IXIC trade ideas
IXIC: Giving us another TA class! Many patterns around!Hello traders and investors! Let’s see how the Nasdaq is doing today!
It didn’t trigger any pullback sign since our last analysis, and as we thought, it is just trending. I see nothing around telling me it’ll drop again, but we have some possible patterns that could cause a pullback here.
First, notice the purple trendline . We talked about this line last week, when the price was still under it, and once defeated, the market did a pullback and found a support at it. This is another classic example of the Principle of Polarity in Technical Analysis: Previous resistances/supports will work as supports/resistances in the future. This happens because the market has a memory, therefore, we have key points we can use.
What’s more, we have a possible H&S chart pattern , and if we trigger the neckline, by losing the 14,660, then we might see a correction ahead.
The daily chart suggests we could drop to the 21 ema, and that would be fine, the trend would still be bullish in the mid-term. If we fail again in closing above the 14,755 then I believe it’ll be an exhaustion sign for real.
The chart looks quite stretched and this makes traders and investors nervous about buying at a possible top level. What’s the solution? Pick amazing stocks that are already near their support levels. I can’t even count how many incredible opportunities are out there, we just need to know where to look.
Meanwhile, watch the points mentioned in this analysis carefully! If you liked this analysis, remember to follow me to keep in touch with my free daily studies, and support this idea if it helped you!
Thank you very much!
Daily Market Update for 7/13Summary: Higher than expected inflation data wasn't enough to keep the indexes from making new highs, but the rally couldn't last, and markets closed lower on Tuesday. A weaker than expected 30y bond auction sent yields higher and spooked investors in the afternoon. Big tech held onto gains, helping the Technology sector end the day in the positive.
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, July 13, 2021
Facts: -0.38%, Volume higher, Closing range: 12%, Body: 26%
Good: Higher high, outside day that keeps index in uptrend, support at ~14,675
Bad: Long upper wick from afternoon selling, red body at bottom of candle
Highs/Lows: Higher high, lower low
Candle: Outside day, long upper wick signals a bearish reversal day
Advanced/Decline: 0.21, five decline stocks for every advancing stock
Indexes: SPX (-0.35%), DJI (-0.31%), RUT (-1.88%), VIX (+5.88%)
Sectors: Technology (XLK +0.41%) and Consumer Staples (XLP -0.03%) at the top. Consumer Discretionary (XLY -1.20%) and Real Estate (XLRE -1.30%) were the bottom.
Expectation: Lower
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Market Overview
Higher than expected inflation data wasn't enough to keep the indexes from making new highs, but the rally couldn't last, and markets closed lower on Tuesday. A weaker than expected 30y bond auction sent yields higher and spooked investors in the afternoon. Big tech held onto gains, helping the Technology sector end the day in the positive.
The Nasdaq closed the day with a -0.38% loss on higher volume. The candle has a long upper wick that represents the morning rally which turned into an afternoon sell-off. The 26% red body sits at the bottom of the candle, creating a 12% closing range above a short lower wick. The outside day with a bearish reversal confirms the underlying weakness where five stocks declined for every advancing stock.
The Dow Jones Industrial Average (DJI) declined -0.31% for the day. The S&P 500 (SPX) lost -0.35%. Small caps were hit the worst, with the Russell 2000 (RUT) dropping -1.88%.
The VIX volatility index rose +5.88%.
Technology (XLK +0.41%) was the only sector to end the day with gains. Consumer Staples (XLP -0.03%) was the second-best sector in the list. Consumer Discretionary (XLY -1.20%) and Real Estate (XLRE -1.30%) were the worst-performing. Despite great earnings reports, the outlook for big banks was not spectacular, sending the Financial sector (XLF -1.08%) lower.
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Economic Indicators
The US Dollar (DXY) advanced +0.60% for the day.
The US 30y, 10y, and 2y Treasury yields advanced for the day, and the gap between long-term and short-term yields widened. The 30y auction that occurred today was weaker than expected.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined significantly from recent highs.
Silver (SILVER) declined while Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) advanced.
Timber (Wood) declined.
Copper (COPPER1!) declined while Aluminum (ALI1!) advanced.
Bitcoin (BTCUSD) declined -1.51%. Ethereum (ETHUSD) declined -4.94%. (Time of writing)
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Investor Sentiment
The put/call ratio declined to 0.598. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side.
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Market Leaders
Of the four largest mega-caps, only Amazon (AMZN) declined today, losing -1.11%. The others ended the day with gains and record closes but could not hold onto intraday highs. Microsoft (MSFT) rose +1.32%. Apple (AAPL) gained +0.79%. Alphabet (GOOGL) advanced +0.29%.
PepsiCo (PEP) topped the mega-cap list after pleasing investors with a great earnings report and raised forecast. Mastercard (MA), Alibaba (BABA), and Visa (V) make up the rest of the top four mega-caps for today. Tesla (TSLA) gave back much of yesterday's gains, ending today at the bottom of the list. Bank of America (BAC) and JP Morgan (JPM) were also at the bottom of the list despite JP Morgan releasing a great earnings report. Watch to see how the market responds to JPM over the next few days to signal how earnings season will go for this quarter.
It was not a great day for growth stocks, but there were some winners in the daily update list. Upwork (UPWK) gained over 5% and topped the list. JD.Com (JD), Alibaba (BABA) were number two and three as Chinese stocks began to climb back from the sell-off last week. Okta (OKTA) was the fourth-best growth stock on the list. The biggest losers were Etsy (ETSY), Penn National Gaming (PENN), Sumo Digital (SUMO), and Lemonade (LMND).
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Looking ahead
The producer price index data released on Wednesday will compliment Tuesday's consumer numbers. The produce prices show a leading indicator of inflation before it passes along to consumers. Jerome Powell is going before congress again to talk monetary policy. Play the suspense music here.
Bank of America (BAC), Wells Fargo (WFC), Citigroup (C ), BlackRock (BLK) are among the big finance companies reporting earnings before the market opens. Delta Airlines (DAL) will also be a critical earnings release to watch and measure how airlines are recovering as the economy reopened further this past quarter.
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Trends, Support, and Resistance
The Nasdaq set a new all-time high for a second day but could not hold the level, closing lower for the day. It seems there is support around 14,675, which we'll look to hold in tomorrow's session.
The trend line from the 5/12 low shows a +0.94% gain for Wednesday.
The five-day trend line leads to a +0.71% gain.
The one-day trend line points to a -0.53% loss.
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Wrap-up
It was a surprise to see the indexes rally after inflation data was higher than expected. The weak 30y bond auction was enough to reverse the positive sentiment and send indexes lower. Tomorrow's producer price index data will add to the story, providing a heads up for more or less inflation coming down the road.
Positive earnings reports for big banks didn't seem to matter today, but we'll see how investors respond to the sector over the next few days. The initial reaction may reverse, and we could see the sector go higher. That would be a positive sign for the next wave of earnings reports in the following weeks.
Stay healthy and trade safe!
Daily Market Update for 7/12Summary: New all-time highs across three of the major indexes is not a bad way to start the week. The 10-year Treasury note auction passed without many surprises, giving the indexes a boost in the afternoon.
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, July 12, 2021
Facts: +0.21%, Volume higher, Closing range: 69%, Body: 12%
Good: Higher high, higher low, body and closing range in upper half of candle
Bad: Red body, low advance/decline ratio
Highs/Lows: Higher high, higher low
Candle: Thin red body in upper half of the candle, long lower wick from morning dip
Advanced/Decline: 0.8, more declining stocks than advancing stocks
Indexes: SPX (+0.35%), DJI (+0.36%), RUT (+0.08%), VIX (-0.06%)
Sectors: Financials (XLF +0.98%) and Real Estate (XLRE +0.87%) at the top. Energy (XLE -0.15%) and Consumer Staples (XPL -0.16%) were the bottom.
Expectation: Sideways or Higher
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Market Overview
New all-time highs across three of the major indexes is not a bad way to start the week. The 10-year Treasury note auction passed without many surprises, giving the indexes a boost in the afternoon.
The Nasdaq closed with a +0.21% advance on slightly higher volume. The candle shows a bit of indecision as markets dipped in the morning but then recovered and made gains in the afternoon after the auction. The 12% Red body in the upper half of the candle is above a long lower wick. The closing range is 69%. There were more declining stocks than advancing stocks.
The Dow Jones Industrial Average (DJI) performed the best for the day with a +0.36% advance. The S&P 500 (SPX) gained +0.35%. The Russell 2000 (RUT) opened the day with a loss but climbed back to end with a +0.08% gain.
The VIX volatility index declined -0.06%.
Financials (XLF +0.98%) and Real Estate (XLRE +0.87%) were at the top of the sector list. Financials is kicking off a big earnings week that will be watched closely by investors. Expect investors to focus on guidance as much or more than they do the results. There were only two declining sectors, Energy (XLE -0.15%) and Consumer Staples (XPL -0.16%).
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Economic Indicators
The US Dollar (DXY) advanced +0.13% for the day.
The US 30y and 10y Treasury yields advanced for the day following the 10y note auction. The 2y Treasury yield also all advanced.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) advanced while Gold (GOLD) declined.h
Crude Oil (CRUDEOIL1!) declined.
Timber (Wood) declined.
Copper (COPPER1!) and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) declined -3.37%. Ethereum (ETHUSD) declined -4.87%.
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Investor Sentiment
The put/call ratio declined to 0.637. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is moving toward neutral.
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Market Leaders
Of the four largest mega-caps, only Alphabet (GOOGL) advanced for today, gaining +1.16%. Apple (AAPL) declined -0.42%. Microsoft (MSFT) fell -0.22%. Amazon (AMZN) declined just -0.02%. All four are trading above moving average lines.
Tesla (TSLA) and Walt Disney (DIS) were the top mega-caps for the day, both gaining more than 4%. ASML Holding (ASML) and Nvidia (NVDA) round out the top four. At the bottom of the list are Cisco Systems (CSCO), Salesforce.com (CRM), Abbott Laboratories (ABT), and Oracle (ORCL).
Tesla and Nvidia also top the daily update growth list. Joining them in the top four are Peloton (PTON) and NIO (NIO). At the bottom of the list are Fiverr (FVRR), UP Fintech (TIGR), Fastly (FSLY), and Pinterest (PINS).
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Looking ahead
On Tuesday, investors will get a fresh look at the consumer price index data. It's likely to continue showing higher inflation in general. Compare the total CPI number to the Core CPI, which excludes Fuel and Food. Investors will also look closely at what subcomponents drive inflation and how transitory prices will be in those areas.
Weekly API Crude Oil numbers will be available in the afternoon after the market closes.
