sectors.
Producer price index data was higher than expected, showing that inflation will be here for a while. The indicator is a good forward predictor of inflation as higher producer prices get passed along to consumers. The US Dollar strengthened, and Treasury Yields rose after the data was released. The dollar index advanced +0.13%. Both High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices declined for the day.
Aluminum continued its climb, gaining over 7% this week. Copper is also starting to climb sharply, advancing +3.34% for the day. Timber has been on a decline this week and lost another -0.32% on Friday. Crude Oil Futures are still bouncing inside a range since the end of August.
The put/call ratio rose to 0.729 as investors became a bit more bearish on Friday. The CNN Fear & Greed index moved well into the Fear area, approaching Extreme Fear.
Apple (AAPL) lost -3.31% today after a judge ruled that the company must make the rules in its app store more flexible. Microsoft (MSFT) and Alphabet (GOOGL) joined Apple with declines that took them below their 21d EMA. Amazon (AMZN) declined as well but remained above its key moving average lines.
Nvidia (NVDA) topped a shortlist of mega-caps that gained for the day, advancing +1.36%. Apple was the worst-performing mega-cap, followed by United Health (UNH) and Tesla (TSLA).
UP Fintech (TIGR), Peloton (PTON), and Zynga (ZNGA) topped the daily update growth list with more than 6% gains each. Investors forgave UP Fintech for missing expectations as the company still grew sales almost 100% year over year, and the outlook appears promising. After two analyst downgrades, Sumo Digital (SUMO) was at the bottom of the list with a +9.49% decline. Earnings were good, but the growth outlook was driven mainly by a single large customer.
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Looking ahead
OPEC's Monthly report is due on Monday morning. The Federal Budget Balance comes in the afternoon.
Oracle (ORCL) reports earnings on Monday.
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Trends, Support, and Resistance
The Nasdaq lost support at 15,200 and sold off in the afternoon, closing above its 21d exponential moving average. The move had the feeling it would have kept going if the closing bell didn't ring.
The index would need to climb +2.73% on Monday to get back to the trend line from the 8/19 low.
The five-day trend line, which is in decline, ends with a +0.57% gain for Monday.
If the one-day trend continues, the index will decline another +0.62% to start next week.
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Wrap-up
The sour mood for the market in the morning seemed to change around mid-day, but then investors turned defensive again in the afternoon. That sent indexes lower. Although defensive sectors were at the bottom of the daily sector list, they outperformed the other sectors in the afternoon selling.
The question is whether the bearish mood in the afternoon is just defense heading into the weekend while COVID fears continue to rise. Or will markets catch a bottom here, and investors buy the dip to start the week? Based on the chart, I expect Lower on Monday, with little economic news to change the mood.
Stay healthy and trade safe!
IXIC (Nasdaq) - Journal and Projection Entry - 9.10.21
My projection hit within my time-line. Probably see more selling with market then bouncing beginning of the week.
(Opinion only)
Market correction just started.
as you can see, the line has broken.
there is week support line near 15110, but it's also nearly about to break soon.
Daily Market Update for 9/9Summary: Indexes declined today after a volatile day for bonds. Yields were rising in the early morning before a robust 30y Bond auction sent yields lower. Jobless claims data released in the morning hit another pandemic low, boosting the economic outlook but raising expectations for the Fed to start tapering bond repurchasing.
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, September 09, 2021
Facts: -0.25%, Volume lower, Closing Range: 3%, Body: 45% Red
Good: Closed above yesterday's low
Bad: Long upper wick formed after a failed morning rally
Highs/Lows: Lower high, Higher low
Candle: Inside day, long upper wick with very low closing range
Advance/Decline: 0.83, more declining stocks than advancing stocks
Indexes: SPX (-0.46%), DJI (-0.43%), RUT (-0.03%), VIX (+4.68%)
Sector List: Financials (XLF +0.29%) and Energy (XLE +0.21%) at the top. Health (XLV -1.15%) and Real Estate (XLRE -2.12%) at the bottom.
