IXIC trade ideas
Daily Market Update for 4/21Summary: The gains were broad across segments and sectors today, pivoting the indexes to the upside after a few days of declines. The only thing that was missing is higher volume that would indicate more institutional support in the gains. We'll take what we got for now and then keep a close eye in the days to come.
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, April 21, 2021
Facts: +1.19%, Volume lower, Closing range: 100%, Body: 84%
Good: Test of 21d EMA in morning then buying throughout the day, rally into close
Bad: Lower volume
Highs/Lows: Higher high, higher low
Candle: Long green body with no upper wick, small lower wick
Advance/Decline: Five advancing stocks for every two declining stocks
Indexes: SPX (+0.93%), DJI (+0.93%), RUT (+2.35%), VIX (-6.32%)
Sectors: Materials (XLB +1.82%) and Financials (XLF +1.39%) were the top sectors. Communications (XLC +0.17%) and Utilities (-0.84%) were bottom.
Expectation: Higher
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Market Overview
The gains were broad across segments and sectors today, pivoting the indexes to the upside after a few days of declines. The only thing that was missing is higher volume that would indicate more institutional support in the gains. We'll take what we got for now and then keep a close eye in the days to come.
The Nasdaq finally had the advance/decline ratio above 1.0 after eight sessions in a row of more decliners than advancers. Along with great support from mega-caps, the index closed with a +1.19% gain and a closing range of 100%. The 84% green body is above a small lower wick formed from a dip at open. Otherwise, the bulls led the index higher through the whole day. There were over 5 advancing stocks for every 2 declining stocks.
In a signal of rotation back into small-caps, the Russell 2000 (RUT) outperformed the other major indexes after underperforming for several sessions. But the rotation did not suck the wind out of the other segments, allowing gains to be broadly shared. The S&P 500 (SPX) and Dow Jones Industrial average (DJI) both had gains of +0.93%.
The VIX volatility index declined -6.32% after two days of big advances.
Cyclical sectors topped to the sector list for the day, but did not leave behind growth sectors. Materials (XLB +1.82%) and Financials (XLF +1.39%) were the top sectors. Utilities (-0.84%) was the only sector to decline, reversing the defensive trades of the previous two days.
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Economic Indicators
The US Dollar (DXY) declined -0.10% and may be in the early part of a base at the current level.
The US 30y treasury bond and the US 10y note yields remained about even. The 2y treasury note yields rose slightly.
Both High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices advanced.
Commodities were mostly bullish for the day. Silver (SILVER) and Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) declined on higher than expected crude oil supply numbers. Timber (WOOD) declines but is still near extraordinary highs. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
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Investor Sentiment
The put/call dropped to 0.548. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index is leaning toward the green side, but not near extreme.
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Market Leaders
The four biggest mega-caps certainly helped with the gains today. Microsoft (MSFT) and Amazon (AMZN) gained +0.90% and +0.82%. Apple (AAPL) gained +0.29%. Alphabet (GOOGL) declined -0.03% but found support late in the session after a morning decline.
ASML Holding (ASML) and Roche Holding (RHHBF) topped the mega-cap list with +6.25% and +4.64%. I don't usually include Roche in the daily update as its traded in OTC, but the earnings surprises of these two giants influenced European markets and likewise influenced sentiment in the US major indexes. Tesla (TSLA) and Nike (NKE) round out the top four mega-caps. There were more winners than losers in the mega-caps. Netflix (NFLX) dropped -7.40% after disappointing investors with subscriber growth. Oracle (ORCL) declined -3.26% because of a lost cloud deal with the Israel government.
There wasn't much to complain about among growth stocks either. Lemonade (LMND) was the top winner with a +10.83% gain. Moderna (MRNA), GrowGeneration (GRWG), DraftKings (DKNG) also topped the list with over 5% gains. At the bottom of the list were communications stocks Facebook (FB) and SNAP (SNAP) with -0.39% and -0.32% declines. FUTU Holdings (FUTU) continued to decline, losing -2.64%, after announcing a secondary offer two days ago. Peloton is struggling with the fallout from reports and investigations of treadmill injuries and one death, declined -6.17% today.
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Looking ahead
Thursday will bring an update to Initial Jobless Claims and Existing Home sales.
Earnings updates will include Intel (INTC), AT&T (T), Snap (SNAP), and DR Horton (DHI).
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Trends, Support and Resistance
The index found support at the 13,700 area again today, before rallying the rest of the day and closing just below 14,000.
If today's trend continues, the one-day trend line points to a +0.90% gain for tomorrow. The trend line from the 3/5 low points to a +0.31% gain.
The five-day trend line points to a -1.53% decline for tomorrow.
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Wrap-up
We've been watching the advance/decline ratio over that past week and a half, looking for a day where the advancing stocks outnumbered the declining stocks. Now that we have the signal, the attention turns to volume. Volume declined over the last three sessions, including a large decline today as the index pivoted upward.
Ideally we will see everything come together in the next session. A move higher, with broadly shared gains, on higher volume. The expectation is set for Higher. If the index moves lower, that will be a signal the last few weeks rally is losing support.
Stay healthy and trade safe!
Daily Market Update for 4/20Summary: The market continued to pull back for another day as investors begin to absorb more earnings reports. Those results and the guidance not only impact to their respective stock prices but also indicate what parts of the economy are recovering faster or slower.
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, April 20, 2021
Facts: -0.92%, Volume lower, Closing range: 38%, Body: 47%
Good: Support at 21d EMA and 13,700 area
Bad: Closing range from morning sell-off
Highs/Lows: Lower high, lower low
Candle: Thick red body with a longer lower wick
Advance/Decline: Almost five declining stocks for every advancing stock
Indexes: SPX (-0.68%), DJI (-0.75%), RUT (-1.96%), VIX (+8.00%)
Sectors: Utilities (XLU +1.27%) and Real Estate (XLRE +1.11%) were the top sectors. Financials (XLF -1.87%) and Energy (XLE -2.65%) were bottom.
Expectation: Sideways or Lower
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Market Overview
The market continued to pull back for another day as investors begin to absorb more earnings reports. Those results and the guidance not only impact to their respective stock prices but also indicate what parts of the economy are recovering faster or slower.
The Nasdaq closed down -0.92% on lower volume with a closing range of 38%. That closing range came after heavy morning selling, a bounce off the 21d EMA and a few tests of the 13,700 area. The index find support there and rallied a bit into close to finish with a thick red 47% red body over a longer lower wick. There were almost five declining stocks for every advancing stock.
The Russell 2000 (RUT) led the losses for the major indexes with a -1.96% decline. The S&P 500 (SPX) declined -0.68% and the Dow Jones Industrial average (DJI) declined -0.75%.
The VIX volatility index gained another +6.40%.
Utilities (XLU +1.27%) and Real Estate (XLRE +1.11%) were the top sectors. Consumer Staples (XLP +0.55%) and Health Services (XLV +0.39%) were the only other gaining sectors. Financials (XLF -1.87%) and Energy (XLE -2.65%) were bottom.
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Economic Indicators
The US Dollar (DXY) gained +0.13%.
The US 30y treasury bond and the US 10y and 2y treasury note yields all declined for the day. The yield curve continues to flatten.
High Yield Corporate Bond (HYG) prices declined while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) was flat while Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) declined on news that demand would retreat later in the year. Copper (COPPER1!) was flat while Aluminum (ALI1!) declined.
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Investor Sentiment
The put/call ratio remained at 0.679. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index is still on the greed side, despite the pullbacks in the market.
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Market Leaders
All four big mega-caps declined for the day. Apple (AAPL) lost -1.28%, Amazon (AMZN) lost -1.11%, Alphabet (GOOGL) lost -0.47%, and Microsoft (MSFT) lost -0.19%. All bases are still intact and these mega-caps are trading well above their 21d EMA and 50d MA.
Johnson & Johnson (JNJ) topped the mega-cap list with UnitedHealth (UNH), Procter & Gamble (PG) and Walmart (WMT) filling out the top four mega-cap performers. At the bottom of the list are Nike (NKE), Abbott Labs (ABT), Bank of America (BAC) and Walt Disney (DIS).
It was another tough day for growth stocks with only a handful in the daily update list advancing for the day. Enphase (ENPH) climbed 4.15% after getting analyst upgrades today. Other top growth stock gainers were Tesla (TSLA), NIO (NIO) and Facebook (FB), but the gains were not huge. FUTU (FUTU) followed up yesterday's big gain with a huge loss of -23.43% after the company announced a secondary issue of stock. UP Fintech (TIGR) also lost -14.10% for the day. SUMO Logic (SUMO) and DataDog (DDOG) were other growth stock losers for the day.
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Looking ahead
Wednesday, additional crude oil inventory data will be released in the morning. A 20y treasury bond auction will happen in the afternoon.
On Wednesday, Roche Holding (RHBY), Verizon (VZ), Chipotle (CMG) will release earnings updates.
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Trends, Support and Resistance
The index found support at the 13,700 area today and ended with a short rally.
The index is in the lower half of the regression trend channel from the 3/5 low. The midline points to +1.39% gain, just below 14,000.
The five-day trend line points to a -0.03% sideways move.
The one-day trend line points to a -1.31% decline.
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Wrap-up
We've gone eight days on the Nasdaq where there are more declining stocks than advancing stocks. It's clear the influence is still in the mega-caps. They are extended after a couple weeks of big gains, and may take some more time to form second stage bases and move up again.
More broadly, there is no indication that investor sentiment will change and end the pullback in small caps and growth stocks. Perhaps some earnings reports or economic news later this week can help (or hurt). For many of the growth stocks I follow, it doesn't feel they could go much lower. But then again, it didn't feel they could go any lower last week either.
Stay healthy and trade safe!
Nasdaq short term outlook Well, I ignored the Hang man candle stick yesterday and paid for it.
Fell thru its channel yesterday And found fib support at 13847 fib. it's currently testing that position premarket. if 847 (purple line) gives way then there is no support until 13755 and after that we're talking gap closure drops. Looking at the history of earnings on big tech there is usually a pullback the week before so let's see this is just that. Resistance is blue line 13965.