JP Morgan (JPM) and Goldman Sachs (GS) will kick-off earnings season with pre-market earnings reports. PepsiCo (PEP) will also release earnings in the morning. Another potentially interesting report to watch is Fastenal (FAST) wholesale distributor. Look for signs of more stress or relief in the supply chain.
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Trends, Support, and Resistance
The Nasdaq set a new all-time high but could not hold the level, closing slightly lower.
The trend line from the 5/12 low shows a +0.34% gain for Tuesday.
The one-day trend line points to a +0.06% gain.
The five-day trend line leads to a -0.19% loss.
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Wrap-up
Today's 10y note auction went by without any big surprises. We seem to be past the volatility in Treasure Yields that happened last week.
Now all eyes turn toward the first earnings reports from big banks tomorrow morning. Investors will also react to any surprises with the Consumer Price Index data released before the market opens.
Stay healthy and trade safe!
Market Week in Review - 7/6/2021 - 7/9/2021Summary: This week's uncertainty around how fast the economy is recovering drove volatility in cyclical sectors while sending Treasury yields on a slide that exasperated investors' worries. Still, the major indexes narrowly secured gains for the week while the S&P 500 and Dow Jones Industrial Average (DJI) set new records.
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, July 6, 2021
Facts: +0.17%, Volume higher, Closing range: 85%, Body: 1%
Good: High closing range, long lower wick shows recovery from dip
Bad: Volatile outside day with doji star candle, bearish pattern
Highs/Lows: Higher high, lower low
Candle: Doji star candle with longer lower wick, outside day
Advanced/Decline: 0.3, more than three declining stocks for every advancing stock
Indexes: SPX (-0.20%), DJI (-0.60%), RUT (-1.36%), VIX (+9.08%)
Sectors: Real Estate (XLRE +0.89%) and Utilities (XLU +0.42%) at the top. Financials (XLF -1.75%) and Energy (XLE -3.25%) were at the bottom.
Expectation: Sideways or Lower
It was a roller-coaster day for the market as prices dipped in the morning and recovered in the afternoon. Investors reacted to the Purchasing Managers index data that indicates the economic recovery may be slowing. Although the Nasdaq could finish the day with a small gain, most stocks across the index declined for the day.
The Nasdaq closed with a +0.17% gain, beginning the day with a gap at open but quickly selling off in the morning. Eventually, the bulls came in and brought the index back just above where it opened. The volume was higher than the previous day, and the mid-day reversal ended with a high 85% closing range. The close, being just above the open, created a slim 1% body. The outside day, doji star candle signals a bearish reversal pattern. Despite the gain in the index, there were more than three declining stocks for every advancing stock.
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Wednesday, July 7, 2021
Facts: +0.01%, Volume higher, Closing range: 28%, Body: 51%
Good: Higher high, higher low
Bad: Couldn't hold morning high, low A/D ratio
Highs/Lows: Higher high, higher low
Candle: Large red body with no upper wick, lower wick created from a morning dip
Advanced/Decline: 0.33, three declining stocks for every advancing stock
Indexes: SPX (+0.34%), DJI (+0.30%), RUT (-0.95%), VIX (-1.46%)
Sectors: Materials (XLB +1.04%) and Industrials (XLI +1.00%) at the top. Communications (XLC -0.15%) and Energy (XLE -1.63%) were at the bottom.
Expectation: Sideways or Lower
Investors rotated back to cyclical stocks after they underperformed yesterday. Mega-caps also did well on a day with no huge surprises in economic news. Jobs data was a bit lower than expected, but not bad, and there were no unexpected statements in the Fed minutes.
The Nasdaq ended the day with a +0.01% gain, carried mainly by mega-caps. There continues to be a much higher number of declining stocks than advancing stocks, with a ratio of 3 to 1 today. The closing range of 28% follows a morning gap-up that quickly sold off to create a long lower wick. The index recovered some of the loss, leaving a 51% red body over the long lower wick.
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Thursday, July 8, 2021
Facts: -0.72%, Volume lower, Closing range: 79%, Body: 63%
Good: Closed above 14,500 support area, lower volume on down day
Bad: Gap down at open, lower high, lower low
Highs/Lows: Lower high, lower low
Candle: Large green body in the middle of two short wicks, the upper wick is slightly longer
Advanced/Decline: 0.37, nearly three declining stocks for every advancing stock
Indexes: SPX (-0.86%), DJI (-0.75%), RUT (-0.94%), VIX (+17.27%)
Sectors: Real Estate (XLRE -0.09%) and Consumer Discretionary (XLY -0.25%) at the top. Industrials (XLI -1.29%) and Financials (XLF -2.00%) were bottom.
Expectation: Sideways or Lower
Is it a pullback from a new high and or the start of a more significant correction? You won't find any easy answers in the data. A few weeks ago, investors were worried about an overheating economic recovery, and now they seem worried about a slowing recovery.
The Nasdaq closed with a -0.72% decline on lower volume. The gap-down at open looked severe and dropped the index below the 14,500 support area, but a mid-day rally brought it back above the support line. The rally created a 63% green body. Prices faded in the late afternoon to create an upper wick and finish the day with a 79% closing range. The lower high and lower low combination is the first in several weeks of gains. The advance/decline line remains low, with almost three declining stocks for every advancing stock.
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Friday, July 9, 2021
Facts: +0.98%, Volume lower, Closing range: 78%, Body: 98%
Good: Close above the weekly open, high closing range, A/D ratio
Bad: Lower volume
Highs/Lows: Higher high, higher low
Candle: Mostly green body, slightly longer lower wick
Advanced/Decline: 2.51, five advancing stocks for every two declining stocks
Indexes: SPX (+1.13%), DJI (+1.30%), RUT (+2.17%), VIX (-14.94%)
Sectors: Financials (XLF +2.89%) and Energy (XLE +2.13%) at the top. Health (XLV +0.34%) and Utilities (XLU +0.12%) were bottom.
Expectation: Higher
Friday brought a confident end to a short but volatile week. After the bond yield slide caused a sell-off the previous day, yields recovered, and investors moved back into equities. In contrast to Thursday, all sectors closed with gains on Friday.
The Nasdaq closed with a +0.98% advance, with gains broadly shared across the index. There were five advancing stocks for every declining stock. The only thing missing was the volume which was much lower than the previous day. Nonetheless, the high closing range of 95% and the green body that spans 78% of the candle are bullish. It also helps close the week with a positive weekly gain.
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View on the Week
This week's uncertainty around how fast the economy is recovering drove volatility in cyclical sectors while sending Treasury yields on a slide that exasperated investors' worries. Still, the major indexes narrowly secured gains for the week while the S&P 500 and Dow Jones Industrial Average (DJI) set new records.
The week opened with investors taking defensive positions in Real Estate and Utilities, showing nervousness over new developments in the pandemic. Among recent surges in the number of cases identified as the Delta variant, Pfizer added worries that the vaccinated population might require a six-month booster shot to remain safe.
In a demonstration of just how confused investors are about economic data, cyclical sectors sold off on Tuesday, were repurchased on Wednesday, sold off again on Thursday, and bought back on Friday. Despite gains on the first two days, the number of declining stocks outnumbered advancing stocks 3 to 1 most of the week. The increases in the indexes for the first three days were driven primarily by mega-caps.
The most significant sign of change in investors thinking was in the sliding yields for Treasury notes. Yields have been dropping since economic data started to show the recovery is progressing slower than previously expected. Never mind that the economy is still expanding at a historically high rate and inflation continues to be a concern. Analysts needed to recalculate and rebalance for the new speed.
The slide in yields came to a critical moment on Thursday when investors who were betting that yields would rise needed to cover those positions. Bond yields move in the opposite direction of prices. Investors were expecting yields to go up, and prices to go down and took short positions in those bonds. When the opposite happened, they needed to buy back the bonds to cover the short position. The result was even higher prices and lower yields.
Once bond investors covered those positions, we saw a recovery of yields on Friday and a boost in equities as investors came back into the market. The story is not over yet. There were more advancing stocks than declining stocks on Friday, but volume in the market was meager.
The Nasdaq advanced +0.43% this week. Volume was slightly higher than the previous week but lower than average for this year. The low is lower than the last week, and the high is higher, marking an outside week for the index. The closing range of 86% is healthy. The long lower wick represents the dip on Thursday that was bought on Friday.
The S&P 500 (SPX) closed the week at another record, advancing +0.40% for the week. The Dow Jones Industrial Average (DJI) also had a record close with a +0.24% gain for the week. The picture was not quite as rosy for small caps, with the Russell 2000 (RUT) declining most of the week. The index gained on Friday, but not enough to end the week positively, falling -1.12% for the week.
The VIX volatility advanced +7.23% for the week. It climbed almost 42% intra-week.
The short week was defined mainly by Thursday's sell-off in equities as Treasury bond yields were sliding. That gave a boost to two defensive sectors, Real Estate ( XLRE ) and Utilities ( XLU ), but the two sectors were already leading from Monday. The worries ended on Friday, but the two sectors remained in the lead for the week.
Technology ( XLK ) and Consumer Discretionary ( XLY ) were the next two sectors at the top of the list, showing a mix of risk-on and risk-off sentiment throughout the week.
The cyclical sectors moved from the top of the sector list on Wednesday to the bottom of the list on Thursday, back to the top of the list on Friday.
Energy ( XLE ) was a consistent loser throughout the week until finally finding itself at the top of the list on Friday. However, the gains were not enough to move it out of the bottom position for the week.
Treasury yields on the 30y, 10y, and 2y all declined for the week. The gap between long-term yields and short-term yields continues to close while the yield curve shape is normalizing.
High Yield Corporate Bond (HYG) prices declined slightly but remained near pre-pandemic highs. Investment Grade Bond (LQD) prices advanced.
The US Dollar (DXY) declined -0.15% for the week.
Silver (SILVER) declined -1.36%, and Gold (GOLD) advanced +1.15%.
Crude Oil (CRUDEOIL1!) declined -0.77% after clearing its 2018 high last week and setting a new high on Monday.
Timber (WOOD) advanced +2.44%.
Copper (COPPER1!) advanced +1.33%.
Aluminum (ALI1!) declined -2.48%.
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Big Four Mega-caps
Microsoft (MSFT) and Alphabet (GOOGL) signaled indecision among investors with their weekly candles. Despite the uncertainty, Microsoft and Alphabet gained +0.10% and +0.21%, respectively. Apple (AAPL) and Amazon (AMZN) showed very bullish weeks. Amazon gained +5.93%, continuing momentum after the government ended an exclusive contract with Microsoft and opened up opportunities for other cloud vendors. Apple gained +3.68% for the week.
