Daily Market Update for 7/27
Summary: Earnings reports releasing this week have been very positive, but investors are already looking beyond the reports to expectations for the second half of the year. With mounting fears around the new Delta variant of COVID and potential changes in monetary policy by the Fed, the major indexes retreated today.
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 27, 2021
Facts: -1.21%, Volume lower, Closing range: 51%, Body: 48%
Good: Lower volume on pullback, longer lower wick from bounce at 14,500 support.
Bad: Lower high, lower low, dip below 21d EMA
Highs/Lows: Lower high, lower low
Candle: Half red body above half lower wick, no upper wick
Advanced/Decline: 0.28, more than three declining stocks for every advancing stock
Indexes: SPX (-0.47%), DJI (-0.24%), RUT (-1.13%), VIX (+10.01%)
Sectors: Utilities (XLU +1.72%) and Real Estate (XLRE +0.80%) at the top. Consumer Discretionary (XLY -1.01%) and Communications (-1.19%) were bottom.
Expectation: Sideways or Lower
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Market Overview
Earnings reports releasing this week have been very positive, but investors are already looking beyond the reports to expectations for the second half of the year. With mounting fears around the new Delta variant of COVID and potential changes in monetary policy by the Fed, the major indexes retreated today.
The Nasdaq closed with a -1.21% loss in a mostly selling session before a bounce at the 14,500 support level. Volume was lower than the previous day. The bounce brought the index back up to the middle of the candle for a 51% closing range. The 48% red body is in the upper half of the candle, over a long lower wick. There were more than three declining stocks for every advancing stock.
The Russell 2000 (RUT) dropped -1.13%. The S&P 500 (SPX) declined -0.47%. The Dow Jones Industrial Average (DJI) retreated -0.24%.
The VIX volatility index rose +10.01%.
Utilities (XLU +1.72%) and Real Estate (XLRE +0.80%) were the top two sectors, with the other defensive sectors filling out the top four. Growth sectors were at the bottom of the sector list, with Consumer Discretionary (XLY -1.01%) and Communications (-1.19%) having the most considerable losses.
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Economic Indicators
Month over month Durable Goods Orders came in much lower than expected. The market didn't seem to react to the data immediately, but it may have played into the morning selling. Consumer Confidence numbers came in higher than expected.
The US Dollar (DXY) declined -0.17%.
The US 30y and 10y Treasury yields declined while the 2y Treasury Yield advanced.
High Yield Corporate Bond (HYG) prices declined for a second day, while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) declined while Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) prices declined.
Timber (Wood) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) advanced +2.77%. Ethereum (ETHUSD) advanced +1.44%. (Time of writing)
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Investor Sentiment
The put/call ratio rose to 0.869. 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 in the Fear area, moved almost back to Extreme Fear.
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Market Leaders
All four largest mega-caps declined for the day. Amazon (AMZN) declined -1.98%, touching its 21d exponential moving average line before recovering some losses. Alphabet (GOOGL) lost -1.59%. Apple (AAPL) closed down -1.49%. Microsoft (MSFT) fell back -0.87%.
Verizon (VZ), Berkshire Hathaway (BRK.A, BRK.B), Pfizer (PFE), and Pepsico (PEP) were the top mega-cap gainers for the day. Alibaba (BABA) bottomed the list again. Intel (INTC), PayPal (PYPL), and Alphabet (GOOG) made up the rest of the bottom four.
Only three stocks in the daily update growth list gained today. Fiverr (FVRR), D.R. Horton (DHI), and MongoDB (MDB) were the gainers. The biggest losers were all Chinese stocks. NIO (NIO), Ehang Holdings (EH), UP Fintech (TIGR), and FUTU Holdings (FUTU) were at the bottom of the list.
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Looking ahead
Goods Trade Balance data, Retail Inventories, and Crude Oil Inventories will be available on Wednesday. Following two days of meetings, the Fed will make a statement in the afternoon and announce any Interest Rate change (expected to be none). The tone of the message and press conference will have an impact on investor sentiment.
Earnings reports on Wednesday include Facebook (FB), PayPal (PYPL), Pfizer (PFE), Thermo Fisher Scientific (TMO), Shopify (SHOP), McDonald's (MCD), Qualcomm (QCOM), Boeing (BA), ADP (ADP), Ford (F), Spotify (SPOT), and ServiceNow (NOW).
There are many earnings reports this week. Keep an eye out for reports from companies in your portfolio.
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Trends, Support, and Resistance
The Nasdaq dipped below the 21d exponential moving average line before getting support at 14,500 and bouncing back above the key moving average line.
The trend-line from the 7/19 low ends with a +1.79% gain for tomorrow. The five-day trend line points to a +0.79% gain.
The one-day trend line leads to a further -1.21% decline.
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Wrap-up
It's tough to see what was on investors' minds today. Perhaps they see all the great earnings reports as a top, and from here, the performance of these companies will pull back a bit. Maybe it's simply buying the rumor, selling the news. Or it could be that investors were getting defensive against any possible disappointment from the big tech earnings. For whatever reason, we got a negative expectation breaker for today.