Daily Market Update for 4/19Summary: After closing last week at record highs, it's reasonable that the equity markets pull back a bit before advancing again. That pull back came abruptly as the session opened in the morning but the markets found some support heading into 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, April 19, 2021
Facts: -0.98%, Volume lower, Closing range: 36%, Body: 35%
Good: Afternoon support after hitting 13,850
Bad: Lower high, lower low, back below 14,000 line
Highs/Lows: Lower high, lower low
Candle: Body in the middle of candle, about equal upper and lower wicks
Advance/Decline: Almost four declining stocks for every advancing stock
Indexes: SPX (-0.53%), DJI (-0.36%), RUT (-1.36%), VIX (+6.40%)
Sectors: Real Estate (XLRE +0.31%) and Health (XLV +0.02%) were only gaining sectors. Technology (XLK -0.83%) and Consumer Discretionary (XLY -1.12%) were bottom.
Expectation: Sideways or Lower
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Market Overview
After closing last week at record highs, it's reasonable that the equity markets pull back a bit before advancing again. That pull back came abruptly as the session opened in the morning but the markets found some support heading into the afternoon.
The Nasdaq declined -0.98% on lower volume for the day. The upper wick formed in the first 15 minutes of trading, The declines came mostly in the morning, forming the lower wick. The candle finished the day with a 36% closing range at the bottom of a red 35% body in the center of the candle. There were almost 4 declining stocks for every one advancing stock on a day of lower highs and lower lows.
All four major indexes tracked in the daily update declined for the day with the small cap Russell 2000 (RUT) having the worst performance, losing -1.36% and dropping back to the bottom of a two week base. The S&P 500 (SPX) declined -0.53%. The Dow Jones Industrial average (DJI) declined -0.36%.
The VIX volatility index dropped another +6.40%.
Real Estate (XLRE +0.31%) and Health (XLV +0.02%) were only gaining sectors for the day. Technology (XLK -0.83%) and Consumer Discretionary (XLY -1.12%) were bottom. Communications (XLC -0.56%) joined the latter two as the three sectors that underperformed the S&P 500 index.
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Economic Indicators
The US Dollar (DXY) continues its downward trend with a -0.58% decline today.
The US 30y treasury bond and the US 10y treasury note yield advanced while the 2y note yield declined for the day.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined for the day.
Silver (SILVER) and Gold (GOLD) both declined. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) remained about flat after Friday's huge gain. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
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Investor Sentiment
The put/call ratio ended the day higher at 0.679. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index is still on the greed side, despite the pullbacks in the market.
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Market Leaders
Apple (AAPL) and Alphabet (GOOGL) both gained for the day while Microsoft (MSFT) and Amazon (AMZN) declined. They all are still trading within a forming base after multiple weeks of gains. Moving average lines look good and they seem to be building support for a move higher.
Netflix (NFLX) topped the mega-cap list ahead of tomorrow's earnings release. Pfizer (PFE), Coca-Cola (KO) and Apple (AAPL) round out the top four. At the bottom of the list are ASML Holding (ASML), Taiwan Semiconductor (TSM), Tesla (TSLA) and Nvidia (NVDA). That majority of mega-caps declined for the day.
The same was true for growth stocks, with most in the daily update list declining. Top gainers included FUTU Holdings (FUTU), UP Fintech (TIGR), NIO (NIO) and RH (RH). Those names look familiar as I noted they swung between the top and the bottom of the list on a daily basis last week. At the bottom of the growth list today are Chewy (CHWY), PENN National gaming (PENN), Peloton (PTON), and Ehang Holdings (EH), all with more than 6% declines.
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Looking ahead
Tuesday's economic calendar is light. The API weekly crude oil stock update will come at market close.
Johnson & Johnson (JNJ) and Proctor & Gamble (PG) will both release earnings on Tuesday. They will be joined by Netflix (NFLX), Abbot Labs (ABT), Philip Morris (PM) and Lockheed Martin (LMT).
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Trends, Support and Resistance
The index dropped back below the 14,000 line. We want to see it get back above that point and stay above it to work toward new all-time highs.
The five-day trend line points to a +0.76% gain, above 14,000. The trend line from the 3/5 low points to +0.40% gain, just below 14,000.
The one-day trend line points to a -0.88% decline, if today's selling continues.
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Wrap-up
The pullback today shouldn't be a huge surprise as the mega-caps and the major indexes are making big weekly gains and investors are likely wanting to protect some profits. There has not been broad support across the index with the advance/decline line remaining under 1.0 for a seventh session in a row.
Some of this could also be from jitters in the market that some of the crazy retail volatility is still lurking. You can see this from the Dogecoin frenzy over the weekend. Stocks like AMC and GME still continue to hold high valuations compared to where analysts would price them, but other popular stocks with retail investors are losing steam. As retail investors tire of losses, they'll add to the selling.
Looking forward, I would think we'd still see some sideways movement or even more pullback. To really see the index reach new highs, we'll need more juice from the mega-caps and also more broadly shared advances across segments.
Stay healthy and trade safe!
Nasdaq short term outlookHeaded up to ATH 14175 in a narrow channel that it has been respecting since that last gap up. It's currently about 140Pts away from channel top and 120 pts away from ATH. I'm expecting an up day on Monday and depending how high we fly another leg up on the following day. . Candle stick is showing Hangman and normally I would be bearish but worst case scenario a pullback to Fib support 1.414 at 13965 (Blue line).which is close to channel bottom.
IMO looking at a few of the fang stock charts and events around Apple's big day Tuesday, I think we'll start Monday and Tuesday up and then a healthy pullback for the big tech Earnings the following week April 26-31th
Market Week in Review - 4/12/2021 - 4/16/2021Summary: There are some interesting questions to answer this week. How much of the economic recovery is already priced into the equity markets? Are investors done with the value trade and moving back to growth, or does value still have more gains ahead? Does the market really see inflation as a threat or is it just necessary and transitionary in the current cycle?
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 do occasionally have some errors or typos and will correct them in my blog or in 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.
The Meaning of Life, a 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 the “The Meaning of Life”. 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, April 12, 2021
Facts: -0.36%, Volume higher, Closing range: 71%, Body: -5%
Good: Higher low than previous day, high closing range
Bad: Distribution day, lower high, loss on higher volume
Highs/Lows: Lower high, higher low
Candle: Inside day, thin red body in upper half of candle
Advance/Decline: Almost three declining for every advancing stock
Indexes: SPX (-0.02%), DJI (-0.16%), RUT (-0.16%), VIX (+1.32%)
Sectors: Consumer Discretionary (XLY +0.64%) and Real Estate (XLRE +0.59%) were top. Technology (XLK -0.48%) and Energy (XLE -0.79%) were bottom.
Expectation: Sideways or Lower
After several days of big gains, its ok for the markets to take a pause. Morning selling turned into buying as treasury auctions showed little trouble and yields remained under control. But the confidence wasn't enough to hold the indexes near intraday highs as investors turned their attention to inflation data becoming available Tuesday morning.
The Nasdaq closed the session with a -0.36% decline on higher volume, marking a distribution day for the index. The thin red body of 5% represents indecision between the good news on treasury auctions, but the potential for bad news in inflation data. The positive is that the body is in the upper half of the candle with a high closing range of 71%, showing a slightly more bullishness in the market. There were 3 declining stocks for every advancing stock.
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Tuesday, April 13, 2021
Facts: +1.05%, Volume lower, Closing range: 86%, Body: 89% (w/gap)
Good: Higher high, higher low, large green body and high closing range
Bad: Small dip at end of day
Highs/Lows: Higher high, higher low
Candle: Large green body under a small upper wick, no lower wick
Advance/Decline: Three declining stocks for every two advancing stocks
Indexes: SPX (+0.33%), DJI (-0.20%), RUT (-0.22%), VIX (-1.54%)
Sectors: Utilities (+1.19%) and Consumer Discretionary (+1.06%) were top. Consumer Staples (-0.53%) and Finance (-0.33%) were bottom.
Expectation: Sideways or Higher
Bigger than expected inflation didn't hold back the markets from setting new records today. The S&P 500 set another new record close while the Nasdaq inches toward key support levels. The gains were driven mostly by large mega-caps and not shared broadly across the indexes.
The Nasdaq advanced +1.05% for the day and closed just below the 14,000 resistance line. The candle has no lower wick as the intraday low was set at the opening bell. The thick green 86% body led the index to a 89% closing range (including the gap) with the intraday high being set late in the afternoon. The advance was driven by larger cap stocks, as there were more declining stocks than advancing stocks.
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Wednesday, April 14, 2021
Facts: -0.99%, Volume lower, Closing range: 10%, Body: 75%
Good: Higher high, pullback is on lower volume
Bad: Selling almost entire day, couldn't hold above 14,000
Highs/Lows: Higher high, lower low
Candle: Outside day, candle is mostly body with a longer upper wick from a rally at open
Advance/Decline: Slightly more declining stocks than advancing stocks
Indexes: SPX (-0.41%), DJI (+0.16%), RUT (+0.84%), VIX (+2.04%)
Sectors: Energy (+2.78%) and Materials (+0.72%) were top. Communications (-1.03%) and Technology (XLK -1.06%) were bottom.
Expectation: Sideways or Lower
The cyclicals moved back to the top of the sector list as investors were motivated by positive import/export data and crude oil inventories. The data provided a good reason for investors to rotate back into the cyclical sectors after chasing gains in big tech over the past few weeks.
The Nasdaq pulled back from recent gains, closing the day with a -0.99% decline on lower volume. The 75% red body represents a day for the bears that ended in a 10% closing range. The index set a higher high in the morning but ended the day with a lower low, providing an outside bearish candle. There were more declining stocks than advancing stocks.
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Thursday, April 15, 2021
Facts: +1.31%, Volume higher, Closing range: 87%, Body: 71%
Good: Higher high, higher low, close above 14,000
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: Mostly body with about equal upper and lower wicks
Advance/Decline: More declining stocks than advancing stocks
Indexes: SPX (+1.11%), DJI (+0.90%), RUT (+0.42%), VIX (-2.47%)
Sectors: Real Estate (XLRE +1.90%) and Technology (XLK +1.72%) were top. Financial (XLF -0.09%) and Energy (XLE -0.81%) were bottom.
Expectation: Sideways or Higher
Positive economic data gave a kick in the right direction to equity markets, allowing the S&P 500 and Dow Jones Industrial average to close again at all-time highs. The day was owned by the bulls with just a few pullbacks, but still the gains were not felt by everyone, with more stocks declining than advancing.
The Nasdaq closed the day with a +1.31% gain on higher volume. The candle, made up of mostly a green body, has a closing range of 87% about even upper and lower wicks. A higher high and higher low provides direction to the previous days outside range.