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The Four Recovery Stocks
I picked four recovery stocks to track against the indexes and other indicators in this weekly report. Given the worries over the economic recovery and new fears for the pandemic, it's no surprise to see the continued losses in the recovery stocks. Only Marriott (MAR) ended the week with gains, advancing +0.86%. Exxon Mobil (XOM) declined -3.07%. Delta Airlines (DAL) lost -2.79%. Carnival Cruise Lines (CCL) had the most significant decline, falling -6.91%. All four closed the week above their 40-week moving average.
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Cryptocurrency
I started tracking four major cryptocurrencies on the week in review. The four are Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. The latter two are not the largest by market cap but seem to be well-known and are part of the CIX capital.com index, tracking five cryptocurrencies, including these four (Ripple is the fifth).
All four cryptocurrencies declined for the week as they consolidate in sideways trends. Volume is shrinking while bases develop. At the time of writing, Bitcoin (BTCUSD) declined -2.60%. Ethereum (ETHUSD) fell -7.55%. Litecoin (LTCUSD) dropped -7.28%. Bitcoin Cash (BCHUSD) declined -5.20%.
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Investor Sentiment
The put/call ratio (PCCE) moved higher, ending the week at 0.735. A contrarian indicator, when the put/call ratio is below 0.7, it signals overly bullish sentiment and could mean an overbought market.
The CNN Fear & Greed Index moved further into the fear side mid-week but is on its way back toward neutral.
The NAAIM Exposure Index shows money managers at 82.54 average exposure among active money managers. The survey occurs on Wednesdays, so the number does not include any of the selling on Thursday.
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The Week Ahead
The week will start slow, but earnings reports will pick up as Financials kick off the earnings season.
Monday
The USDA will release the monthly agriculture supply and demand estimate report on Monday. Investors will also watch the 10y and 3y note auction closely in the afternoon.
There are no relevant earnings reports for the daily update on Monday.
Tuesday
On Tuesday, investors will get a fresh look at the consumer price index data. It's likely to continue showing higher inflation in general. Compare the total CPI number to the Core CPI, which excludes Fuel and Food. Investors will also look closely at what subcomponents drive inflation and how transitory prices will be in those areas.
Weekly API Crude Oil numbers will be available in the afternoon after the market closes.
JP Morgan (JPM) and Goldman Sachs (GS) will kick-off earnings season with pre-market earnings reports. PepsiCo (PEP) will also release earnings in the morning. Another potentially interesting report to watch is Fastenal (FAST) wholesale distributor. Look for signs of more stress or relief in the supply chain.
Wednesday
The producer price index data released on Wednesday will compliment Tuesday's consumer numbers. The produce prices show a leading indicator of inflation before it passes along to consumers.
Bank of America (BAC), Wells Fargo (WFC), Citigroup (C ), BlackRock (BLK) are among the big finance companies reporting earnings before the market opens. Delta Airlines (DAL) will also be a critical earnings release to watch and measure how airlines are recovering as the economy reopened further this past quarter.
Thursday
Two sets of data will be in focus on Thursday. First, the weekly Initial Jobless Claims will show how the labor market is progressing. Second, the Manufacturing and Industrial Production data in the morning will be closely watched as investors continue to measure the speed of the economic recovery.
Taiwan Semiconductor (TSM) will release earnings on Thursday. The earnings release and commentary should show how stretched the semiconductor giant is to meet demand. The impact may be among auto manufacturers who've had to put plants on hold, waiting for chips from suppliers. Other large producers of electronics will also be impacted.
In addition, UnitedHealth (UNH), Morgan Stanley (MS), U.S. Bancorp (USB), Progressive (PGR), and Cintas (CTAS) will be interesting reports to watch out for on Thursday.
Friday
The focus will be on Retail Sales data on Friday morning. Consumer Sentiment and Consumer Expectations data will be available after the market opens.
Friday's earning reports include Honeywell (HON) and Charles Schwab (SCHW).
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The Bullish Side
Sliding Treasury Yields tested investor confidence this past week. The markets largely passed the test as yields recovered and the indexes moved higher. There are some key things we can look to for a bullish outlook.
First, the lowering treasury yields drive borrowing costs lower for companies. The result is that investors are further buying up both Investment Grade Corporate Bonds and High Yield "Junk" Bonds. Although yields on those bonds also drop as prices go up, the yields are higher than government bonds, and the purchases reflect confidence in US businesses to pay back debts.
If inflation is really going to stick, funding growth via cheap debt now could be a smart move by companies. Use the purchasing power now before further inflation hits, and then as inflation continues, the debt obligation becomes cheaper over time. There are plenty of examples in history of wise business owners funding massive growth by acquiring debt in the face of inflation.
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The Bearish Side
The indexes are extended as they continue to set new record closes. As uncertainty remains around how quickly the economy is expanding, investors will continue to rotate between sectors and cap segments. The volatility will send a portion of smart money to safer bets elsewhere. The pullback isn't necessarily a bad thing but will undoubtedly be painful for some.
As supply chain pressure remains among higher demand from consumers, inflation will remain a concern. This week's CPI and PPI data may be a crushing blow to investor confidence. Higher than expected numbers will drive more volatility in both bond and equity markets.
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Key Nasdaq Levels to Watch
The Nasdaq set another all-time high this week before pulling back on economic worries on Thursday. Still, the index remained above the 21d moving average and continues to track along with a regression trend mid-line from the 5/12 low.
On the positive side, the levels are:
The high of this past week was a new all-time high at 14,755.33.
The mid-point of the regression trend from the 5/12 low points to 14,914 by the end of the week.
The round number 15,000 is likely to be a new area of resistance.
On the downside, there are a few key levels:
The 10d MA is at 14,564.53.
14,500 is a support area developed from three days of sideways trading this week.
The low of this past week is 14,371.59.
The 21d EMA is at 14,363.62.
14,000 has been a key area of support/resistance.
The 50d MA is at 13,926.79.
There is a pivot at 13,548.93. This is a "higher low" in the current uptrend.
There is a support area at 13,000. 13,002.54 is a pivot from May.
13,026.58 is the 200d MA. This could be a support point if the index falls below 13,000.
12,397.05 is a low pivot point from the early March dip.
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Wrap-up
The mixed sentiment among investors on the economic recovery is interesting. Yes, the economic recovery is slowing, yet it's still expanding at a higher than standard rate. The Fed's monetary policy seems to be supporting the growth while still allowing room to taper if the recovery drives unacceptable levels of inflation.
That's driving yields lower, bringing borrowing costs down. Small and large companies can borrow at those reduced rates to drive further growth. If inflation continues, the costs to servicing the debt only become cheaper. That to me appears bullish, but maybe I'm a fool.
Only history will be the final judge of who is wise and who is a fool. Follow price!
Good luck, stay healthy, and trade safe!
Daily Market Update for 7/9Summary: Friday brought a confident end to a short but volatile week. After the bond yield slide caused a sell-off the previous day, yields recovered, and investors moved back into equities. In contrast to Thursday, all sectors closed with gains on Friday.
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, July 9, 2021
Facts: +0.98%, Volume lower, Closing range: 78%, Body: 98%
Good: Close above the weekly open, high closing range, A/D ratio
Bad: Lower volume
Highs/Lows: Higher high, higher low
Candle: Mostly green body, slightly longer lower wick
Advanced/Decline: 2.51, five advancing stocks for every two declining stocks
Indexes: SPX (+1.13%), DJI (+1.30%), RUT (+2.17%), VIX (-14.94%)
Sectors: Financials (XLF +2.89%) and Energy (XLE +2.13%) at the top. Health (XLV +0.34%) and Utilities (XLU +0.12%) were bottom.
Expectation: Higher
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Market Overview
Friday brought a confident end to a short but volatile week. After the bond yield slide caused a sell-off the previous day, yields recovered, and investors moved back into equities. In contrast to Thursday, all sectors closed with gains on Friday.
The Nasdaq closed with a +0.98% advance, with gains broadly shared across the index. There were five advancing stocks for every declining stock. The only thing missing was the volume which was much lower than the previous day. Nonetheless, the high closing range of 95% and the green body that spans 78% of the candle are bullish. It also helps close the week with a positive weekly gain.
The Russell 2000 (RUT) performed the best for the day as investors swung back into small caps. The index gained +2.17% but still closed with a weekly loss. The Dow Jones Industrial Average (DJI) and S&P 500 (SPX) soared back to another set of record closes with +1.30% and +1.13% gains today.
The VIX volatility index declined -14.94%.
All sectors gained today, and cyclical sectors moved back to the top of the sector list. Financials (XLF +2.89%) and Energy (XLE +2.13%) were at the top of the list, followed by Materials (XLB +1.97%) and Industrials (XLI +1.58%). Health (XLV +0.34%) and Utilities (XLU +0.12%) were at the bottom of the list, as investors did not take defensive positions heading into the weekend.
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Economic Indicators
The US Dollar (DXY) declined -0.27% for the day.
Bond yields recovered from the previous day's drop. The US 30y, 10y, and 2y Treasury yields all advanced.
High Yield Corporate Bond (HYG) prices advanced while Investment Grade Corporate Bond (LQD) prices declined. Both are in an uptrend.
Silver (SILVER) and Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) advanced.
Timber (Wood) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) advanced.
Bitcoin (BTCUSD) advanced +2.82%. Ethereum (ETHUSD) advanced +1.50%.
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Investor Sentiment
The put/call ratio rose to 0.735. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, moving back toward neutral.
The NAAIM Exposure Index shows money managers at 82.54 average exposure among active money managers. The survey occurs on Wednesdays, so the number does not include any of the selling on Thursday.
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Market Leaders
Apple (AAPL) climbed back to all-time highs with a +1.31% advance on Friday. Alphabet (GOOGL) gained +0.38%. Microsoft (MSFT) advanced +0.19%. Amazon (AMZN) was the only of the largest four mega-caps to decline for the day, losing -0.32% but still very extended above moving average lines.
Big banks led the mega-cap list, with Bank of America (BAC) and JP Morgan Chase (JPM) gaining more than 3%. Also in the top four were Alibaba (BABA) and ASML Holding (ASML). At the bottom of the list were Eli Lilly (LLY), Comcast (CMCSA), and Amazon (AMZN). The handful of losers in the mega-cap list all lost less than 1%.