Expectation: Lower
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Market Overview
Indexes declined today after a volatile day for bonds. Yields were rising in the early morning before a robust 30y Bond auction sent yields lower. Jobless claims data released in the morning hit another pandemic low, boosting the economic outlook but raising expectations for the Fed to start tapering bond repurchasing.
The Nasdaq closed with a -0.25% gain for the day. The index could not hold onto a morning rally that formed a long upper wick. The index faded after the rally to end the day with a 3% closing range and 45% red body. Volume was lower than the previous day, and the trading range was within the high and low of Wednesday. There were more declining stocks than advancing stocks.
The Russell 2000 (RUT) started the day outperforming the other indexes, climbing over 1% in the morning. But two sell-offs, one after the 30y auction and the other later in the afternoon, erased those gains ending the day with a -0.03% decline for the small-cap index. The S&P 500 (SPX) declined -0.46%, dragged down by big tech. The Dow Jones Industrial Average (DJI) lost -0.43%.
Three cyclical sectors, Financials (XLF +0.29%), Energy (XLE +0.21%), and Materials (XLB +0.04%), were the only sectors to end the day with gains. Defensive sectors moved to the bottom of the list, with Health (XLV -1.15%) and Real Estate (XLRE -2.12%) having the worst performance.
Initial jobless claims came in better than expected, whereas continuing jobless claims were slightly worse than expected. Crude Oil Inventories showed less demand than forecast. The 30y Bond Auction was the day's big news, with high demand sending yields across all Treasuries lower. It could be that bond investors are moving to US Treasuries as the ECB begins tapering emergency bond purchases in Europe.
The US Dollar Index (DXY) dropped -0.20% for the day while long- and short-term Treasury yields declined. The US Dollar started the day OK but then weakened throughout the morning. It regained some of the loss after the strong 30y bond auction. Both High Yield (HYG) and Investment Grade (LQD) bond prices increased for the day.
Aluminum futures continue to soar higher with another +1.62% gain today. Timber is in its third day of decline. Copper has been bouncing up and down in a bound trading range since the end of August.
The put/call ratio declined to 0.597 for the day. The CNN Fear & Greed index moved further into the fear territory. The NAAIM money manager exposure index fell to 84.68 from 93.95 the previous week.
All four of the largest mega-caps declined today. Microsoft (MSFT) closed below its 21d exponential moving average lien for the first time since June. The other three are still trading above their key moving average lines. Nike (NKE) was the top-performing mega-cap for the day. Most mega-caps declined for the day, with health services companies Johnson & Johnson (JNJ) and Eli Lilly (LLY) performing the worst.
Growth stocks in the daily update list did reasonably well today. Lululemon (LULU) was a top performer, gaining over 10% after smashing earnings expectations and improving outlook in its earnings call yesterday. Shares of Peloton (PTON) were up almost 10% after announcing its private-label clothing brand.
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Looking ahead
We will get a forward-looking update on inflation with the Producer Price Index data in the morning.
Kroger (KR) and UP Fintech (TIGR) release earnings on Friday.
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Trends, Support, and Resistance
The Nasdaq attempted a rally in the morning before dipping below 15,300 again.
The trend line from the 8/19 low points toward a +2.00% gain for Friday.
The five-day trend line leads to a +0.19% gain.
The one-day trend line points to another -0.45% decline to end the week.
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Wrap-up
Treasury yields swung up and down today. They rose slightly before the jobless claims data, then dropped sharply during the 30y bond auction before recovering a bit before the market closed. There will be more volatility as investors change their assessment of when the Fed will begin tapering bond purchasing programs. Once the tapering begins, its expected yields will continue to rise until the end of the year.
Equity markets haven't reacted well during volatility in bonds and the volatility today reversed the morning rally. With the long upper wick and low closing range, the expectation is for Lower tomorrow.
Stay healthy and trade safe!