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Friday, April 16, 2021
Facts: +0.10%, Volume higher, Closing range: 88%, Body: 8%
Good: Higher high after early selling turns to late buying
Bad: Red body, morning sell-off, slight dip at end of session
Highs/Lows: Higher high, higher low
Candle: Long lower wick with a thin body at the top of the candle
Advance/Decline: More than three declining stocks for every two advancing stocks
Indexes: SPX (+0.36%), DJI (+0.48%), RUT (+0.25%), VIX (-1.93%)
Sectors: Materials (XLB +1.21%), Utilities (XLU +0.81%) were top. Communications (XLC -0.07%) and Energy (XLE -0.80%) were bottom.
Expectation: Sideways or Higher
The indexes set more records on Friday, with the Dow Jones Industrial and S&P 500 closing at new all-time highs again. That gains initially came at open after positive building data drove the materials sector to the top of the sector list. It was not a straight line. The market dipped in the morning and the indexes needed to climb back to close near intraday highs.
The Nasdaq closed with +0.10%, above yesterday's close but slightly below the opening price. The bears took over shortly after open, bringing the index nearly to yesterday's low. But the bulls fought back and bought it back to make an intraday high before dipping into close. The long lower wick was formed in the morning selling. The thin 8% body is at the top of the candle which has an 88% closing range. There were more than three declining stocks for every two advancing stocks.
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The Meaning of Life (View on the Week)
There are some interesting questions to answer this week. How much of the economic recovery is already priced into the equity markets? Are investors done with the value trade and moving back to growth, or does value still have more gains ahead? Does the market really see inflation as a threat or is it just necessary and transitionary in the current cycle?
Coming into the week, investors showed caution as they waited for two things. Tuesday's consumer price index data would provide a look at how high inflation moved in March. Second would be the earnings reports for big finance, starting on Wednesday. That caution brought an indecisive candle on Monday, a fight between bulls and bears, creating a thin body where the close was just below the mornings open.
The consumer price index data did come in higher than expected on Tuesday. But it seemed the equity markets had already priced in the fear of higher inflation. The numbers had a different consequence. The US Dollar weakened. The weaker US dollar was a boost for multinational mega-caps, amidst the caution in the market. It was interesting to see Utilities top the sector list, signaling caution, while still Consumer Discretionary and Technology came in second and third, helping advance the Nasdaq for the day.
After more than a week of strong gains with the largest mega-caps, we were due a pullback as investors take profits and turn to other opportunities. That happened on Wednesday. The mega-caps all dipped, taking the Nasdaq down for the day. Investors turned back to the cyclicals for new opportunities, especially in the Financial sector after positive reports from big banks in the morning. Import/Export data was good, Crude Oil Inventories good, demand for Chinese exports soared. It all showed economic activity accelerating. Perfect for cyclicals.
Yet, the enthusiasm for cyclicals was short lived. Thursday was back to big tech and growth stocks with the Financial and Energy sector moving back to the bottom of the sector list. And that Growth vs Value is a theme for the week that's worth more exploring.
The sure winner for the week, without much to question, was the Materials sector and the commodities behind it. All data from retail sales, China exports to the huge building permits and housing starts data on Friday, are driving commodity prices higher and boosting the Materials sector.
For big tech and Nasdaq, Friday was another indecisive day while the other major indexes hit all-time highs. But the curious thing for the week was how the Nasdaq put in higher highs all week while never seeing the advance/decline ratio move about 1.0. It hasn't been above 1.0 for the past six trading sessions. What was happening?
You can see what was happening by looking at the top and bottom lists for mega-caps and growth stocks throughout the week. You'll see the same names show up in the top list one day and the bottom list the next. Nvidia (NVDA) is a great example, going back and forth between top and bottom mover. Chinese stocks FUTU Holdings (FUTU) and UP Fintech (TIGR) had the opposite days from Nvidia. So the advancing stocks one day exchanged places with the declining stocks the next day.
That constant rotation within the index kept the advance/decline line below 1.0 while the mega-caps continued to push higher highs though the week. But by the end of the week, the rotations didn't prevent a broad set of stocks moving upward. Looking at the QQQ (weighted) index vs the QQQE (equal weight) index, the gains for the week are a bit more for the weighted index, but not that much higher. So despite rotation, that may have left some investors dazed, eventually the gains were shared broadly on a weekly basis.
Another way to view the rotation within the week is the back and forth between value and growth stocks. The last two weeks, investors moved back into growth stocks, clearly seen in the ratio of gains between growth and value stocks. However this week, the rise of growth relative to value stocks paused and went back and forth as it appeared investors weren't sure which was the right play moving forward.
The Nasdaq advanced +1.09% for the week. The closing range of 96% marks the third week in a row of a closing range above 95%. Volume was higher.
The higher and higher low is also a three week trend. The key level we needed to pass this week was 14,000. The index topped it twice and retreated but then closed above on Thursday. One more test on Friday, confirmed the resistance level turned to a support area and the index closed the week above the line on its way to a new all-time high.
The S&P 500 (SPX) and Dow Jones Industrial (DJI) both set new all-time highs for another week. The S&P 500 gained +1.37% for the week. The Dow Jones Industrial average gained +1.18%. The Russell 2000 (RUT) gained +0.86%, completing a three-weeks tight pattern where the index closes within a tight range each week. Small caps are still searching for their spot in the current rally.
The VIX volatility index continues lower with a -2.64% decline this week.
Utilities ( XLU ) is surprisingly the top sector for the week. Topping the list on Tuesday and nearing the top of the list on Friday the sector had steady gains throughout the week. The sector is usually a defensive move for investors. Perhaps investors nervousness grew as the S&P 500 has been setting new all-time highs.
Less of a surprise is to see Materials ( XLB ) at the top of the weekly list. The sector is benefiting not only from investments on infrastructure being discussed in Washington, but also a strong housing sector and a surge in building permits.
Energy ( XLE ) had a choppy week, taking the lead on Wednesday, but quickly fading to near the bottom of the list for the weekly.
Consumer Discretionary ( XLY ) also had some good days this week, advancing on news of strong retail sales and an advance in consumer credit showing increased spending.
The worst performing sector this week was Communications ( XLC ). There have been some reports of decelerating spending on Internet media and social platforms from retailers. That makes sense as demand is naturally increasing and requires less effort for omnichannel marketing to bring in consumers.
For the US Treasury yields, note the spread shown in the top of the chart. The green line is the difference between the US 10y and 2y yields. It's been flattening since the panic in March where the performance of equities was so tightly attached to the longer term treasury note yields.
The US 30y bond and 10y note yields both declined for the week while the 2y note yields rose, helping narrow the spread between long term and short term yields.
Both the High Yield Corporate Bond (HYG) and Investment Grade Bond (LQD) prices advanced for the week.
s3.tradingview.com
The US Dollar (DXY) retreated -0.70% erasing all the gains during March and giving a boost to multinational companies that can benefit from a weakened US dollar.
All commodities, in the six tracked by this update, rose for the week, showing the high demand while economic activity continues to increase.
Timber (WOOD) is all time highs. COPPER (COPPER1!) is at its highest since at least 2015.
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The Big Four Mega-caps
The four big mega-caps completed a third week of gains, helping drive the index and their respective sectors higher. Microsoft (MSFT) had the biggest weekly gain, advancing +1.91%. Apple (AAPL) advanced +0.88%. Alphabet (GOOGL) gained +0.53%. All of these three have 10w moving average lines above the 40w moving average line. Amazon (AMZN) advanced +0.81% for the week and is trying to keep the 10w MA above the 40w MA.
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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. Exxon Mobil (XOM) was able to finish the week with a +1.41% gain despite the Energy sector not faring well. Marriott (MAR) had a small gain of +0.10% gain. However, Carnival Cruise Lines (CCL) and Delta Airlines (DAL) lost -7.75% and -5.34% for the week as new waves of the pandemic outside of the US brought in new fears of impact to the travel and leisure sectors.
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Investor Sentiment
The put/call ratio (PCCE) closed the week 0.567. 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 back and forth around neutral but ended the week on the greed side.
The NAAIM exposure index rose to 96.57. Money managers continue to increase exposure in the market.
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The Week Ahead
Economic news on Monday will start off light with just a few short-term treasury bill auctions scheduled. They likely won't have much influence over yield concerns.
Tuesday also will be light. The API weekly crude oil stock update will come at market close.
Wednesday, additional crude oil inventory data will be released in the morning. A 20y treasury bond auction will happen in the afternoon.
Thursday will bring an update to Initial Jobless Claims and Existing Home sales.
On Friday the Manufacturing and Services Purchasing Managers Index data will be released. The data is an indicator for economic activity the respective sectors. New Home Sales data will also be released in the morning.
Coca-Cola (KO) will kick-off the week with a premarket earnings release on Monday. After market close, IBM (IBM), United Airlines (UAL), and Steel Dynamics (STLD) could be important earnings reports to watch.
Johnson & Johnson (JNJ) and Proctor & Gamble (PG) will both release earnings on Tuesday. They will be joined by Netflix (NFLX), Abbot Labs (ABT), Philip Morris (PM) and Lockheed Martin (LMT).
On Wednesday, Roche Holding (RHBY), Verizon (VZ), Chipotle (CMG) will release updates.
Thursday's earnings updates will include Intel (INTC), AT&T (T), Snap (SNAP), and DR Horton (DHI).
Friday will close the week with earnings reports from Honeywell (HON) and American Express (AXP).
Earnings reports for the first quarter of the year are starting to pick up and this isn't meant to be an exhaustive list. Check your own portfolio for earnings dates so you aren't surprised.
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The Bullish Side
The S&P 500 and Dow Jones Industrial continue to set records with all-time high closes. One could see that as the potential for a pullback in the markets, but it could also be time for the tech and small-caps to have their turn and bring the Nasdaq and the Russell 2000 up to all-time highs as well.
Inflation numbers are out in the open and investors didn't run from equity markets. Rather the impact to the US dollar showed there is some silver lining in the higher inflation number, that multinational companies can benefit from a weaker dollar under higher inflation. It also shows investors are taking some heed from the Fed that higher inflation doesn't necessarily mean higher interest rates.
Considering the mixed reaction to inflation, then one must be excited about the accelerating performance of the economy. You would be hard pressed to find a time when the economy grew at pace like it is now and the equity markets didn't advance at some level.
There is much to be positive about, from the flattening yield curve, to good earnings reports over the past week.
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The Bearish Side
Sure, there are positive gains in the market, but the gains are limited to a few players that are over extended or built on thin bases. Although mega-caps have carried the indexes higher, the big companies are now extended and ripe for a pullback. The action for their counterparts in mid-cap growth stocks are all over the place without strong price action to support expectation for further gains. Many popular small-caps seem to be on a downward spiral with no bottom in site.