There were also only a handful of losers in the daily update growth list. The top gainers were Snowflake (SNOW), SNAP (SNAP), Chewy (CHWY), and Upwork (UPWK). At the bottom of the list were Peloton (PTON), Zynga (ZNGA), Etsy (ETSY), and DocuSign (DOCU)
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Looking ahead
The USDA will release the monthly agriculture supply and demand estimate report on Monday. Investors will also watch the 10y and 3y note auction closely in the afternoon.
There are no relevant earnings reports for the daily update on Monday, but that will change by Tuesday as earnings season kicks off next week.
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Trends, Support, and Resistance
The Nasdaq was able to close with a weekly gain, recovering from yesterday's losses. It's in a position to make another new all-time high in the next week if trends continue.
The one-day trend line points to a +0.85% gain for Monday.
The trend line from the 5/12 low shows a +0.30% gain.
The five-day trend line leads to a -0.45% loss to start the week.
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Wrap-up
After a "the sky is falling" moment with bond yields on Thursday, everything seemed to be back to normal on Friday. The thesis that bond traders were covering for short positions seemed to be correct. The performance of the treasury note auctions on Monday afternoon will be a better signal of the health of the bond market.
Based on the two thick-bodied, green candles on Thursday and Friday, the expectation is for Higher on Monday.
Stay healthy and trade safe!
The Nasdaq or the Fed Balance Sheet..❔Since 2008 the Federal Reserve balance sheet has increased steadily from $ 870 billion to 4 trillion USD. In the last year, it has doubled again to $ 8 trillion. This suggests that the FED has printed more DOLLARS in the last year than it has in the previous 100. The Nasdaq has experienced a similar growth cycle over thae same period; strange that...
NASDAQ Overall View. We're at wave 3 (yellow). 10/July/21 NASDAQ Overall perspective, Index price probably at wave 3 (yellow) which is not completed yet.
New Bubble in developmentExpecting it ends in late 2021. It seems it is safe to invest in NASDAQ:NDAQ for now because we are in the middle of the bubble, but as more and more "investors" from Robinhood is coming at the market as more bubbling we see. And eventually, the bubble will brakes. Together with the recession scenario and low-interest rates this is likely to happen someday in 2021
IXIC: Be careful with these points! Time to buy or sell?Hello traders and investors! Let’s see how the NDX is doing today!
The index crashed a little this week, which is fine, but I find it curious that some people panic over just a 2% correction. The key is to have balance, and to know where to buy/sell.
Now it is not the time to buy Nasdaq, but I don’t think it is time to sell it either. The trend is clearly bullish , and let’s not forget Dow Theory 5th tenet: Trends persist until a clear reversal occurs . As long as we don’t see a clear reversal, all we can assume is that it’ll keep pushing up.
What would be an alarming sign? If the index loses the 14,511 (black line), after failing in defeating the purple trendline. We may drop to the 21 ema, or even a little bit below this point, and do some sideways movements for the next few days, but not lose the 14,511, as this will indicate exhaustion.
The daily chart suggests that a pullback to the 21 ema is plausible, but for now, we have no pullback signs around. The moment to buy was around May, when my followers and I bought many stocks, like PLTR, PINS, MSFT, AAPL, ARKK and many others at their dips . Now it is time to manage positions.
Now the amount of stocks trading at a discount is limited (there are still a lot there, if you know where to look), and if you want to trade, do it with caution. I’m neutral on Nasdaq, but still see some opportunities around.
Let’s watch these points and we’ll be just fine. Remember to follow me to keep in touch with my daily studies, and support this idea if it helped you!
Have a good weekend!
Daily Market Update for 7/8Summary: Is it a pullback from a new high and or the start of a more significant correction? You won't find any easy answers in the data. A few weeks ago, investors were worried about an overheating economic recovery, and now they seem worried about a slowing recovery.
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, July 8, 2021
Facts: -0.72%, Volume lower, Closing range: 79%, Body: 63%
Good: Closed above 14,500 support area, lower volume on down day
Bad: Gap down at open, lower high, lower low
Highs/Lows: Lower high, lower low
Candle: Large green body in the middle of two short wicks, the upper wick is slightly longer
Advanced/Decline: 0.37, nearly three declining stocks for every advancing stock
Indexes: SPX (-0.86%), DJI (-0.75%), RUT (-0.94%), VIX (+17.27%)
Sectors: Real Estate (XLRE -0.09%) and Consumer Discretionary (XLY -0.25%) at the top. Industrials (XLI -1.29%) and Financials (XLF -2.00%) were bottom.
Expectation: Sideways or Lower
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Market Overview
Is it a pullback from a new high and or the start of a more significant correction? You won't find any easy answers in the data. A few weeks ago, investors were worried about an overheating economic recovery, and now they seem worried about a slowing recovery.
The Nasdaq closed with a -0.72% decline on lower volume. The gap-down at open looked severe and dropped the index below the 14,500 support area, but a mid-day rally brought it back above the support line. The rally created a 63% green body. Prices faded in the late afternoon to create an upper wick and finish the day with a 79% closing range. The lower high and lower low combination is the first in several weeks of gains. The advance/decline line remains low, with almost three declining stocks for every advancing stock.
The S&P 500 (SPX) declined -0.86%, recovering after nearly dropping below its 21d EMA. The Dow Jones Industrial Average (DJI) fell -0.75%. The Russell 2000 (RUT) seems to be in the most trouble, with a decline of -0.94% today.
The VIX volatility index soared +17.27%.
All sectors lost ground today, and cyclical sectors moved back to the bottom of the sector list. Real Estate (XLRE -0.09%), Consumer Discretionary (XLY -0.25%), and Utilities (XLU -0.29%) were at the top of the list.
Industrials (XLI -1.29%) and Financials (XLF -2.00%) were at the bottom.
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Economic Indicators
The US Dollar (DXY) declined -0.37% for the day.
The big news today was the continued slide of government bond yields worldwide. The US 30y, 10y, and 2y Treasury yields continue to decline as the gap between long-term and short-term yields tighten.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) advanced slightly.
Timber (Wood) declined.
Copper (COPPER1!) and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) declined -3.26%. Ethereum (ETHUSD) declined -8.38%. (Time of writing)
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Investor Sentiment
The put/call ratio rose to 0.665. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is moved much further to the fear side.
The NAAIM Exposure Index shows money managers at 82.54 average exposure among active money managers. The survey occurs on Wednesdays, so the number does not include any of the selling on Thursday.
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Market Leaders
Amazon (AMZN) gained +0.94% today, helping the Consumer Discretionary sector to remain high in the sector list. The other three largest mega-caps declined but remain extended above moving average lines. Alphabet (GOOGL) is the closest to its moving average lines, falling -1.13% today. Apple (AAPL) pulled back -0.92% after several days of rally. Microsoft (MSFT) is also pulling back from a new all-time high, losing -0.90% today.
Only a handful of mega-caps gained today. Tesla (TSLA), Amazon (AMZN), Eli Lilly (LLY), and Novartis AG (NVS) topped the mega-cap list. Alibaba (BABA) the worst-performing in the list as Chinese stocks continue to sell-off. AT&T (T), Bank of America (BAC), and ASML Holding (ASML) were others at the bottom of the list.
The daily update growth list also had more losers than gainers. The most significant gains included Etsy (ETSY), Penn National Gaming (PENN), Fastly (FSLY), and Tesla (TSLA). Alibaba (BABA), FUTU Holding (FUTU), D.R. Horton (DHI), and SNAP (SNAP) were at the bottom of the list.
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Looking ahead
The Fed will release its semi-annual Monetary Policy Report on Friday.
There are no relevant earnings reports for the daily update on Friday.
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Trends, Support, and Resistance
The Nasdaq opened below the 14,500 support area this morning. It rallied back above the level by the end of the day. In the morning volatility, 14,425 also emerged as an area of support.
The one-day trend lien points to a +1.15%, which would continue the recovery from today's low at market open. The trend line from the 5/12 low is just below that target.
The five-day trend line leads to a +0.50% gain for tomorrow.
There's still potential for a further pullback, so I added a trend-line that follows from yesterday's high and ends with a -0.95% loss for tomorrow.
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Wrap-up
Attention was on sliding government bond yields today.
The slide in long-term yields typically indicates less confidence in future economic growth. But as with most economic indicators this year, there may be more to the story.
Some argue that investors were heavily shorting bond prices (prices move in the opposite direction of yields). They expected yields to rise as the economy continues to overheat and people dump the bonds to find inflation-protected gains elsewhere. Recent economic data showed a slower than expected recovery and caused the trade to go against them. The resulting purchases to cover short positions sent yields even lower.
As we saw earlier in the year, volatility in bonds will cause volatility in equities as well. So over the next few days, we will watch to see if investors are correcting for a change in the pace of the recovery or are more severe fears about the future driving the behavior.
With the lower high and lower low, the expectation for tomorrow remains sideways or lower.
Stay healthy and trade safe!
Nasdaq - High Reward Short SetupHigh probability trade for very fast gains this week.
You'll know if it's on by end of day; would get in short soon and leave a very loose stop.
TVC:IXIC
TVC:NDX
CURRENCYCOM:US100
Where is the MOST probable support I think the correction could be between 3-6% in the next few weeks.
Daily Market Update for 7/7Summary: Investors rotated back to cyclical stocks after they underperformed yesterday. Mega-caps also did well on a day with no huge surprises in economic news. Jobs data was a bit lower than expected, but not bad, and there were no unexpected statements in the Fed minutes.
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, July 7, 2021
Facts: +0.01%, Volume higher, Closing range: 28%, Body: 51%
Good: Higher high, higher low
Bad: Couldn't hold morning high, low A/D ratio
Highs/Lows: Higher high, higher low
Candle: Large red body with no upper wick, lower wick created from a morning dip
Advanced/Decline: 0.33, three declining stocks for every advancing stock
Indexes: SPX (+0.34%), DJI (+0.30%), RUT (-0.95%), VIX (-1.46%)
Sectors: Materials (XLB +1.04%) and Industrials (XLI +1.00%) at the top. Communications (XLC -0.15%) and Energy (XLE -1.63%) were at the bottom.
Expectation: Sideways or Lower
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Market Overview
Investors rotated back to cyclical stocks after they underperformed yesterday. Mega-caps also did well on a day with no huge surprises in economic news. Jobs data was a bit lower than expected, but not bad, and there were no unexpected statements in the Fed minutes.
The Nasdaq ended the day with a +0.01% gain, carried mainly by mega-caps. There continues to be a much higher number of declining stocks than advancing stocks, with a ratio of 3 to 1 today. The closing range of 28% follows a morning gap-up that quickly sold off to create a long lower wick. The index recovered some of the loss, leaving a 51% red body over the long lower wick.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) fared better with +0.34% and +0.30% gains today. The Russell 2000 (RUT) declined -0.95%.
