Nasdaq Market Update for 10/20
Trend lines drawn from 9/3 (33d), 9/24 bottom (19d), 10/12 pivot day (7d), 10/14 (5d), and today 10/20 (1 day).
Tuesday, October 20, 2020
I know why you want to hate me
Facts: 0.33% higher, Volume higher, Closing range: 28%, Red Body: 9%
Good: Stayed above yesterday’s low and holding above 21d EMA
Bad: Very choppy day with selling into close
Highs/Lows: Lower high, Higher low (Inside day)
Candle: Inside day, 9% red body with 28% closing range.
Advance/Decline: 1.18, slightly more advancing than declining
Sectors: Utilities (XLE) finished the day on top. Consumer Discretionary (XLY) and Finance (XLF) led at mid-day but fell off. Consumer Staples (XLP) was the worst performing.
Expectation: Sideways or Lower
It was a choppy day with many moves back and forth. After being up 1.34% at one point in the day, the Nasdaq dropped in afternoon selling, ending the day with a 0.33% gain. The candle has a thin negative body of 9% and a lower closing range of 28%. The inside day (recognized by the price range being within the previous days range) often marks a continuation of the current trend. There were slightly more advancing stocks than declining stocks. Although volume was higher, it is still lower than recent average volume. The index is still testing October support area and the 21d EMA. Breaking the 21d EMA would be a negative signal.
The S&P500 gained +0.47%, with Utilities (XLE) ending the day as the leading sector. Consumer Discretionary (XLY) and Financials (XLF) both led at mid-day but lost those gains in the late afternoon. Consumer Staples (XLP) was the worst performing sector today and the only sector with a loss.
The mega-caps all saw gains with Apple (AAPL +1.32%) and Google (GOOG +1.39%) outperforming the indexes. Microsoft (MSFT +0.20%) and Amazon (AMZN +0.31%) turned in smaller gains. Growth stock Tesla (TSLA -2.06%) continues to lose ground heading in Wednesday earnings. Logitech (LOGI +15.76%) had a huge gap up after bearing expectations. Some 2020 favorites such as Zoom (ZM -5.51%), Datadog (DDOG -2.75%), and Pinterest (PINS -1.09%) had losing days. Snap (SNAP -0.74%) is up over 22% after hours after also smashing expectations.
As for expectations, a lot depends on news coming from ongoing stimulus discussions. A positive sign of an agreement could have the index bounce of this support area and move up +3.65% to rejoin the trend line drawn from the 9/23 bottom. Another potential outcome is that stimulus talks continue and investors remain optimistic which could result in a +1.02% gain, continuing today’s trend line and rejoining the trend from 9/3.
The index is trading in the lower half of all these regression trends. However, there seems to be good support at the 21d EMA and so a downward move looks like it would be limited to a -0.22% loss. That would continue along the trend drawn from the pivot on 10/12. If investor sentiment were to worsen, the index could break through the 21d EMA and then hopefully find support at the 50d MA.
I'm keeping the June Support line in view, but its 15% below the Tuesday close and there are 4 key support levels that the index would have to break thru. If we have a significant downside that takes the index below 11,300, then I'll add that possibility back to the chart.
Tuesday, October 20, 2020
I know why you want to hate me
Facts: 0.33% higher, Volume higher, Closing range: 28%, Red Body: 9%
Good: Stayed above yesterday’s low and holding above 21d EMA
Bad: Very choppy day with selling into close
Highs/Lows: Lower high, Higher low (Inside day)
Candle: Inside day, 9% red body with 28% closing range.
Advance/Decline: 1.18, slightly more advancing than declining
Sectors: Utilities (XLE) finished the day on top. Consumer Discretionary (XLY) and Finance (XLF) led at mid-day but fell off. Consumer Staples (XLP) was the worst performing.
Expectation: Sideways or Lower
It was a choppy day with many moves back and forth. After being up 1.34% at one point in the day, the Nasdaq dropped in afternoon selling, ending the day with a 0.33% gain. The candle has a thin negative body of 9% and a lower closing range of 28%. The inside day (recognized by the price range being within the previous days range) often marks a continuation of the current trend. There were slightly more advancing stocks than declining stocks. Although volume was higher, it is still lower than recent average volume. The index is still testing October support area and the 21d EMA. Breaking the 21d EMA would be a negative signal.
The S&P500 gained +0.47%, with Utilities (XLE) ending the day as the leading sector. Consumer Discretionary (XLY) and Financials (XLF) both led at mid-day but lost those gains in the late afternoon. Consumer Staples (XLP) was the worst performing sector today and the only sector with a loss.
The mega-caps all saw gains with Apple (AAPL +1.32%) and Google (GOOG +1.39%) outperforming the indexes. Microsoft (MSFT +0.20%) and Amazon (AMZN +0.31%) turned in smaller gains. Growth stock Tesla (TSLA -2.06%) continues to lose ground heading in Wednesday earnings. Logitech (LOGI +15.76%) had a huge gap up after bearing expectations. Some 2020 favorites such as Zoom (ZM -5.51%), Datadog (DDOG -2.75%), and Pinterest (PINS -1.09%) had losing days. Snap (SNAP -0.74%) is up over 22% after hours after also smashing expectations.
As for expectations, a lot depends on news coming from ongoing stimulus discussions. A positive sign of an agreement could have the index bounce of this support area and move up +3.65% to rejoin the trend line drawn from the 9/23 bottom. Another potential outcome is that stimulus talks continue and investors remain optimistic which could result in a +1.02% gain, continuing today’s trend line and rejoining the trend from 9/3.
The index is trading in the lower half of all these regression trends. However, there seems to be good support at the 21d EMA and so a downward move looks like it would be limited to a -0.22% loss. That would continue along the trend drawn from the pivot on 10/12. If investor sentiment were to worsen, the index could break through the 21d EMA and then hopefully find support at the 50d MA.
I'm keeping the June Support line in view, but its 15% below the Tuesday close and there are 4 key support levels that the index would have to break thru. If we have a significant downside that takes the index below 11,300, then I'll add that possibility back to the chart.
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