Big finance earnings reports this past week were strong, thanks to improving yields in long term treasuries that impact results for big banks. Financial institutions have also benefited from the huge rise in investment activity in the first quarter. But how will earnings reports outside of the Financial sector look in the coming weeks. More importantly, what will be the outlook set for big tech and growth stocks as they face the post-pandemic recovery? Those could be in for a shock to investors compared to the tail winds of 2020.
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Key Nasdaq Levels to Watch
This week we will be watching for a new all-time high for the Nasdaq. Will it come this week, or is one more pullback necessary before the milestone?
On the positive side, the levels are:
14,062.50 is the high of this week. That will be the first price to beat this week.
The all-time high is at 14,175.12.
14,564 is the middle line of the channel from the March 2020 bottom. The index has been below the midline for the past eight weeks.
On the downside, there are a few key levels:
The low of this past week is 13,783.95. Let's get a higher low for next week.
The 10d MA is at 13,861.74. The index has done well to stay above this line during power trends.
The 21d exponential moving average is at 13,639.66. The 21d EMA is now above the 50d MA, a good confirmation of an uptrend.
The 50d moving average is at 13,507.28.
The lower line of the channel from the March 2020 bottom is around 13,192 for next week.
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Wrap-up
There's really one thing I'm watching for next week from a macro perspective. Will the advance/decline ratio rise above 1.0? When will there be a broader rally vs growth limited to the mega-caps while everything else rotates? That broader rally will mean there is enough shake out in equities that now investors are starting to set solid bets in the market vs chasing swings.
As for the individual investor, the most important price action is the one in your portfolio. Looking past the daily charts, how are your stocks performing on a weekly basis? The day-to-day swings don't matter as much as the weekly action that shows whether there is institutional support and growth heading into the economic recovery.
Good luck, stay healthy and trade safe!
Daily Market Update for 4/16Summary: The indexes set more records on Friday, with the Dow Jones Industrial and S&P 500 closing at new all-time highs again. That gains initially came at open after positive building data drove the materials sector to the top of the sector list. It was not a straight line. The market dipped in the morning and the indexes needed to climb back to close near intraday highs.
Notes
The private indicator I use to draw the large candles on the Daily Market Update chart is not working today (you can see the issue looking at previous daily updates). TV identified the issue and is working on it. Until its fixed, I'll include just the daily summary data at the top of the chart and include an additional daily candlestick chart in the report below.
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, April 16, 2021
Facts: +0.10%, Volume higher, Closing range: 88%, Body: 8%
Good: Higher high after early selling turns to late buying
Bad: Red body, morning sell-off, slight dip at end of session
Highs/Lows: Higher high, higher low
Candle: Long lower wick with a thin body at the top of the candle
Advance/Decline: More than three declining stocks for every two advancing stocks
Indexes: SPX (+0.36%), DJI (+0.48%), RUT (+0.25%), VIX (-1.93%)
Sectors: Materials (XLB +1.21%), Utilities (XLU +0.81%) were top. Communications (XLC -0.07%) and Energy (XLE -0.80%) were bottom.
Expectation: Sideways or Higher
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Market Overview
The indexes set more records on Friday, with the Dow Jones Industrial and S&P 500 closing at new all-time highs again. That gains initially came at open after positive building data drove the materials sector to the top of the sector list. It was not a straight line. The market dipped in the morning and the indexes needed to climb back to close near intraday highs.
The Nasdaq closed with +0.10%, above yesterday's close but slightly below the opening price. The bears took over shortly after open, bringing the index nearly to yesterday's low. But the bears fought back and bought it back to make an intraday high before dipping into close. The long lower wick was formed in the morning selling. The thing 8% body is at the top of the candle which has an 88% closing range. There were more than three declining stocks for every two advancing stocks.
The Dow Jones Industrial average (DJI) gained +0.48% a bit below the 0.64% it gained in the first 10 minutes of the session. The S&P 500 (SPX) gained +0.36%. Both closed a new all-time highs. The Russell 2000 (RUT) continues to slowly work itself out of a base with a +0.25% advance today.
The VIX volatility index dropped another -1.93%.
Materials (XLB +1.21%) was the top sector, gapping up at open on the positive building data. Utilities (XLU +0.81%) was the second best sector, signaling some caution from investors perhaps on lower than expected consumer data or protecting against the volatility of a big options expiration day. Communications (XLC -0.07%) and Energy (XLE -0.80%) were bottom.
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Economic Indicators
The US Dollar (DXY) continues its downward trend with a -0.14% decline today.
The US 30y treasury bond yield declined while the US 10y and 2y note yields advanced for the day.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined advanced for the day.
Silver (SILVER) both Gold (GOLD) advanced . Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) both declined.
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Investor Sentiment
The put/call ratio ended the day at 0.567. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index is moving toward the greed side.
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Market Leaders
Microsoft (MSFT) continued its breakout, setting another new all-time high with a +0.48% advance. Amazon (AMZN) also advanced, gaining +0.60% and regaining ground from a pullback earlier in the week. Apple (AAPL) and Alphabet (GOOGL) declined -0.25% and -0.11% but the base within their uptrends remain intact.
Pfizer (PFE), Cisco (CSCO), Comcast (CMCSA), and Home Depot (HD) topped the mega-cap list today. Most mega-caps faired pretty well for the day. At the bottom of the list are PayPal (PYPL), Nvidia (NVDA), Exxon Mobil (XOM) and Facebook (FB).
It was a different story for growth stocks. There were some winners with Moderna (MRNA), Dr Horton (DHI), FUTU Holdings (FUTU) and RH (RH) topping the daily update list. However, there were more losers than winners and some of the losses were a surprise. Pinterest (PINS) dropped nearly 10% on news that an analyst is forecasting a deceleration in omnichannel spending from retailers. DataDog (DDOG) and Fiverr (FVRR) gave up recent gains with 5% declines today.
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Looking ahead
The only thing on the economic calendar for Monday is a short-term treasury bill auction. It's not likely to impact outlook on bonds or equities.
Coca-Cola (KO) will kick-off the week with a premarket earnings release. After market close, IBM (IBM), United Airlines (UAL), and Steel Dynamics (STLD) could be important earnings reports to watch.
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Trends, Support and Resistance
The index testing the 14,000 support area in the morning. That was a spot for the bulls to come back in and start buying, helping the index to bounce of the line and make it back to a higher high before close.
The five-day trend and one-day trend lines point to a +0.36% gain, moving the index slowly but surely toward a new all-time high.
The trend line from the 3/5 low points to a -0.89% decline for Monday.
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Wrap-up
It's been six trading days in a row that the advance/decline ratio is below 1.0 even as the index makes higher highs. Looking at the QQQ (weighted) index vs the QQQE (equal weight) index, the gains for the week are a bit more for the weighted index, but not that much higher. A closer look could tell, but likely what happened is the mega-caps kept moving up as lower cap stocks rotated throughout the week, keeping the daily A/D ratio low each day despite a broader gain on a weekly basis.
What that means for the trend needs some more thought. Perhaps in the weekly update something will pop and provide some insight of where we can expect things to go next week. On the daily look, it seems the index has support and will continue to move up as economic activity continues picking up. For growth investors, it sure would be nice to have the gains be more broadly (and consistently) shared across the index.
Stay healthy and trade safe!
NASDAQ DAILY CHARTKEY LEVEL TO BREAK IS AROUN 14100, AND AFTER THAT COULD SEE RETURN OF SMALL CAPS
I believe around 2 weeks max until we break 14100 levels and if history repeats its self we can get a very good run
NQ reach its highest levelRSI shows over bought
MACD show negative divergence
Fib shows golden point at 13425
this is the target we aim....
big money we gonna achieve
Daily Market Update for 4/15Summary: Positive economic data gave a kick in the right direction to equity markets, allowing the S&P 500 and Dow Jones Industrial average to close again at all-time highs. The day was owned by the bulls with just a few pullbacks, but still the gains were not felt by everyone, with more stocks declining than advancing.
Notes
The private indicator I use to draw the large candles on the Daily Market Update chart is not working today (you can also see the issue looking at previous daily updates). Until its fixed, I'll include just the daily summary data at the top of the chart and include an additional daily candlestick chart in the report below.
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, April 15, 2021
Facts: +1.31%, Volume higher, Closing range: 87%, Body: 71%
Good: Higher high, higher low, close above 14,000
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: Mostly body with about equal upper and lower wicks
Advance/Decline: More declining stocks than advancing stocks
Indexes: SPX (+1.11%), DJI (+0.90%), RUT (+0.42%), VIX (-2.47%)
Sectors: Real Estate (XLRE +1.90%) and Technology (XLK +1.72%) were top. Financial (XLF -0.09%) and Energy (XLE -0.81%) were bottom.
Expectation: Sideways or Higher
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Market Overview
Positive economic data gave a kick in the right direction to equity markets, allowing the S&P 500 and Dow Jones Industrial average to close again at all-time highs. The day was owned by the bulls with just a few pullbacks, but still the gains were not felt by everyone, with more stocks declining than advancing.
The Nasdaq closed the day with a +1.31% gain on higher volume. The candle, made up of mostly a green body, has a closing range of 87% about even upper and lower wicks. A higher high and higher low provides direction to the previous days outside range.
The S&P 500 (SPX) gained 1.31% while the Dow Jones Industrial average (DJI) gained +1.11%. The Russell 2000 (RUT) also had gains for the day, advancing 0.42%.
The VIX volatility index declined -2.47%.
Real Estate (XLRE +1.90%) and Technology (XLK +1.72%) were top. Financial (XLF -0.09%) and Energy (XLE -0.81%) were the only losing sectors for the day.
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Economic Indicators
The US Dollar (DXY) rose +0.04%.
The US 30y treasury bond yield, and US 10y and 2y note yields all declined for the day.
Prices on both High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) advanced for the day. The High Yield bond prices made a move upward after basing for a few weeks.
Silver (SILVER) both Gold (GOLD) advanced . Crude Oil (CRUDEOIL1!) declined slightly. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
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Investor Sentiment
The put/call ratio ended the day at 0.571. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index is in the neutral area, moving just a bit to the greed side.
The NAAIM money manager exposure index rose to 96.57.
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Market Leaders
The four big mega-caps all gained for the day after pulling back yesterday. Microsoft (MSFT) and Alphabet (GOOGL) closed at new all-time highs. Apple (AAPL) and Amazon (AMZN) are continuing breakouts but have a ways to go to new all-time highs.