The VIX volatility index declined -1.46%.
Cyclical sectors moved back to the top of the sector list, with Materials (XLB +1.04%) and Industrials (XLI +1.00%) leading the day. Communications (XLC -0.15%) and Energy (XLE -1.63%) were at the bottom of today's list.
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Economic Indicators
The US Dollar (DXY) advanced +0.17% for the day.
The US 30y, 10y, and 2y Treasury yields continue to decline as the gap between long-term and short-term yields tighten.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) remained flat while Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) continues to decline off recent highs.
Timber (Wood) advanced.
Copper (COPPER1!) advanced and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) declined -0.53%. Ethereum (ETHUSD) advanced +0.04%. (Time of writing)
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Investor Sentiment
The put/call ratio rose to 0.629. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, moving further from neutral.
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Market Leaders
The four largest mega-caps continue to advance with gains today, but the charts start to look overly extended from moving averages.
Apple (AAPL) gained another +1.80% today, setting a record close. Microsoft (MSFT) gained +0.82%. Amazon (AMZN) and Alphabet (GOOGL) had advances but could not hold onto intraday gains, ending the day with +0.57% and +0.23% gains.
Oracle (ORCL) topped the mega-cap list today, with Apple (AAPL), PayPal (PYPL), and Adobe (ADBE) filling out the top four. At the bottom of the list are Exxon Mobile (XOM), Nvidia (NVDA), Alibaba (BABA), and Tesla (TSLA).
The majority of the daily update growth list lost for the day. However, there were several gainers with SUMO Digital (SUMO), Snowflake (SNOW), RH (RH), and D.R. Horton (DHI) topping the list. At the bottom of the list are Lemonade (LMND), GrowGeneration (GRWG), NIO (NIO), and Ehang Holdings (EH).
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Looking ahead
Initial Jobless Claims and weekly Crude Oil Inventories data will be available on Thursday.
There are no relevant earnings reports for the daily update on Thursday.
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Trends, Support, and Resistance
Just as yesterday, the Nasdaq set a new all-time high after opening but then sold off quickly.
The five-day trend line points to a +0.49% gain for Thursday.
The trend line from the 5/12 low leads to a +0.16% gain.
The one-day trend line is downward sloping and points to a -0.04% decline.
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Wrap-up
As rotations go, yesterday's sell-off of cyclical sectors became today's buying opportunity. Big tech mega-caps are mainly driving the gains in the Nasdaq. The advance/decline ratio hasn't been over 1.0 since 6/24.
With increasing volatility in the intraday chart and the advance/decline ratio remaining low, it’s a good time for caution. However, the index continues to ride the mid-point of an upward regression trend channel from 5/12, so more gains could be ahead.
The expectation is set for sideways or lower tomorrow. Surprise me.
Stay healthy and trade safe!
Daily Market Update for 7/6Summary: It was a roller-coaster day for the market as prices dipped in the morning and recovered in the afternoon. Investors reacted to the Purchasing Managers index data that indicates the economic recovery may be slowing. Although the Nasdaq could finish the day with a small gain, most stocks across the index declined 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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Tuesday, July 6, 2021
Facts: +0.17%, Volume higher, Closing range: 85%, Body: 1%
Good: High closing range, long lower wick shows recovery from dip
Bad: Volatile outside day with doji star candle, bearish pattern
Highs/Lows: Higher high, lower low
Candle: Doji star candle with longer lower wick, outside day
Advanced/Decline: 0.3, more than three declining stocks for every advancing stock
Indexes: SPX (-0.20%), DJI (-0.60%), RUT (-1.36%), VIX (+9.08%)
Sectors: Real Estate (XLRE +0.89%) and Utilities (XLU +0.42%) at the top. Financials (XLF -1.75%) and Energy (XLE -3.25%) were at the bottom.
Expectation: Sideways or Lower
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Market Overview
It was a roller-coaster day for the market as prices dipped in the morning and recovered in the afternoon. Investors reacted to the Purchasing Managers index data that indicates the economic recovery may be slowing. Although the Nasdaq could finish the day with a small gain, most stocks across the index declined for the day.
The Nasdaq closed with a +0.17% gain, beginning the day with a gap at open but quickly selling off in the morning. Eventually, the bulls came in and brought the index back just above where it opened. The volume was higher than the previous day, and the mid-day reversal ended with a high 85% closing range. The close, being just above the open, created a slim 1% body. The outside day, doji star candle signals a bearish reversal pattern. Despite the gain in the index, there were more than three declining stocks for every advancing stock.
The S&P 500 (SPX) closed the day with a -0.20% loss. The Dow Jones Industrial Average (DJI) retreated -0.60%. The small-cap Russell 2000 (RUT) fell -1.36%.
The VIX volatility index rose +9.08% for the day. It was up almost 20% intraday.
Real Estate (XLRE +0.89%) and Utilities (XLU +0.42%) were the top sectors, signaling a defensive stance from investors. Interestingly, the growth sectors of Technology (XLK +0.38%) and Consumer Discretionary (XLY +0.12%) were the only other two sectors to gain for the day, helping the Nasdaq finish higher. Financials (XLF -1.57%) and Energy (XLE -3.25%) were the only two declining sectors.
The Financial sector is down as yields on the 10y Treasury Note continue to drop, bringing interest rates down and taking away revenue potential for big banks. The Energy sector dropped as OPEC was unable to get agreement from Saudi Arabia and U.A.E. on output. The disagreement is bringing volatility to the sector that investors likely want to avoid.
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Economic Indicators
The US Dollar (DXY) advanced -0.34% for the day.
The US 30y and 10y Treasury yields dropped to their lowest point since February. The 2y Treasury yield also declined today, but not as much as longer-term yields, tightening the gap.
High Yield Corporate Bond (HYG) prices rose while Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) declined, Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) declined.
Timber (Wood) declined.
Copper (COPPER1!) and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) rose +1.16%. Ethereum (ETHUSD) advanced +5.27%.
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Investor Sentiment
The put/call ratio rose to 0.694. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, moving further from neutral.
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Market Leaders
To find out what made the index move up, look no further than the four largest mega-caps. Amazon (AMZN) had a massive gain of +4.69% after the Pentagon decided to cancel the exclusive $10b cloud contract with Microsoft and split it across major cloud providers, including Amazon. It wasn't great news for Microsoft (MSFT), but the tech giant avoided a significant loss, closing with a 0% daily move. Apple (AAPL) gained +1.47% for the day. Alphabet (GOOGL) gained +0.74%.
Amazon (AMZN) topped the mega-cap list, followed by Oracle (ORCL), which also stands to benefit from the new opportunities in government cloud contracts. Apple (AAPL) and Netflix (NFLX) were third and fourth best performers on the list.
It was a day for big tech, while most mega-caps gained for the day. Only Oracle (ORCL) topped the four largest mega-caps in daily gains, advancing +2.87%. Alibaba (BABA), Bank of America (BAC), JP Morgan (JPM), and Berkshire Hathaway (NRK) were at the bottom of the mega-cap list. At the bottom of the list were Bank of America (BAC), Alibaba (BABA), Tesla (TSLA), and Exxon Mobil (XOM).
Despite the low advance/decline ratio, the daily update growth list had plenty of winners. At the top of the list are GrowGeneration (GRWG), CrowdStrike (CRWD), Chewy (CHWY), and Zscaler (ZS), all with greater than 4% gains. Chinese stocks dominated the bottom of the list as the Chinese government cracks down on Didi and has its eyes on more regulation of Internet companies. JD.com (JD), Ehang Holdings (EH), FUTU Holdings (FUTU), and UP Fintech (TIGR) all lost more than 5% for the day.
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Looking ahead
The JOLTs Job Openings report for May will be available on Wednesday morning. In the afternoon, the FOMC will release the meeting minutes from last month. Investors will be interested to see what concerns remain around inflation and employment. The API Weekly Crude Oil stock comes after the market close.
There are no relevant earnings reports for the daily update on Wednesday.
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Trends, Support, and Resistance
The Nasdaq set a new all-time high before dipping in the morning. The mid-day upside reversal came above the 14,500 support area.
All three trend lines point to nearly the same place, with a decline between -0.03% and -0.22%.
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Wrap-up
The ISM purchasing managers index data released today showed that the economic recovery might be slowing. That is a bad sign for cyclicals. But is it a good sign for big tech and growth stocks? It could be. If the recovery is slowing but still progressing, that will take some inflationary pressures out of the picture. It will also keep interest rates lower in the near term. Inflation and high-interest rates are the biggest evil for technology and growth stocks.
The ISM reading today was at 60.1 compared to an expectation of 63.5. The lower-than-expected reading is indicating a more slowly expanding economy. But the reading above 50 indicates the economy is still expanding. If you disregard the last three exceptional months, the last time the indicator was above 60 was in 2018.
Still, it does not mean these sectors shield investors from a slowdown in the recovery. Investors will be looking at the Fed meeting minutes released tomorrow for any clues on monetary policy changes. Those hints of changes amid a shift in the economic picture could spread the worries further into the market.
Based on the candle, the expectation is for sideways or lower tomorrow.
Stay healthy and trade safe!
The Bullish scenarioThis Bullish channel could be the best framework for the coming months.
I think we should consider any decrease in Nasdaq as a correction unless, Nasdaq composite getting outside this bullish channel and trending below it.
Another bullish scenario: 16200 by the end of September
I should confess I put two much emphasis on trading volume and see the generalized decrease in trading volume as a negative factor for market to trending upper. However, the relationship between prices and volume is not a linear correlation. And it’s effect in making bullish trends could be more than making bearish cases.
Reading my analysis published on June 13th is recommended.
I calculate 2 different scenario in that analysis and shied them as 1 and 2.
Interestingly, between the 2 major scenario, I choose the wrong one.
To accept your mistake means to become smarter than you were - Pierre Boiste
Market Week in Review - 6/28/2021 - 7/2/2021Summary: The market added another week of record closes across the major indexes while the Nasdaq continued a power trend which is in its twelfth day. Investors were not without worries this week. Their attention was on the pandemic at the beginning of the week. However, it turned to the employment data at the end of the week.
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, June 28, 2021
Facts: +0.98%, Volume lower, Closing range: 95%, Body: 94%
Good: Very bullish candle on sets a new all-time high
Bad: Lower volume, low A/D ratio
Highs/Lows: Higher high, higher low
Candle: Mostly green body with no lower wick, small upper wick
Advanced/Decline: 0.59, three declining stocks for every two advancing stocks
Indexes: SPX (+0.23%), DJI (-0.44%), RUT (-0.52%), VIX (+0.90%)
Sectors: Communications (XLC +1.13%) and Technology (XLK +1.05%) at top. Financials (XLF -0.73%) and Energy (XLE -2.28%) were bottom.