It's possible for the afternoon dip buying to continue into tomorrow for more gains. However, after several days of gains last week and the market at all-time highs yesterday, another day or two of pullback is possible. Expectation is for sideways or lower.
Stay healthy and trade safe!
Notes
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Tuesday, July 27, 2021
Facts: -1.21%, Volume lower, Closing range: 51%, Body: 48%
Good: Lower volume on pullback, longer lower wick from bounce at 14,500 support.
Bad: Lower high, lower low, dip below 21d EMA
Highs/Lows: Lower high, lower low
Candle: Half red body above half lower wick, no upper wick
Advanced/Decline: 0.28, more than three declining stocks for every advancing stock
Indexes: SPX (-0.47%), DJI (-0.24%), RUT (-1.13%), VIX (+10.01%)
Sectors: Utilities (XLU +1.72%) and Real Estate (XLRE +0.80%) at the top. Consumer Discretionary (XLY -1.01%) and Communications (-1.19%) were bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Earnings reports releasing this week have been very positive, but investors are already looking beyond the reports to expectations for the second half of the year. With mounting fears around the new Delta variant of COVID and potential changes in monetary policy by the Fed, the major indexes retreated today.
The Nasdaq closed with a -1.21% loss in a mostly selling session before a bounce at the 14,500 support level. Volume was lower than the previous day. The bounce brought the index back up to the middle of the candle for a 51% closing range. The 48% red body is in the upper half of the candle, over a long lower wick. There were more than three declining stocks for every advancing stock.
The Russell 2000 (RUT) dropped -1.13%. The S&P 500 (SPX) declined -0.47%. The Dow Jones Industrial Average (DJI) retreated -0.24%.
The VIX volatility index rose +10.01%.
Utilities (XLU +1.72%) and Real Estate (XLRE +0.80%) were the top two sectors, with the other defensive sectors filling out the top four. Growth sectors were at the bottom of the sector list, with Consumer Discretionary (XLY -1.01%) and Communications (-1.19%) having the most considerable losses.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
Month over month Durable Goods Orders came in much lower than expected. The market didn't seem to react to the data immediately, but it may have played into the morning selling. Consumer Confidence numbers came in higher than expected.
The US Dollar (DXY) declined -0.17%.
The US 30y and 10y Treasury yields declined while the 2y Treasury Yield advanced.
High Yield Corporate Bond (HYG) prices declined for a second day, while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) declined while Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) prices declined.
Timber (Wood) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) advanced +2.77%. Ethereum (ETHUSD) advanced +1.44%. (Time of writing)
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose to 0.869. 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 in the Fear area, moved almost back to Extreme Fear.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four largest mega-caps declined for the day. Amazon (AMZN) declined -1.98%, touching its 21d exponential moving average line before recovering some losses. Alphabet (GOOGL) lost -1.59%. Apple (AAPL) closed down -1.49%. Microsoft (MSFT) fell back -0.87%.
Verizon (VZ), Berkshire Hathaway (BRK.A, BRK.B), Pfizer (PFE), and Pepsico (PEP) were the top mega-cap gainers for the day. Alibaba (BABA) bottomed the list again. Intel (INTC), PayPal (PYPL), and Alphabet (GOOG) made up the rest of the bottom four.
Only three stocks in the daily update growth list gained today. Fiverr (FVRR), D.R. Horton (DHI), and MongoDB (MDB) were the gainers. The biggest losers were all Chinese stocks. NIO (NIO), Ehang Holdings (EH), UP Fintech (TIGR), and FUTU Holdings (FUTU) were at the bottom of the list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Goods Trade Balance data, Retail Inventories, and Crude Oil Inventories will be available on Wednesday. Following two days of meetings, the Fed will make a statement in the afternoon and announce any Interest Rate change (expected to be none). The tone of the message and press conference will have an impact on investor sentiment.
Earnings reports on Wednesday include Facebook (FB), PayPal (PYPL), Pfizer (PFE), Thermo Fisher Scientific (TMO), Shopify (SHOP), McDonald's (MCD), Qualcomm (QCOM), Boeing (BA), ADP (ADP), Ford (F), Spotify (SPOT), and ServiceNow (NOW).
There are many earnings reports this week. Keep an eye out for reports from companies in your portfolio.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq dipped below the 21d exponential moving average line before getting support at 14,500 and bouncing back above the key moving average line.
The trend-line from the 7/19 low ends with a +1.79% gain for tomorrow. The five-day trend line points to a +0.79% gain.
The one-day trend line leads to a further -1.21% decline.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It's tough to see what was on investors' minds today. Perhaps they see all the great earnings reports as a top, and from here, the performance of these companies will pull back a bit. Maybe it's simply buying the rumor, selling the news. Or it could be that investors were getting defensive against any possible disappointment from the big tech earnings. For whatever reason, we got a negative expectation breaker for today.
It's possible for the afternoon dip buying to continue into tomorrow for more gains. However, after several days of gains last week and the market at all-time highs yesterday, another day or two of pullback is possible. Expectation is for sideways or lower.
Stay healthy and trade safe!
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