Nvidia (NVDA), UnitedHealth (UNH), PayPal (PYPL) and Adobe (ADBE) topped the mega-cap list with gains of +2.5% and higher. At the bottom of the list were Bank of America (BAC), Taiwan Semiconductor (TSM), Walt Disney (DIS) and Exxon Mobil (XOM).
Growth stocks were mixed with Okta (OKTA), CloudFlare (NET), ROKU (ROKU) and MongoDB (MDB) topping the list with over 3% gains. At the bottom of the list are Digital Turbine (APPS), UP Fintech (TIGER), Enphase (ENPH) and Solar Edge (SEDG).
DELL Technologies (DELL) rose +6.71% on news that they will spin-off VMWare (VMW).
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Looking ahead
Building Permits and Housing Starts data will be released on Friday morning. We will also get an update on Consumer Expectations and Consumer Sentiment.
Friday's earnings reports include Honeywell (HON) and Morgan Stanley (MS).
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Trends, Support and Resistance
The index was able to rise above the 14,000 line, staying above the line even after a couple afternoon tests of the line.
The five-day trend and one-day trend lines point to a +0.24% gain.
The trend line from the 3/5 low points to a -1.13% decline for Friday.
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Wrap-up
Positive economic news in the morning was enough to lift the indexes, but not enough to see gains shared broadly across the market. The gain on higher volume is a positive, but it would be good to see the Advance/Decline number be above 1.0.
As the index inches toward a new all-time high, we can expect a bit more rotation as investors take profits and chase gains in other stocks. Trying to find those opportunities, rotating your own investments, can be tricky. So as always, its best to stick to the rules that work for you and your trading style, sticking with the stocks that are working for you.
That message is for me too. I've been burned by breaking rules too many times already in 2021.
Stay healthy and trade safe!
Daily Market Update for 4/14Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Wednesday, April 14, 2021
Facts: -0.99%, Volume lower, Closing range: 10%, Body: 75%
Good: Higher high, pullback is on lower volume
Bad: Selling almost entire day, couldn't hold above 14,000
Highs/Lows: Higher high, lower low
Candle: Outside day, candle is mostly body with a longer upper wick from a rally at open
Advance/Decline: Slightly more declining stocks than advancing stocks
Indexes: SPX (-0.41%), DJI (+0.16%), RUT (+0.84%), VIX (+2.04%)
Sectors: Energy (+2.78%) and Materials (+0.72%) were top. Communications (-1.03%) and Technology (XLK -1.06%) were bottom.
Expectation: Sideways or Lower
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Market Overview
The cyclicals moved back to the top of the sector list as investors were motivated by positive import/export data and crude oil inventories. The data provided a good reason for investors to rotate back into the cyclical sectors after chasing gains in big tech over the past few weeks.
The Nasdaq pulled back from recent gains, closing the day with a -0.99% decline on lower volume. The 75% red body represents a day for the bears that ended in a 10% closing range. The index set a higher high in the morning but ended the day with a lower low, providing an outside bearish candle. There were more declining stocks than advancing stocks.
The S&P 500 (SPX) declined -0.41% for the day after setting a new all-time high. The Dow Jones Industrial average (DJI) also set a new all-time high and closed the day with a +0.16% gain, but the close was well below the intraday high. The Russell 2000 (RUT) preformed the best for the day with a +0.84% gain, but also closed below intraday highs.
The VIX volatility index gained +2.04%.
Cyclical stocks were at the top o fthe sector list. Energy (+2.78%) and Materials (+0.72%) were the best performing. Energy was driven to the top by higher than expected demand for crude oil. Financials (+0.60%) also performed well, helped by earnings beats by big finance companies announced before market open. The big growth sectors of Communications (-1.03%) and Technology (XLK -1.06%) that drove recent gains, were at the bottom of today's sector list.
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Economic Indicators
The US Dollar (DXY) declined -0.21%.
The US 30y treasury bond yield, and US 10y and 2y note yields all gained for the day.
Prices on both High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) declined for the day.
Silver (SILVER) advanced while Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) had a huge advance after data showed a surprisingly level of demand. Timber (WOOD) advanced slightly. Copper (COPPER1!) and Aluminum (ALI1!) both advanced. The outlook for economic activity, showing by the positive import/export data, is driving these prices higher along with the cyclical sectors.
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Investor Sentiment
The put/call ratio ended the day at 0.566. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index is in the neutral area, moving just a bit to the fear side.
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Market Leaders
All four big mega-caps declined for the day. I've been mentioning how extended they've gotten over the past two weeks, so a pullback is not a surprise, nor is it bad thing. Apple (AAPL) declined -1.79% but finally had its 21d EMA cross above the 50d MA, further confirming an uptrend for the stock. Microsoft (MSFT) declined -1.12%. Amazon (AMZN) declined -1.97%. Alphabet (GOOGL) declined -0.56%. Alphabet was already developing a based and may be the first to make the next breakout higher.
Exxon Mobil (XOM) and Chevron (CVX) topped the mega-cap list, driving the Energy sector performance for the day. PetroChina (PTR) and Bank of America (BAC) were also near the top. At the bottom of the list were Tesla (TSLA), PayPal (PYPL), Nvidia (NVDA) and Neftlix (NFLX).
The majority of the growth stock list had declines for the day. The biggest gainers in our list were UP Fintech (TIGR), Moderna (MRNA), FUTU Holdings (FUTU) and Fastly (FSLY). GrowGeneration (GRWG), Palantir (PLTR), Square (SQ) and Digital Turbine (APPS) were the biggest losers with more than 5% declines.
Investor's attention was on the Coinbase (COIN) debut today with a 40% swing in prices from lows to highs and a close that was 23% below the intraday high.
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Looking ahead
Thursday has several economic data releases. Initial Jobless Claims data before the market opens will hopefully recover a bit from last week's negative surprise. Retail Sales data for March should show an improvement over the February numbers that were brought down by weather events. The Manufacturing Index data and Industrial Production data will also be leading indicators on the recovery of economic activity.
The Financial sector earnings reports will include Bank of America (BAC), Citigroup (C), Charles Schwab (SCHW) and BlackRock (BLK). Taiwan Semiconductor (TSM), UnitedHealth (UNH), Delta Airlines (DAL) will also be closely watched earnings reports for the day.
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Trends, Support and Resistance
The index popped above the 14,000 line briefly today before selling off the rest of the day. That type of round-number resistance is not unexpected as investors tend to place conditional rules at round numbers.
The five-day trend line points to a +1.30% gain for Thursday, back above 14,000.
The trend line from the 3/5 low points to a -0.33% as the index regresses back to the center line. The one-day trend line points to a -1.25% loss tomorrow which would leave the index around the 13,700 support area.
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Wrap-up
In the previous few updates, we recognized that the big tech and mega-cap names that were driving gains were also getting quite extended. As rotations go, investors took profits and moved them into the next opportunity for some gains which is the cyclicals and recovery stocks.
There is still some room for the mega-caps to pause and let moving average lines catch up with the recent gains. The expectation is for sideways or lower for tomorrow, but gains across a much broader set of stocks in the Nasdaq would be very welcome and healthy for the current bull market.
Stay healthy and trade safe!
Daily Market Update for 4/13Trend lines drawn from the 3/5 low (25d), 4/5 (5d) and today 4/9 (1d).
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, April 13, 2021
Facts: +1.05%, Volume lower, Closing range: 86%, Body: 89% (w/gap)
Good: Higher high, higher low, large green body and high closing range
Bad: Small dip at end of day
Highs/Lows: Higher high, higher low
Candle: Large green body under a small upper wick, no lower wick
Advance/Decline: Three declining stocks for every two advancing stocks
Indexes: SPX (+0.33%), DJI (-0.20%), RUT (-0.22%), VIX (-1.54%)
Sectors: Utilities (+1.19%) and Consumer Discretionary (+1.06%) were top. Consumer Staples (-0.53%) and Finance (-0.33%) were bottom.
Expectation: Sideways or Higher
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Market Overview
Bigger than expected inflation didn't hold back the markets from setting new records today. The S&P 500 set another new record close while the Nasdaq inches toward key support levels. The gains were driven mostly by large mega-caps and not shared broadly across the indexes.
The Nasdaq advanced +1.05% for the day and closed just below the 14,000 resistance line. The candle has no lower wick as the intraday low was set at the opening bell. The thick green 86% body led the index to a 89% closing range (including the gap) with the intraday high being set late in the afternoon. The advance was driven by larger cap stocks, as there were more declining stocks than advancing stocks.
The S&P 500 (SPX) gained +0.33%, closing just below a new all-time high set intraday. The Dow Jones Industrial average (DJI) declined -0.20%, weighed down by cyclical sectors. The Russell 2000 (RUT) continues to underperform the other indexes with a -0.22% decline today.
The VIX volatility index declined -1.54%.
Utilities (XLU +1.19%) was the top sector, signaling caution among investors despite the gains in the Nasdaq and S&P 500. Consumer Discretionary (XLY +1.06%) and Technology (XLK +0.94%) were the second and third best sectors. Consumer Staples (XLP -0.53%) and Finance (XLF -0.33%) were bottom.
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Economic Indicators
The US Dollar (DXY) declined -0.28%.
The US 30y treasury bond yield declined after a strong auction of the bond today. US 10y and 2y note yields also declined for the day.
Prices on both High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) advanced for the day.
Silver (SILVER) and Gold (GOLD) both advanced. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) remained flat near its highs. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
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Investor Sentiment
The put/call ratio ended the day at 0.521. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index is in the neutral area.
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Market Leaders
All four big mega-caps gained for the day. Apple (AAPL) had a +2.43% and nearly got the 21d EMA line above the 50d MA. Microsoft (MSFT) continues setting new all-time highs with a +1.01% advance. Amazon (AMZN) held onto a +0.61% gain after advancing more than 1.5% intraday. Alphabet (GOOGL) closed the day with a +0.56% advance.
Tesla (TSLA) was the big mega-cap winner of the day with a big +8.60% gain. Nvidia (NVDA) and PayPal (PYPL) join Apple to fill out the top four. At the bottom of the list are consumer staples Procter & Gamble (PG) and Johnson & Johnson (JNJ) along with big finance JP Morgan (JPM) and Bank of America (BAC). Nike was the worst performing mega-cap with over a 2% decline.
The growth stock list had a decent day with CloudFlare (NET) topping the list, closing the day with a 11.30% gain. Palantir (PLTR), SUMO Logic (SUMO) and Moderna (MRNA) had gains of over 7%. FUTU Holdings (FUTU) and UP Fintech (TIGR) were at the bottom of the list with over 2% declines.