Expectation: Sideways or Higher
The S&P 500 and Nasdaq moved higher today, setting more records, while the Dow Jones Industrial Average and Russell 2000 took a step back. New fears of pandemic lockdowns in Asia sent Energy and Industrial stocks lower.
The Nasdaq finished the day with a +0.98% gain, producing a bullish green candle that is primarily green body with no lower wick and a small upper wick. Volume was lower than Friday, but Friday's volume was exceptionally high. The closing range of 95% shows bullish support into the close. Other than a slight dip in the early afternoon, investors were in a buying mood all day. Still, there were three declining stocks for every two advancing stocks.
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Tuesday, June 29, 2021
Facts: +0.19%, Volume higher, Closing range: 88%, Body: 30%
Good: Green candle on higher volume, great closing range
Bad: The low A/D line
Highs/Lows: Higher high, higher low
Candle: Thin green body in the upper half of the candle, longer lower wick
Advanced/Decline: 0.43, two declining stocks for every advancing stock
Indexes: SPX (+0.03%), DJI (+0.03%), RUT (-0.58%), VIX (+1.78%)
Sectors: Technology (XLK +0.73%) and Consumer Discretionary (XLY +0.25%) at the top. Communications (XLC -0.54%) and Utilities (XLU -1.62%) at the bottom.
Expectation: Sideways or Lower
Consumer confidence numbers helped send Apple and Microsoft higher and drive gains in the Nasdaq. The gains were not spread broadly across the index, with more declining stocks than advancing stocks.
The Nasdaq finished with a +0.19% gain after dipping in the morning. The dip created a longer lower wick, under a 30% green body that ended the day with a 88% closing range. The higher volume did not translate into broad gains. There were more than two declining stocks for every advancing stock.
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Wednesday, June 30, 2021
Facts: -0.17%, Volume higher, Closing range: 53%, Body: 12%
Good: Higher low
Bad: Lower high, thin red body, higher volume on decline
Highs/Lows: Lower high, higher low
Candle: Indecisive candle with a thin red body in between two equal wicks
Advanced/Decline: 0.58, more declining stocks than advancing stocks
Indexes: SPX (+0.13%), DJI (+0.61%), RUT (+0.07%), VIX (-1.19%)
Sectors: Energy (XLE +1.24%) and Consumer Staples (XLP +0.78%) at the top. Utilities (XLU -0.19%) and Real Estate (XLRE -0.78%) at the bottom.
Expectation: Sideways
Solid economic recovery data sent the cyclical sectors higher today while other sectors saw modest gains. Data included positive Nonfarm Employment change, Pending Home Sales, and Crude Oil Inventories. After an indecisive candle yesterday, the S&P 500 set a new record to close the quarter.
The Nasdaq finished with a -0.17% decline on higher volume. The closing range of 53% is right at the middle of the candle, with a thin 12% red body in the middle of equal length wicks. The "spinning top" candle signals indecision in the market, where both buyers and sellers are active during the trading session. There were more declining stocks than advancing stocks on the Nasdaq.
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Thursday, July 1, 2021
Facts: +0.13%, Volume lower, Closing range: 88%, Body: 30%
Good: High closing range after morning dip, higher high
Bad: Dip below 14,500 creating lower low
Highs/Lows: Higher high, lower low
Candle: Bullish outside day follows an inside day, signals continuation
Advanced/Decline: 0.80, more declining stocks than advancing stocks
Indexes: SPX (+0.52%), DJI (+0.38%), RUT (+0.81%), VIX (-2.34%)
Sectors: Energy (XLE +1.74%) and Utilities (XLU +1.09%) at the top. Technology (XLK +0.17%) and Consumer Staples (XLP -0.30%) were at the bottom.
Expectation: Sideways
While major indexes advanced for the day, there was some caution in the market as investors await the jobs data coming on Friday.
The Nasdaq closed the day with a +0.13% gain after dipping in the morning. The morning dip created a long lower wick for the candle and a lower low for the day compared to the previous day. However, the index recovered and also created a new high. The body is 30% longer than the previous day, creating a bullish outside day. That is typically a continuation pattern in an uptrend but will need to be confirmed tomorrow after the jobs data. There were more declining stocks than advancing stocks.
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Friday, July 2, 2021
Facts: +0.81%, Volume lower, Closing range: 92% (w/gap), Body: 60%
Good: High closing range, large green body, higher high, higher low
Bad: Lower volume, low A/D ratio
Highs/Lows: Higher high, higher low
Candle: Gap up with higher high and higher low
Advanced/Decline: 0.39, five declining stocks for every two advancing stocks
Indexes: SPX (+0.75%), DJI (+0.44%), RUT (-1.01%), VIX (-2.52%)
Sectors: Technology (XLK +1.32) and Health (XLV +0.96) at the top. Financials (XLF -0.11%) and Energy (XLE -0.22%) were at the bottom.
Expectation: Sideways or Higher
The market gave a big yes to the jobs data but focused investors on mega-caps and leaving small-caps behind. Volume was low, and trading was concentrated into big tech, sending the Technology sector higher. Three of the major indexes had record closes.
The Nasdaq closed at another all-time high with a +0.81% advance. The day was dominated by buyers, producing a 60% green body and 92% closing range with the gap at open. However, volume was lower than the previous day, and there were five declining stocks for every two advancing stocks.
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View on the Week
The market added another week of record closes across the major indexes while the Nasdaq continued a power trend which is in its twelfth day. Investors were not without worries this week. Their attention was on the pandemic at the beginning of the week. However, it turned to the employment data at the end of the week.
Monday opened the week with some fear from a resurgence in covid cases in Asia. The Utilities competed with Technology as the top sector in the morning. The contrast between growth and defensive moves showed a mixed attitude toward the rise in cases. Energy sunk as some countries reinstated travel bans. The Utilities sector quickly faded as fears melted away.
On Monday afternoon, a judge threw out an antitrust case brought by regulators against Facebook. That not only sent Facebook and the Communications sector higher, but it was a boon for big tech companies also facing similar scrutiny. The win for big tech helped send the growth sectors higher throughout the week.
Consumer Confidence numbers on Tuesday were another positive for growth stocks. Consumer Confidence is at a post-pandemic high as US citizens see improving conditions heading into the summer months. The numbers surprised wall street and helped further put pandemic worries behind for the week.
The gains on the first two days of the week came with a diverging advance/decline line. The advance/decline line is the ratio of advancing stocks to declining stocks. If the index is moving higher, we will ideally see the ratio near or above 1.0, meaning more advancing stocks than declining stocks. The divergence on Monday and Tuesday, specifically the A/D ratio moving lower, signaled a potential pullback. That happened on Wednesday and continued into Thursday morning.
After dipping below 14,500 on Thursday morning, it seemed the market turned toward employment data. Initial Jobless Claims on Thursday looked better than expected. Anticipation of positive news on Friday was enough to bring the Nasdaq back above the 14,500 support area. Still, some investors took defensive positions, sending the Utilities sector higher.
There are some key things to note in the employment data released on Friday that sent all the Dow, S&P 500, and Nasdaq to record closes. First, the Private Nonfarm Payrolls were much higher than expected, meaning businesses are adding jobs faster than previously expected. Second, Average Hourly Earnings was lower than expected. Between the two, we can say that people are starting to go back to work, requiring more minor wage increases to attract people back into the workforce.
Higher wages are a critical factor in making inflation permanent instead of transitory. Seeing that businesses are getting people back to work with less pressure on wages is good news for investors worried about inflation and a possible earlier-than-planned Fed reaction. Not only can you see the investor reaction in the stock indexes, but you can also see it in the lowering yields on longer-term Treasuries.
The Nasdaq advanced +1.94% this week, setting another record high. Volume was much lower than the previous week and lower than average for this year. The low this week is higher than the high of the previous week. The closing range of 96% is excellent.
The Russell 2000 (RUT) lost +1.23% this week after outperforming the other indexes in the previous week. The S&P 500 (SPX) gained +1.67%. The Dow Jones Industrial Average (DJI) advanced +1.02%.
The VIX volatility declined -3.50% for the week and closed the week at a post-pandemic low.
Technology ( XLK ) led the sector list this week, propelled higher by strong economic data and significant gains by big tech. Communications ( XLC ) led briefly on Monday after a judge threw out two cases brought against Facebook. The decision was a blow to regulators and a boon to several tech mega-caps facing similar challenges.
Utilities ( XLU ) also led at the beginning of the week but quickly retreated and ended the week at a loss.
Energy ( XLE ) had a volatile start to the week due to increased pandemic fears. The continued demand for Oil, driving prices higher, eventually brought investors back to the sector. However, it wasn't enough to lift the sector out of the bottom position in the sector list.
The three secular growth sectors outperformed the broader S&P 500 index this week, while cyclical sectors underperformed.
Treasury yields on the 30y, 10y, and 2y all declined for the day. However, the gap between longer-term yields (7y and longer) and shorter-term yields (2y and 3y) continues to tighten. The signal could be that investors see inflationary pressures as short-term. The market agrees with the Fed that inflation is transitory.
The High Yield Corporate Bond (HYG) and Investment Grade Bond (LQD) prices advanced, showing confidence in US businesses.
The US Dollar (DXY) advanced +0.47% for the week.
Silver (SILVER) advanced +1.46%, and Gold (GOLD) advanced +0.39%.
Crude Oil (CRUDEOIL1!) advanced +1.71% and surpassed its 2018 peak.
Timber (WOOD) advanced +1.37%.
Copper (COPPER1!) advanced +0.07%.
Aluminum (ALI1!) advanced +3.34%.
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Big Four Mega-caps
The largest four mega-caps all advanced this week. Apple (AAPL) soared +5.15% higher. Microsoft (MSFT) set another record high with a +4.77% gain. Amazon (AMZN) climbed by +3.22%. Alphabet (GOOGL) gained +2.24%. All four are trading well above their 10-week moving average lines.
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The Four Recovery Stocks
I picked four recovery stocks to track against the indexes and other indicators in this weekly report. Pandemic fears sent the four recovery stocks lower this week. Marriott (MAR) was able to recover and close the week with a +0.80%. Delta (DAL) tested the 40-week moving average line before recovering some losses and ending the week with a -0.63% decline. Exxon Mobile (XOM) lost -2.30% this week. Carnival Cruise Lines (CCL) had the most significant loss among the four, dropping -7.36% for the week. The company launched its first cruise since the pandemic began on Saturday.
