Daily Market Update for 7/30Summary: A disappointing earnings report from Amazon weighed down major indexes, but inflation data came in less than expected, helping give the market a boost in the morning.
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 30, 2021
Facts: -0.71%, Volume lower, Closing range: 50%, Body: 50%
Good: Bounce off 21d EMA and did not revisit low
Bad: Could not hold intraday high from morning rally
Highs/Lows: Lower high, lower low
Candle: Half green body at the bottom of the candle, no lower wick
Advanced/Decline: 0.45, two declining stocks for every advancing stock
Indexes: SPX (-0.54%), DJI (-0.42%), RUT (-0.62%), VIX (+2.94%)
Sectors: Materials (XLB +0.41%) and Real Estate (XLRE +0.32%) at the top. Energy (XLE -1.59%( and Consumer Discretionary (XLY -2.06%) at the bottom.
Expectation: Sideways
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Market Overview
A disappointing earnings report from Amazon weighed down major indexes, but inflation data came in less than expected, helping give the market a boost in the morning.
The Nasdaq closed the day with a -0.71% loss to end the week. Volume was lower and declining every day this week since Monday's all-time high in the index. The 50% green body sits at the bottom of the candle with no lower wick. The upper wick formed in the morning rally, but the index could not hold onto the intraday high. There were two declining stocks for every advancing stock.
The S&P 500 (SPX) declined -0.54%, while the Dow Jones Industrial Average (DJI) fell -0.42%. The Russell 2000 (RUT), which outperformed this week, declined -0.62% in Friday's session.
The VIX volatility index advanced +2.94%.
Materials (XLB +0.41%) and Real Estate (XLRE +0.32%) were top sectors for the day. Energy (XLE -1.59%( and Consumer Discretionary (XLY -2.06%) were the worst-performing, with Amazon pulling down the latter.
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Economic Indicators
Core PCE Price Index data came in less than expected, while Personal Income and Personal Spending data were higher than expected. Michigan Consumer Sentiment was higher, and Inflation Expectations was lower. Those all should help ease some fears around inflation and an overheated economy.
The result is that the US Dollar (DXY) rose +0.23%.
The US 30y, 10y, and 2y Treasury yields all declined.
High Yield Corporate Bond (HYG) declined while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices advanced.
Timber (Wood) declined.
Copper (COPPER1!) declined. Aluminum (ALI1!) continued to advance for another day.
Bitcoin (BTCUSD) advanced +5.49%. Ethereum (ETHUSD) advanced +3.37%.
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Investor Sentiment
The put/call ratio rose to 0.668. 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 moved back into Extreme Fear.
The NAAIM money manager exposure index moved up to 78.39.
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Market Leaders
Apple (AAPL) was the only of the largest four mega-caps to advance today, gaining +0.15%. Amazon (AMZN) gapped down and ended the day well below its 21d EMA and 50d MA lines, declining -7.56%. Microsoft (MSFT) declined -0.55%. Alphabet (GOOGL) lost -0.77%.
Proctor & Gamble (PG), Tesla (TSLA), Comcast (CMCSA), and Thermo Fisher Scientific (TMO) were the top-performing mega-caps. AbbView (ABBV), Exxon Mobil (XOM), PayPal (PYPL), and Amazon were the worst-performing.
Only a handful of the daily update growth stocks gained for the day. NIO (NIO), Enphase (ENPH), Ehang Holding (EH), and Tesla (TSLA) were the top performers in the list. Pinterest (PINS) lost over 18%, while Roku (ROKU), Etsy (ETSY), and Upwork (UPWK) fill out the rest of the bottom four.
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Looking ahead
The ISM will release manufacturing purchasing managers index data on Monday.
HSBC (HSBC), Mitsubishi UFJ (MUFG), Heineken (HEINY), and Zoominfo (ZI) are a few of the earnings reports for Monday.
There are many earnings reports next week. Keep an eye out for reports from companies in your portfolio.
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Trends, Support, and Resistance
The Nasdaq pulled back but remained above the 21d EMA today.
The trend-line from the 7/19 low ends with a +1.51% gain for Monday.
The five-day trend line points to a +0.18% gain.
The one-day trend line leads to a -0.01% decline.
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Wrap-up
After several days of reasonably good earnings reports, the Amazon and Pinterest reports were a bit of a shocker. Thankfully inflation data and consumer sentiment data did not make things worse, and the indexes held support levels.
Based on the long upper shadow two days in a row, the expectation is for Sideways or Lower on Monday.
Stay healthy and trade safe!