Zoom Video (ZM) also had a big gain for the day perhaps on fears of the vaccine concerns (now including Johnson & Johnson) slowing down the return to work.
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Looking ahead
Economic news for Wednesday includes Export/Import Price index data before markets open. Crude Oil Inventory data will be released after the market opens.
JP Morgan (JPM), Wells Fargo (WFC), Goldman Sachs (GS) will get earnings season going for big finance with reports on Wednesday. In addition, retail stocks Bed, Bath and Beyond (BBBY) and Lovesac (LOVE) will release earnings.
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Trends, Support and Resistance
The index is just under the 14,000 support/resistance area. A breakthrough of that line will be a confidence booster on the way to new all-time highs for the Nasdaq. With big tech stocks extended above bases, we may need one more pull back before this breakthrough.
The one-day trend line points to a +0.39% gain for Wednesday. The five-day trend line points to a sideways move.
The trend line from the 3/5 low points to a -1.73% loss.
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Wrap-up
It may seem that inflation data was ignored in the equities markets, with the Nasdaq having a gain and the S&P 500 hitting a record high. However, the gains in the market were driven by large mega-caps and not broadly shared across the indexes.
After the inflation data was released the US dollar weakened further. The weakening of the US dollar will positively impact valuations of large multinational companies. Exports become cheaper, boosting revenues in foreign subsidiaries. When those revenues are repatriated for reporting, they are also worth more translated back into the USD.
On the other hand, domestic companies are more likely to be impacted by inflation and the weakening dollar as imports become more expensive. Not all the expense can be passed onto the consumer, so margins will be reduced while the companies balance higher prices with the impact to demand.
The high inflation is expected to be transitionary and should come back down later in the year after lagging supply catches up with the accelerated demand caused by consumers getting back out shopping, spending savings, stimulus checks and credit. The high demand is seen in the huge surprise export data from China.
Stay healthy and trade safe!
Nasdaq is going to a new ATHInverse HS on the picture. Target price is 14.646 if we count with IHS formation.
Small gap ups with little red candles. We are in wave 3 for sure.
If we count with EW Fibo levels then the target is between 1.618 - 2.0 levels, so 14.376 - 14.844. Green box on the picture.
Daily Market Update for 4/12Trend lines drawn from the 3/5 low (25d), 4/5 (5d) and today 4/9 (1d).
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, April 12, 2021
Facts: -0.36%, Volume higher, Closing range: 71%, Body: -5%
Good: Higher low than previous day, high closing range
Bad: Distribution day, lower high, loss on higher volume
Highs/Lows: Lower high, higher low
Candle: Inside day, thin red body in upper half of candle
Advance/Decline: Almost three declining for every advancing stock
Indexes: SPX (-0.02%), DJI (-0.16%), RUT (-0.16%), VIX (+1.32%)
Sectors: Consumer Discretionary (XLY +0.64%) and Real Estate (XLRE +0.59%) were top. Technology (XLK -0.48%) and Energy (XLE -0.79%) were bottom.
Expectation: Sideways or Lower
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Market Overview
After several days of big gains, its ok for the markets to take a pause. Morning selling turned into buying as treasury auctions showed little trouble and yields remained under control. But the confidence wasn't enough to hold the indexes near intraday highs as investors turned their attention to inflation data becoming available Tuesday morning.
The Nasdaq closed the session with a -0.36% decline on higher volume, marking a distribution day for the index. The thin red body of 5% represents indecision between the good news on treasury auctions, but the potential for bad news in inflation data. The positive is that the body is in the upper half of the candle with a high closing range of 71%, showing a slightly more bullishness in the market. There were 3 declining stocks for every advancing stock.
The S&P 500 (SPX) declined -0.02%. The Dow Jones Industrial average (DJI) declined -0.16%. The Russell 2000 (RUT) continues to underperform the other indexes with a -0.43% decline today.
The VIX volatility index advanced +1.32%.
Consumer Discretionary (XLY +0.64%) and Real Estate (XLRE +0.59%) were top performing sectors for the day. Technology (XLK -0.48%) and Energy (XLE -0.79%) were bottom. Energy opened the day at the top of the sector list, but quickly moved to the bottom.
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Economic Indicators
The US Dollar (DXY) declined -0.11%.
The US 30y treasury bond yield remained flat while the and 10y treasury note yield advanced. The shorter term 2y note yield advanced, helping bring down the spread between short term and long term.
Prices on both High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) declined for the day.
Silver (SILVER) and Gold (GOLD) both declined. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) declined slightly. Copper (COPPER1!) declined while and Aluminum (ALI1!) advanced.
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Investor Sentiment
The put/call ratio ended the day at 0.596. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index moved back to the neutral area.
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Market Leaders
Of the big four mega-caps, Microsoft (MSFT) and Amazon (AMZN) were able to hold onto gains for the day despite closing below intraday highs. Apple (AAPL) and Alphabet (GOOGL) both declined. All four are trading above key moving average lines. Apple is getting close to getting the 21d EMA to cross above the 50d MA.
The accelerated gains for the big four this past week results in their prices getting extended and some pullback or pause may be in order. That may mean another day or two of pause in the indexes as well.
Alibaba (BABA) topped the mega-cap list despite being fined a record amount by the Chinese government over the weekend. The company stated the fine will have little impact to the company and investors must be relieved that the outcome wasn't worse.
Nvidia (NVDA), Tesla (TSLA) and Pfizer (PFE) fill out the remaining top four mega-caps for the day. In addition to Apple and Alphabet, the big mega-cap losers for the day included Taiwan Semiconductor (TSM) and Intel (INTC).
The mega-caps topped the growth stock list as well. Just below them in the list were Snowflake (SNOW), MongoDb (MDB), Okta (OKTA) and DataDog (DDOG). At the bottom of the growth list were FUTU Holdings (FUTU), DraftKings (DKNG), UP Fintech (TIGR) and Ehang Holdings (EH).
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Looking ahead
All eyes will be on the Consumer Price Index data for March being released before market open on Tuesday. The data compliments the produce price index data released this past week. The produce price index data is leading indicator to consumer price index data, both providing an outlook on inflation. Investors are fearful of inflation bringing an end to lower interest rates.
Earnings reports will start to pick up this week, but there are no notable earnings for the daily update on Tuesday.
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Trends, Support and Resistance
The index is inching toward the 14,000 support/resistance area. A breakthrough of that line will be a confidence booster on the way to new all-time highs for the Nasdaq.
The five-day trend line points to a +0.37% gain for Tuesday. The one-day trend line points to a +0.06% gain.
The trend line from the 3/5 low points to a -1.09% loss.
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Wrap-up
It was an indecisive day as investors await inflation data and key earnings reports from big finance this week. For inflation, it seems investors are fearing the worst. That could be a good thing if the data is not quite as frightful as feared.
Last week, the Nasdaq climbed +3.12% while the S&P 500 and Dow Jones Industrial average set new all-time highs. So it should not come as a huge surprise that the market takes a breather, especially as more economic data is on its way. In fact, we may see a little more pullback or sideways action before the Nasdaq marches toward new all-time highs for itself.
Stay healthy and trade safe!
Market Week in Review - 4/5/2021 - 4/9/2021The 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. It helps me evaluate my observations, recognize new data points, and create a plan for possible scenarios in the future.
I do occasionally have some errors or typos and will correct them in my blog or in 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.
The Meaning of Life, a 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 the “The Meaning of Life”. 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, April 5, 2021
Facts: +1.67%, Volume lower, Closing range: 94% (w/Gap), Body: +80%
Good: Three positive days in a row, above 13,700 confirmed with a quick retest
Bad: Lowering volume
Highs/Lows: Higher high, higher low
Candle: Gap up, mostly green body with a slightly longer upper wick
Advance/Decline: About the same number of advancing as declining stocks.
Indexes: SPX (+1.44%), DJI (+1.13%), RUT (+0.49%), VIX (+3.35%)
Sectors: Consumer Discretionary (XLY +2.27%) and Communications (XLC +2.11%) were top. Energy (XLE -2.39%) was the only declining sector.
Expectation: Higher
The markets set new records on Monday led by gains from the largest public companies in Consumer Discretionary, Communications and Technology. The S&P 500 and Dow Jones Industrial marked new all-time highs with a bullish session that began the day with opening gap ups.
The Nasdaq closed the day with a +1.67% gain on lower volume. The closing range of 94% includes the morning gap-up that led to an 80% green body. A minor fade in the afternoon created a slightly longer upper wick than the lower wick but the higher high and higher low continue a strong uptrend from last week's pivot. There were about the same number of gaining stocks as declining stocks.
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Tuesday, April 6, 2021
Facts: -0.05%, Volume lower, Closing range: 24%, Body: +16%
Good: Higher high, higher low, held support around 13,700
Bad: Long upper shadow from afternoon selling
Highs/Lows: Higher high, higher low
Candle: Long upper shadow above a thin green body
Advance/Decline: About three declining for every two advancing stocks.
Indexes: SPX (-0.10%), DJI (-0.29%), RUT (-0.25%), VIX (+1.17%)
Sectors: Utilities (XLU +0.53%) and Consumer Discretionary (XLY +0.43%) were top. Health Services (XLV -0.38%) and Technology (XLK -0.43%)
Expectation: Sideways or Higher
There was caution in the market on Tuesday after several days of record setting gains. Investors are monitoring the progress of infrastructure plans and the potential for new taxes. At the same time, the pandemic keeps popping up new fears as Canada declares a very serious third wave.
The Nasdaq closed with a small -0.05% loss, after climbing 0.5% in the morning. The closing range of 24% is above a thin 16% body signaling indecision. The long upper wick was formed from a morning rally that sold off in the afternoon. Still, the index seemed to have support around the 13,700 area, testing the area twice and settling just below the line at the close. There were 3 declining stocks for every 2 advancing stocks.
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Wednesday, April 7, 2021
Facts: -0.07%, Volume lower, Closing range: 44%, Body: +17%
Good: Stayed near 13,700 support, lower volume, not a distribution day
Bad: Indecisive candle, no signal on direction
Highs/Lows: Lower high, lower low
Candle: Long upper shadow above a thin green body
Advance/Decline: About three declining for every two advancing stocks.
Indexes: SPX (+0.15%), DJI (+0.05%), RUT (-1.60%), VIX (-5.30%)
Sectors: Communications (XLC +0.77%) and Technology (XLK +0.53%) were top. Industrials (XLI -0.46%) and Materials (XLB -1.72%) were bottom.