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Cryptocurrency
I started tracking four major cryptocurrencies on the week in review. The four are Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. The latter two are not the largest by market cap but seem to be well-known and are part of the CIX capital.com index, tracking five cryptocurrencies, including these four (Ripple is the fifth).
Ethereum (ETHUSD) had the best week with a +17.05% gain. It is the only of the four trading above the 40-week moving average. Bitcoin Cash (BCHUSD) closed right at the 40-week line with a +10.30% advance this week. Litecoin (LTCUSD) gained +9.25%. Bitcoin (BTCUSD) continues to underperform with a +1.66% advance this week.
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Investor Sentiment
The put/call ratio (PCCE) moved higher, ending the week at 0.617. A contrarian indicator, when the put/call ratio is below 0.7, it signals overly bullish sentiment and could mean an overbought market.
The CNN Fear & Greed Index is on the fear side but moving toward neutral.
The NAAIM money manager exposure index rose to 91.72 this week.
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The Week Ahead
There are no relevant earnings reports for the daily update next week. A quiet period before the Financial sector kicks off earnings season the following week.
Monday
Markets are closed on Monday for the July 4th holiday.
Tuesday
Tuesday will open the trading week with Purchasing Managers Index data for Services and Non-Manufacturing Employment.
There are no relevant earnings reports for the daily update on Tuesday.
Wednesday
The JOLTs Job Openings report for May will be available on Wednesday morning. In the afternoon, the FOMC will release the meeting minutes from last month. Investors will be interested to see what concerns remain around inflation and employment. The API Weekly Crude Oil stock comes after the market close.
There are no relevant earnings reports for the daily update on Wednesday.
Thursday
Initial Jobless Claims and weekly Crude Oil Inventories data will be available on Thursday.
There are no relevant earnings reports for the daily update on Thursday.
Friday
The Fed will release its semi-annual Monetary Policy Report on Friday.
There are no relevant earnings reports for the daily update on Friday.
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The Bullish Side
The same bullish signals from last week continue into this week. Economic data throughout the week only strengthened the bullish outlook and helped the Nasdaq continue its power trend. The S&P 500 is also nearing the criteria for a power trend.
One of the most significant indications that investors are no longer worried about inflation is in the performance of both Corporate and Treasury bonds. Corporate interest rates remain low as investors are confident in the near-term performance of US businesses. Yields on mid-term Treasuries are rising relative to longer-term Treasuries, while overall yields remain low. Bond investors see inflation as only a short-term problem.
The coming week has few influential earnings reports and only a couple of important items on the economic calendar. While investors anticipate a strong earnings season overall, this week will be an excellent time to get positioned for growth.
Clearly from the Growth/Value chart, investors are moving back into Growth.
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The Bearish Side
It's another light week on economic news and earnings, providing very little to be bearish about in the data. Still, after a few weeks of gains into record closes, it would not be a surprise if the market pulls back a bit or pauses.
This past week ended with a lopsided rotation into the largest tech mega-caps that drove indexes higher. Expect some rotation the other way gains spread out across the market before the indexes head much higher.
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Key Nasdaq Levels to Watch
The Nasdaq found support at 14,500 this week, closing at new all-time highs.
On the positive side, the levels are:
The high of this past week was a new all-time high at 14,649.11.
The mid-point of the regression trend from the 5/12 low points to 14,724 by the end of the week.
On the downside, there are a few key levels:
14,500 is a support area developed from three days of sideways trading this week.
The 10d MA is at 14,409.11.
The low of this past week is 14,417.20.
The 21d EMA is at 14,231.69.
14,000 has been a key area of support/resistance.
The 50d MA is at 13,880.92.
There is a pivot at 13,548.93. This is a "higher low" in the current uptrend.
There is a support area at 13,000. 13,002.54 is a pivot from May. Below this level is a correction.
12950.85 is the 200d MA. This could be a support point if the index falls below 13,000.
12,397.05 is a low pivot point from the early March dip.
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Wrap-up
This week confirmed a bullish thesis for growth stocks and the Nasdaq. While valuations remain high, there still seems to be quite a lot of support for US bonds and equities. That's likely coming from a more robust recovery among US businesses than in other countries globally, especially those countries still struggling to reopen after a rise in Delta variant cases.
With the indexes all at record highs, investors will be watching for any signals that the rally is ending. Those aren't likely to come from scheduled events like earnings reports or the economic calendar. Instead, they may come from a surprise turn in the pandemic or another unexpected event. In the meantime, follow price. Trade safe, but don't miss out on the gains.
Good luck, stay healthy, and trade safe!
Daily Market Update for 7/2Summary: The market gave a big yes to the jobs data but focused investors on mega-caps and leaving small-caps behind. Volume was low, and trading was concentrated into big tech, sending the Technology sector higher. Three of the major indexes had record closes.
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, July 2, 2021
Facts: +0.81%, Volume lower, Closing range: 92% (w/gap), Body: 60%
Good: High closing range, large green body, higher high, higher low
Bad: Lower volume, low A/D ratio
Highs/Lows: Higher high, higher low
Candle: Gap up with higher high and higher low
Advanced/Decline: 0.39, five declining stocks for every two advancing stocks
Indexes: SPX (+0.75%), DJI (+0.44%), RUT (-1.01%), VIX (-2.52%)
Sectors: Technology (XLK +1.32) and Health (XLV +0.96) at the top. Financials (XLF -0.11%) and Energy (XLE -0.22%) were at the bottom.
Expectation: Sideways or Higher
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Market Overview
The market gave a big yes to the jobs data but focused investors on mega-caps and leaving small-caps behind. Volume was low, and trading was concentrated into big tech, sending the Technology sector higher. Three of the major indexes had record closes.
The Nasdaq closed at another all-time high with a +0.81% advance. The day was dominated by buyers, producing a 60% green body and 92% closing range with the gap at open. However, volume was lower than the previous day, and there were five declining stocks for every two advancing stocks.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) also had record-high closes, advancing +0.75% and +0.44%, respectively. Small-caps and the Russell 2000 (RUT) did not do so well, with the index declining -1.01% for the day.
The VIX volatility index declined -2.52%.
Technology (XLK +1.32) and Health (XLV +0.96) were the top sectors for the day. Financials (XLF -0.11%) and Energy (XLE -0.22%) were the only two declining sectors.
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Economic Indicators
The US Dollar (DXY) declined -0.31% for the day.
The US 30y, 10y, and 2y Treasury yields all declined today.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) declined.
Timber (Wood) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) advanced.
Bitcoin (BTCUSD) rose +0.74%. Ethereum (ETHUSD) advanced +2.24%.
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Investor Sentiment
The put/call ratio rose to 0.617. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, close to neutral.
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Market Leaders
The four largest mega-caps all had considerable gains. Alphabet (GOOGL) gained +2.30%. Amazon (AMZN) rose +2.27%. Microsoft (MSFT) advanced +2.23%. Apple (AAPL) gained +1.96%.
It was a day for big tech, while most mega-caps gained for the day. Only Oracle (ORCL) topped the four largest mega-caps in daily gains, advancing +2.87%. Alibaba (BABA), Bank of America (BAC), JP Morgan (JPM), and Berkshire Hathaway (NRK) were at the bottom of the mega-cap list.
The daily update growth stock list was a mix of gainers and losers. Top gainers included Paycom (PAYC), Upwork (UPWK), DataDog (DDOG), and Enphase(ENPH). Digital Turbine (APPS), Lemonade (LMND), Fastly (FSLY), and UP Fintech (TIGR) were at the bottom.
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Looking ahead
Markets are closed on Monday for the July 4th holiday.
Tuesday will open the trading week with Purchasing Managers Index data for Services and Non-Manufacturing Employment.
There are no relevant earnings reports for the daily update next week. A quiet period before the Financial sector kicks off earnings season the following week.
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Trends, Support, and Resistance
The Nasdaq continued to push the ATH line higher, closing Friday near the mark.
The one-day trend line points to a +0.42% gain for Tuesday.
The five-day trend-line and trend-line from the 5/12 low leads to a -0.24% decline.
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Wrap-up
The jobs data put investors focus on the big mega-caps for Friday, advancing the largest cap stocks while rotating out of the smaller cap stocks. Lop-sided rotations are typically reversed in the following days, either by the rest of the market catching up or by the market pulling back some before advancing again.
Based on the chart, the expectation is for higher or sideways on Tuesday. However, the index may want to come back down to the 14,500 area, filling today's opening gap and building more support before moving up.
Stay healthy and trade safe!
Daily Market Update for 7/1Summary: While major indexes advanced for the day, there was some caution in the market as investors await the jobs data coming on Friday.
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, July 1, 2021
Facts: +0.13%, Volume lower, Closing range: 88%, Body: 30%
Good: High closing range after morning dip, higher high
Bad: Dip below 14,500 creating lower low
Highs/Lows: Higher high, lower low
Candle: Bullish outside day follows an inside day, signals continuation
Advanced/Decline: 0.80, more declining stocks than advancing stocks
Indexes: SPX (+0.52%), DJI (+0.38%), RUT (+0.81%), VIX (-2.34%)
Sectors: Energy (XLE +1.74%) and Utilities (XLU +1.09%) at the top. Technology (XLK +0.17%) and Consumer Staples (XLP -0.30%) were at the bottom.
Expectation: Sideways
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Market Overview
While major indexes advanced for the day, there was some caution in the market as investors await the jobs data coming on Friday.
The Nasdaq closed the day with a +0.13% gain after dipping in the morning. The morning dip created a long lower wick for the candle and a lower low for the day compared to the previous day. However, the index recovered and also made a new high. The body is 30% and longer than the previous day, creating a bullish outside day. That is typically a continuation pattern in an uptrend but will need to be confirmed tomorrow after the jobs data. There were more declining stocks than advancing stocks.
The Russell 2000 (RUT) outperformed the other major indexes today, gaining +0.81%. The S&P 500 (SPX) gained +0.52%, setting yet another record close. The Dow Jones Industrial Average (DJI) advanced +0.38%.
The VIX volatility index declined -2.34%.
Energy (XLE +1.74%) was at the top of the sector list. Utilities (XLU +1.09%) and Health (XLV +0.89%) were second and third, signaling some defensiveness in the market. Technology (XLK +0.17%) and Consumer Staples (XLP -0.30%) were at the bottom.
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Economic Indicators
The US Dollar (DXY) rose +0.19% for the day.
The US 30y and 10y Treasury yields declined while the 2y yield advanced.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) declined, Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) advanced.
Timber (Wood) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) declined -4.20%. Ethereum (ETHUSD) declined -7.41%.