Expectation: Sideways
It was a choppy side-ways session today for most of the market. The small caps suffered compared to the larger caps while mid-cap growth stocks had mixed results. Overall, investor sentiment remained cautious without many big reactions to economic news.
The Nasdaq closed with a -0.07% decline, another indecisive day without a clear signal on direction. The 17% body is in the lower half of the candle as the index attempted to find a rally twice but reversed quickly back to the 13,700 area. The closing range of 44% is better than the previous day, but the lower higher and lower low show the bears put up a good fight. There were nearly four declining stocks for every advancing stock.
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Thursday, April 8, 2021
Facts: +1.03%, Volume higher, Closing range: 99%, Body: +45%
Good: Gains all-day with few pullbacks, high closing range, higher volume
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: Longer lower wick under a green body, no upper wick
Advance/Decline: Three advancing for every two declining stocks
Indexes: SPX (+0.42%), DJI (+0.17%), RUT (+0.88%), VIX (-1.22%)
Sectors: Technology (XLK +1.44%) and Consumer Discretionary (XLY +0.47%) were top. Real Estate (XLRE -0.49%) and Energy (XLE -1.30%) were bottom.
Expectation: Higher
Investors shook off early nervousness over higher jobless claims and bulls led the markets rally throughout the day. Treasury yields, the US Dollar and commodity prices all supported Technology as the leading sector of the day, carrying the Nasdaq to the leading index of the day.
The Nasdaq closed with a +1.03% gain on higher volume. The 99% closing range resulted from a 45% green body at the top of the candle which opened with a gap above yesterday's close. The lower wick was formed in the morning, but the index quickly erased the dip with gains into the afternoon that ended with a rally at close. There were three advancing stocks for every declining stock.
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Friday, April 9, 2021
Facts: +0.51%, Volume lower, Closing range: 97%, Body: +72%
Good: Never revisited morning low, bullish buying rest of the day
Bad: Nothing
Highs/Lows: Higher high, lower low
Candle: Bullish outside day candle with short lower wick, almost no upper wick
Advance/Decline: Two declining stocks for every advancing stocks
Indexes: SPX (+0.42%), DJI (+0.17%), RUT (+0.88%), VIX (-1.22%)
Sectors: Health (XLV +1.10%) and Industrials (XLI +0.97%) were top. Consumer Staples (XLP -0.17%) and Energy (XLE -0.66%) were bottom.
Expectation: Higher
The morning producer price index numbers are a great sign for the economy as demand increases in manufactured goods indicates consumer demand. It's not a great sign if you are worried about inflation. The markets opened with a dip on the news, but quickly recovered as the dollar pulled back from the morning reaction to the news.
The Nasdaq closed the day with a rally to gain +0.51% with a closing range of 97%. Volume was lower but buyers were present throughout the day, leading to a 72% green body over a small lower wick from the morning dip. The higher high and lower low, with a high closing range, create a bullish outside candle.
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The Meaning of Life (View on the Week)
The story of the week was the strength of big tech as the four largest mega-caps broke out of bases and drove indexes and their respective sectors higher. The week also saw a breakout of growth stocks relative to value stocks after a few months of rotation. It's still yet to be determined if the trends will stick, but the charts show a positive trend.
Although it was Apple with the big weekly gain, Alphabet, Microsoft and Tesla all helped kick-off the momentum on Monday. Microsoft continued gains from the previous week's big announcement deal with the US Army. Tesla announced record production and deliveries for the first quarter over the holiday weekend.
The gap-up on Monday took the index well past a declining resistance line. The big gain warranted a pause as the index tested the 13,700 resistance area. The next two days were mostly sideways choppy action. Investors showed caution in the market, signaled by the rise of Utilities from the bottom to the top of the sector chart during Tuesday's session. The caution continued into Wednesday even as mega-caps continued to advance.
Then a surprise consumer credit number arrived late on Wednesday. Instead of a $5B expected number for February, consumer credit rose to $27.58 signaling that consumers were not only confident (from the previous weeks data), but were spending money.
That was enough to continue the rally and the Nasdaq opened with another gap up on Thursday despite disappointing jobless claims in the morning. On top of the economic data, the USD dollar continued to weaken while the treasury yield curve was flattening and commodity prices showed high demand. It was bullish for the economy and the right context to see big tech and growth stocks soar.
Friday ended the week with an outside day. Prices dipped in the morning as inflation worries crept back into investors' minds after the produce price index data was higher than expected. Those worries subsided and the index continued its rally into the close for the week.
The Nasdaq advanced +3.12% for the week. The closing range is 99% for a second week in a row. Volume was lower.
The lowering volume trend is largely due to the absence of the retail investor. That is confirmed by VandaTrack, which tracks retail investors and shows they are taking a step back from the market. That's bad news if you want to play your hand in the next YOLO meme stock trade. But it's good news if you want to see fewer swings in the value of your portfolio.
The higher high and higher low is a great signal of the uptrend. The index closed just above 13,900 and is working toward the round number resistance of 14,000 before it moves toward a new all-time high.
The S&P 500 (SPX) and Dow Jones Industrial (DJI) both set new all-time highs, making +2.71% and +1.95% advances for the week. The Russell 2000 (RUT) retreated -0.46% for the week.
The Russell 2000 was outperforming since August but has been consolidating since hitting an all-time high in March. Certainly, small-caps and the index will benefit from market rallies, but the question will be at what level of relative performance to the rest of the market. This is something to watch over the coming weeks.
The VIX volatility index closed well with the pre-pandemic price range with another -3.69% decline. The absence of retail investors seems to have helped reduce some of the volatility in the market as well.
Growth broke out this week relative to value stocks. The dip in relative performance hit a low on March 8 and chopped back and forth before making a big move this week.
The S&P 500 was dominated by three growth sectors for the week.
Technology ( XLK ) finished the week as the top sector, taking the top spot on Thursday and Friday as big tech companies solidified breakouts from their recent consolidations.
Likewise, Consumer Discretionary ( XLY ) and Communication Services ( XLC ) finished in second and third place largely thanks for mega-caps that are overweight in the lists.
Energy ( XLE ) was at the bottom of the list with over a 4% decline. Some of that may be attributed to mixed outlook from analysts on supply and demand for oil . But Energy also tends to suffer when a large amount of investment rotates into the three big growth sectors.
Only Energy declined for the week. The other sectors had gains, albeit underperformed the broader S&P 500 index .
The 30y treasury bond yield gained slightly while the 10y note yield declined. The US 2y note yield also declined. Most importantly, the yield curve continues its trend of flattening, helping improve investor confidence in growth companies impacted by interest rates.
Both the High Yield Corporate Bond (HYG) and Investment Grade Bond (LQD) prices advanced for the week. The spread between corporate bonds and treasury bonds still has some tightening to get back to pre-pandemic levels, but the trend is heading in the right direction.
The US Dollar (DXY) retreated -0.89% this week giving a boost to big multi-national companies that can benefit from a weakened US Dollar.
The recovery of economic activity is accelerating and that can be seen clearly in demand for commodities.
Silver (SILVER) and Gold (GOLD) both advanced for the week.
Crude Oil Futures (CRUDEOIL1!) declined for the week as investors balance the increased output with expected recovery in demand.
Timber (WOOD) advanced for another week.
Copper (COPPER1!) and Aluminum (ALI1!) both advanced for the week.
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The Big Four Mega-caps
It was a great week for the big four mega-caps. They all drove the indexes and their respective sectors higher.
Apple (AAPL) gained + 8.13%, Microsoft (MSFT) gained +5.57%, Amazon (AMZN) gained +6.68%, and Alphabet (GOOGL) gained +6.62%. All four now show the 10 week moving average line above the 40 week moving average line, confirming their uptrends.
As an added signal behind the strength of these breakout moves in the mega-caps, note at the volume is higher for all of them and at the bottom, the thick blue bars show a strong outperformance of the Nasdaq.
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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. Carnival Cruise Lines (CCL) gained over 9% after providing a cautiously optimistic outlook for this year during their earnings announcement. Delta Airlines (DAL) and Marriott (MAR) both held onto gains for the week, despite their red candles. Exxon Mobil (XOM) declined for the week, pulled down by downgrade of Chevron and sell-off of Energy stocks.
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Investor Sentiment
The put/call ratio (PCCE) closed the week 0.588. 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 remained in the same area, on the side of greed, for most of the week.
The NAAIM exposure index rose to 89.85, showing money managers are increasing position sizes again.
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The Week Ahead
There will be Treasury auctions for 10y and 3y notes on Monday afternoon. The performance of those auctions could impact investor sentiment in the bond market and send yields in either direction.
Consumer Price Index data for March will be released on Tuesday. The data compliments the produce price index data released this past week. The produce price index data is leading indicator to consumer price index data, both providing an outlook on inflation.
Economic news for Wednesday includes Export/Import Price index data before markets open. Crude Oil Inventory data will be released after the market opens.
Thursday has several economic data releases. Initial Jobless Claims data before the market opens will hopefully recover a bit from last week's negative surprise. Retail Sales data for March should show an improvement over the February numbers that were brought down by weather events. The Manufacturing Index data and Industrial Production data will also be leading indicators on the recovery of economic activity.
Building Permits and Housing Starts data will be released on Friday morning. We will also get an update on Consumer Expectations and Consumer Sentiment.
This quarters earning season will pick up next week, dominated by earnings reports in the Financial sector.
Monday and Tuesday do not have any notable reports for the daily update.
On Wednesday, JP Morgan (JPM), Wells Fargo (WFC), Goldman Sachs (GS) will release earnings reports. In addition, retail stocks Bed, Bath and Beyond (BBBY) and Lovesac (LOVE) will release earnings.
On Thursday, the Financial sector earnings reports will include Bank of America (BAC), Citigroup (C), Charles Schwab (SCHW) and BlackRock (BLK). Taiwan Semiconductor (TSM), UnitedHealth (UNH), Delta Airlines (DAL) will also be closely watch earnings reports for the day.
Friday's reports include Honeywell (HON) and Morgan Stanley (MS).
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The Bullish Side
A lot of the bullish side is a continuation of the signals we saw at the end of the previous week. The mega-caps continued breakout moves on higher volume this week which has led the indexes higher and restored confidence in big tech and growth stocks.
The volatility in the market continues to drop to pre-pandemic levels as retail investors spent new stimulus checks on something other than meme stocks. The US Dollar and Treasury Yields have also stopped their climbs that was causing investors to worry about interest rates impacting growth companies while the US Dollar impacts the bottom line of multi-nationals.