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Investor Sentiment
The put/call ratio rose to 0.561. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, moving back toward neutral.
The NAAIM money manager exposure index rose to 91.72.
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Market Leaders
Of the four largest mega-caps, only Amazon (AMZN) declined for the day, losing -0.21%. Alphabet (GOOGL) advanced +0.29%. Microsoft (MSFT) rose +0.26% and Apple (AAPL) gained +0.23%.
Nike (NKE), Oracle (ORCL), Facebook (FB), and Mastercard (MA) were the top mega-cap gainers. The top losers for mega-caps were Walmart (WMT), Taiwan Semiconductor (TSM), ASML Holding (ASML), and Alibaba (BABA).
The majority of growth stocks in the daily update list were losers for the day. The biggest gainers were GrowGeneration (GRWG), Lemonade (LMND), Digital Turbine (APPS), and Paycom (PAYC). The biggest losers were Roku (ROKU), Palantir (PLTR), UP Fintech (TIGR), and FUTU Holding (FUTU).
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Looking ahead
More economic data becomes available on Friday. Average Hourly Earnings, Nonfarm Payrolls, and the Unemployment Rate will provide insights into the labor market recovery. Trade Balance data will also be released.
There are no relevant earnings reports for the daily update on Friday.
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Trends, Support, and Resistance
The Nasdaq dipped below the 14,500 support area in the morning. However, it closed back above the area by the end of the session.
The five-day trend-line and trend-line from the 5/12 low leads to a +0.34% advance for Friday.
The one-day trend line results in a -0.02% decline.
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Wrap-up
All eyes this week are on Friday's job data. It seems the Nasdaq will decide which direction to move after seeing the data. With the morning dip resulting in buying that brought the index back above 14,500, the expectation is sideways or higher tomorrow. However, the jobs data may just bust that expectation.
Stay healthy and trade safe!
Daily Market Update for 6/30Summary: Solid economic recovery data sent the cyclical sectors higher today while other sectors saw modest gains. Data included positive Nonfarm Employment change, Pending Home Sales, and Crude Oil Inventories. After an indecisive candle yesterday, the S&P 500 set a new record to close the quarter.
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, June 30, 2021
Facts: -0.17%, Volume higher, Closing range: 53%, Body: 12%
Good: Higher low
Bad: Lower high, thin red body, higher volume on decline
Highs/Lows: Lower high, higher low
Candle: Indecisive candle with a thin red body in between two equal wicks
Advanced/Decline: 0.58, more declining stocks than advancing stocks
Indexes: SPX (+0.13%), DJI (+0.61%), RUT (+0.07%), VIX (-1.19%)
Sectors: Energy (XLE +1.24%) and Consumer Staples (XLP +0.78%) at the top. Utilities (XLU -0.19%) and Real Estate (XLRE -0.78%) at the bottom.
Expectation: Sideways
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Market Overview
Solid economic recovery data sent the cyclical sectors higher today while other sectors saw modest gains. Data included positive Nonfarm Employment change, Pending Home Sales, and Crude Oil Inventories. After an indecisive candle yesterday, the S&P 500 set a new record to close the quarter.
The Nasdaq finished with a -0.17% decline on higher volume. The closing range of 53% is right at the middle of the candle, with a thin 12% red body in the middle of equal length wicks. The "spinning top" candle signals indecision in the market, where both buyers and sellers are active during the trading session. There were more declining stocks than advancing stocks on the Nasdaq.
The S&P 500 (SPX) had a similar indecisive spinning top candle yesterday but made a positive move to close the quarter at an all-time high, advancing +0.13% today. The Dow Jones Industrial Average (DJI) gained +0.61%, thanks to a resurgence in cyclical stocks and recovery stocks. The Russell 2000 (RUT) gained +0.07%.
The VIX volatility index advanced -1.19%.
Energy (XLE +1.24%) and Consumer Staples (XLP +0.78%) topped the sector list, while the next three were the other cyclical sectors. Utilities (XLU -0.19%) and Real Estate (XLRE -0.78%) were at the bottom of the list.
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Economic Indicators
The US Dollar (DXY) rose +0.31% for the day.
The US 30y Treasury yield gained white the 10y stayed the same, and the 2y declined.
High Yield Corporate Bond (HYG) prices gained slightly while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) advanced.
Timber (Wood) advanced.
Copper (COPPER1!) advanced, and Aluminum (ALI1!) retreated from record highs.
Bitcoin (BTCUSD) gained +4.12%. Ethereum (ETHUSD) advanced +3.84%.
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Investor Sentiment
The put/call ratio rose to 0.557. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, moving back toward neutral.
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Market Leaders
Apple (AAPL) gained +0.46%, the only of the four largest mega-caps to advance today. Alphabet (GOOGL) declined -0.15%. Microsoft (MSFT) lost -0.18%. Amazon (AMZN) fell -0.23%. All remained above the key moving average lines.
Walmart (WMT) gained +2.71% today, topping the mega-cap list and helping send the Consumer Staples sector higher. Walt Disney (DIS), Chevron (CVX), and JP Morgan Chase (JPM) were the next three best performers in the mega-cap list. At the bottom of the list are Abbot Labs (ABT), Alibaba (BABA), Facebook (FB), and ASML Holding (ASML).
On the daily update growth list, most stocks declined for the day. The top winners include NIO (NIO), Roku (ROKU), Ehang Holdings (EH), and Etsy (ETSY). At the bottom of the list are DoorDash (DASH), which topped the list yesterday, Workday (WDAY), Fiverr (FVRR), and MongoDB (MDB).
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Looking ahead
Thursday's economic data includes Initial Jobless Claims and Manufacturing Purchasing Managers Index.
Walgreens Boots (WBA) releases earnings on Thursday.
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Trends, Support, and Resistance
There seems that support is forming at 14,500. The index has only been above the area for two days, but there were four tests of the support intraday today.
The five-day trend-line points to a +0.54% gain for Thursday.
The trend-line from the 5/12 low leads to a +0.24% advance.
The one-day trend line results in a +0.06% gain.
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Wrap-up
It seemed yesterday that the momentum was waning in tech and growth stocks that dominate the Nasdaq. So it was time today for cyclical sectors to get some attention. The rotation was not oversized and did not fundamentally change uptrends for the index or the big mega-caps.
Based on the indecisive candle, the expectation for tomorrow is Sideways. The market needs to decide if it wants to go higher or lower.
Stay healthy and trade safe!
Daily Market Update for 6/29Summary: Consumer confidence numbers helped send Apple and Microsoft higher and drive gains in the Nasdaq. The gains were not spread broadly across the index, with more declining stocks than advancing stocks.
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, June 29, 2021
Facts: +0.19%, Volume higher, Closing range: 88%, Body: 30%
Good: Green candle on higher volume, great closing range
Bad: The low A/D line
Highs/Lows: Higher high, higher low
Candle: Thin green body in the upper half of the candle, longer lower wick
Advanced/Decline: 0.43, two declining stocks for every advancing stock
Indexes: SPX (+0.03%), DJI (+0.03%), RUT (-0.58%), VIX (+1.78%)
Sectors: Technology (XLK +0.73%) and Consumer Discretionary (XLY +0.25%) at the top. Communications (XLC -0.54%) and Utilities (XLU -1.62%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
Consumer confidence numbers helped send Apple and Microsoft higher and drive gains in the Nasdaq. The gains were not spread broadly across the index, with more declining stocks than advancing stocks.
The Nasdaq finished with a +0.19% gain after dipping in the morning. The dip created a longer lower wick, under a 30% green body that ended the day with a 88% closing range. The higher volume did not translate into broad gains. There were more than two declining stocks for every advancing stock.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) both gained a modest +0.03%. The spinning top candle on the SPX is indicating indecision in the market. The Russell 2000 (RUT) declined -0.58% for the day.
The VIX volatility index advanced +1.78%.
Technology (XLK +0.73%) and Consumer Discretionary (XLY +0.25%) were at the top of the sector list with only one other sector, Health (XLV +011%), ending the day with gains. Communications (XLC -0.54%) and Utilities (XLU -1.62%) were at the bottom of the list.
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Economic Indicators
The US Dollar (DXY) rose +0.21% for the day.
The US 30y, 10y, and 2y Treasury Yields declined.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) advanced.
Timber (Wood) advanced.
Copper (COPPER1!) declined, and Aluminum (ALI1!) advanced. Aluminum is back to all-time highs.
Bitcoin (BTCUSD) gained +4.12%. Ethereum (ETHUSD) advanced +3.84%.
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Investor Sentiment
The put/call ratio rose to 0.524. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, moving back toward neutral.
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Market Leaders
Apple (AAPL) and Microsoft (MSFT) drove much of the significant gains in the index, with +1.15% and +1.00% advances. Amazon (AMZN) also gained for the day with a +0.12% advance. Alphabet (GOOGL) fell -0.22%. All four are trading above key moving average lines and considered in uptrends.
Nike (NKE), Abbot Labs (ABT), Home Depot (HD), and Apple (AAPL) led the mega-cap list, which is about 50% gainers. At the bottom of the list are Tesla (TSLA), Intel (INTC), Walt Disney (DIS), and Bank of America (BAC).
The daily update growth stock list has DoorDash (DASH), Upwork (UPWK), JD.com (JD), and UP Fintech (TIGR) at the top of the list with greater than 3% gains. At the bottom of the growth list are MongoDB (MDB), Palantir (PLTR), Digital Turbine (APPS), and Ehang Holdings (EH).
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Looking ahead
This week's closely watched employment data starts to come in on Wednesday. It begins with an update on Nonfarm Employment before the market opens. In addition, pending Home Sales and Crude Oil Inventories are available after the market open.
Meme stock, Bed Bath & Beyond (BBBY), will release earnings on Wednesday.
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Trends, Support, and Resistance
The Nasdaq continued to move higher today. It's hard to judge support areas without a retest, but there could be support at 14,350 if the index pulls back.
The five-day trend-line points to a +0.39% gain for Wednesday.
The one-day trend line results in a +0.21% gain.
The trend-line from the 5/12 low leads to a -0.23% decline.
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Wrap-up
The tech-heavy Nasdaq continues to march higher thanks to the mega-caps today and good consumer confidence numbers. However, after two days of gains contrasted with a declining A/D line, the expectation is or sideways or lower tomorrow.
The counter to those inputs is the higher volume on the gain today. That could translate to investors spreading out investments tomorrow, a higher A/D line, and possibly another move higher. Add in variability in that it's the last day of the quarter, and we start a new earnings season expected to show strength.
Stay healthy and trade safe!