The growth sectors of Technology, Communications and Consumer Discretionary are leading the market higher. These sectors focused on innovation, have been responsible for many of the big rallies over the past decade.
The pop in consumer credit came as a positive surprise this past week. Consumer sentiment numbers this week could add to the positive outlook on spending as consumers unleash record-setting savings and new stimulus checks into the economy.
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The Bearish Side
Investors are not worry-free. Biden's infrastructure plans and proposal for higher corporate taxes are having analysts and investors calculating the impact to sectors and valuations of US companies. The progress of these proposals in congress will keep investors on their toes for the coming weeks.
Inflation also continues to be a top worry, stoked by Friday's produce price index data. The inflation outlook could get worse as consumer price index data is released this week. The Fed's assurance to not change monetary policy to control inflation only helps calm the worries to a certain degree.
Energy being at the bottom of the sector list is another sign of the uncertainty. Analysts are watching closely as the pandemic hits third-waves in many countries which could cause lower than hoped demand for travel and leisure, and likewise lower demand for oil. While OPEC is cautiously increasing supply, a sharp pull back in demand will cause the sector further losses.
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Key Nasdaq Levels to Watch
The Nasdaq cleared key areas of resistance this past week, leaving just a few key levels in between Friday's close and a new all-time high.
On the positive side, the levels are:
13,905.41 is the high of this week. Make a new high for next week to continue the uptrend.
14,000 will be the next area of resistance. Round numbers tend to be areas of resistance as they become triggers for alerts and buy/sell rules.
The all-time high is at 14,175.12. That might be a stretch to get there this week, but keep it in our sites.
On the downside, there are a few key levels:
The low of this past week is 13,582.76.
The moving average lines are all very close together. The 10d MA is at 13,479.31.
The 50d moving average is at 13,452.07.
The 21d exponential moving average is at 13,439.48. Look for the index to stay above these averages and for the 21d EMA to cross above the 50d MA.
The lower line of the channel from the March 2020 bottom is around 13,128 for next week.
The low of this past week is 12,922.57. Stay above that price to give us a higher low for this week.
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Wrap-up
The signals looked good coming into this week and continue to show positive signs for next week. There are certainly a few things we'd like to see to remain confident.
For the Nasdaq, clear the 14,000 line and set a new all-time high, joining the other major indexes. That will require big tech and growth stocks to continue to rally.
The Russell 2000 is not participating in the rally thus far. Having it break out of the symmetrical triangle and begin moving along with the other indexes will be a positive sign of broad support in the market.
There's a lot of be positive about, but don't forget things can always change quickly.
Good luck, stay healthy and trade safe!
Illustrative idea... continued*Just an idea, not financial advice*
We're now exiting an area of continual volatility. The potential for a small-lived big swing downwards is still possible, wait for confirmation during next week. Cost averaging over this period would reduce the risk.
Weekly Wrap (10/04/2021)NASDAQ:IXIC
This week for tech stocks has been rather bullish. With many good catalysts the week before which aided this week's rally, it has really pumped some optimism into the market. With important bullish points having been penetrated in the daily graph such as the 13700 area. Having surpassed this point with no red days has been a very good indicator that there is steam now re-entering the technology sector. However, there is one thing to be cautious of and that is overextension.
Although the upward momentum has been very positive, it has now landed the index in a position where it can move too quickly too fast and becomes over-bought. In this situation, I would expect the price to bounce back to its mean of roughly 13500 before once again making a strong move towards the upside.
So I guess the most important thing to watch out for particularly in the technology sector is, 1 that the index isn't too over-optimistic and pushes past the 14000 points too quickly and 2, that there aren't any real changes in interest rates that may drive investors out of equities and into other sections of the financial markets.
Happy weekend everyone! I hope your trading has gone well for this week.
- LMF
IXIC Analysis From 29-03-2021 To 26-04-2021Nasdaq Composite :- INDEXNASDAQ: .IXIC Looking Bullish Go For Buy Trade
Daily Market Update for 4/9Trend lines drawn from the 3/5 low (25d), 4/5 (5d) and today 4/9 (1d).
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, April 9, 2021
Facts: +0.51%, Volume lower, Closing range: 97%, Body: +72%
Good: Never revisited morning low, bullish buying rest of the day
Bad: Nothing
Highs/Lows: Higher high, lower low
Candle: Bullish outside day candle with short lower wick, almost no upper wick
Advance/Decline: Two declining stocks for every advancing stocks
Indexes: SPX (+0.42%), DJI (+0.17%), RUT (+0.88%), VIX (-1.22%)
Sectors: Health (XLV +1.10%) and Industrials (XLI +0.97%) were top. Consumer Staples (XLP -0.17%) and Energy (XLE -0.66%) were bottom.
Expectation: Higher
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Market Overview
The morning producer price index numbers are a great sign for the economy as demand increases in manufactured goods indicates consumer demand. It's not a great sign if you are worried about inflation. The markets opened with a dip on the news, but quickly recovered as the dollar pulled back from the morning reaction to the news.
The Nasdaq closed the day with a rally to gain +0.51% with a closing range of 97%. Volume was lower but buyers were present throughout the day, leading to a 72% green body over a small lower wick from the morning dip. The higher high and lower low, with a high closing range, create a bullish outside candle.
The day was dominated by industrials and mega-caps as the Dow Jones Industrial average (DJI) closed at a new all-time high with a +0.89% gain. The S&P 500 (SPX) also set a record close after a +0.77% gain. The Russell 2000 (RUT) did not do as well but still was able to squeak out a gain of +0.04%.
The VIX volatility index declined -1.53%, continuing to move lower into its pre-pandemic trading range.
Health (XLV +1.10%) and Industrials (XLI +0.97%) were top. Consumer Staples (XLP -0.17%) and Energy (XLE -0.66%) were bottom. The sectors don't hold any big surprises except Energy which rose to the top of the list just after market open and quickly sank to the bottom by mid-day as the outlook for demand vs supply was mixed among investors.
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Economic Indicators
The US Dollar (DXY) rose +0.12% but was well off intraday highs driven by the inflation outlook.
The US 30y treasury bond and 10y and 2y note yields all advanced.
Both High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices both declined slightly.
Silver (SILVER) and Gold (GOLD) both declined. Crude Oil (CRUDEOIL1!) declined just slightly. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) declined. Nothing alarming in the commodities. Oil was choppy intraday as analysts tried to figure out the supply and demand outlook.
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Investor Sentiment
The put/call ratio ended the day at 0.588. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index is remained about the same, on the greed side.
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Market Leaders
The big four mega-caps continue to rise. Apple (AAPL) gained +2.02% and Amazon (AMZN) gained +2.21%. Both are moving toward their 21d EMA crossing above the 50d MA to solidify the uptrend. Microsoft (MSFT) and Alphabet (GOOGL) already met that milestone and gained +1.03% and 0.90% for the day.
United Health (UNH) topped the mega-cap list helping the Health services sector lead for the day. Salesforce.com (CRM), Amazon (AMZN) and Apple (AAPL) round out the top performing mega-caps. As the bottom of the list were Alibaba (BABA), Comcast (CMCSA), Johnson & Johnson (JNJ) and Tesla (TSLA).
Moderna (MRNA) topped the growth stock list that is about half-and-half gainers and losers. UP Fintech (TIGR), Chewy (CHWY) and Palantir (PLTR) also were at the top of the list. Peloton (PTON), Beyond Meat (BYND), Snowflake (SNOW) and Zoom Video (ZM) were at the bottom of the list.
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Looking ahead
Monday will kick-off next week with a 10-year Treasury Note Auction in the afternoon.
Earnings reports will start to pick up next week, but there are no notable earnings for the daily update on Monday or Tuesday.
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Trends, Support and Resistance
The index is inching toward the 14,000 support/resistance area. A breakthrough of that line will be a confidence booster on the way to new all-time highs for the Nasdaq.
The five-day and one-day trend lines point to a +0.34% gain on Monday.
The trend line from the 3/5 low points to a -1.91% loss.
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Wrap-up
The day was for the large/mega caps and industrials. Some mid-cap growth stocks also did well. The Russell 2000 and small-caps seemed to give back are consolidating in a bullish symmetric triangle. We can expect the index to eventually breakout and join the other indexes if the market continues upward.
I'm confident it will follow the market trend, but the question will be at what pace. The small cap index was on a tear from September to March, outperforming everything, but pulled back with the recent rotations. Will it pick back up the previous pace or will it underperform the other indexes.
Stay healthy and trade safe!
Daily Market Update for 4/8Trend lines drawn from the 3/5 low (24d), 4/1 (5d) and today 4/8 (1d).
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, April 8, 2021
Facts: +1.03%, Volume higher, Closing range: 99%, Body: +45%
Good: Gains all-day with few pullbacks, high closing range, higher volume
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: Longer lower wick under a green body, no upper wick
Advance/Decline: Three advancing for every two declining stocks
Indexes: SPX (+0.42%), DJI (+0.17%), RUT (+0.88%), VIX (-1.22%)
Sectors: Technology (XLK +1.44%) and Consumer Discretionary (XLY +0.47%) were top. Real Estate (XLRE -0.49%) and Energy (XLE -1.30%) were bottom.
Expectation: Higher
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Market Overview
Investors shook off early nervousness over higher jobless claims and bulls led the markets rally throughout the day. Treasury yields, the US Dollar and commodity prices all supported Technology as the leading sector of the day, carrying the Nasdaq to the leading index of the day.
The Nasdaq closed with a +1.03% gain on higher volume. The 99% closing range resulted from a 45% green body at the top of the candle which opened with a gap above yesterday's close. The lower wick was formed in the morning, but the index quickly erased the dip with gains into the afternoon that ended with a rally at close. There were three advancing stocks for every declining stock.
The Russell 2000 (RUT) rallied after a few days of declines and ended the day with a +0.88% gain. The S&P 500 advanced +0.42% and the Dow Jones Industrial average (DJI) closed with a +0.17% gain.
The VIX volatility index declined -1.22% and is now well within the pre-pandemic range of highs and lows.
Technology (XLK +1.44%) and Consumer Discretionary (XLY +0.47%) were top sectors for the day. Utilities (XLU -0.08%) opened with gains in the morning but faded to near the bottom of the list by the end of the day. Real Estate (XLRE -0.49%) and Energy (XLE -1.30%) were the worst performing sectors of the day.
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Economic Indicators
The US Dollar (DXY) declined -0.38% continues to retreat from a pivot high at the end of March.
The US 30y treasury bond and 10y and 2y note yields all declined. The yield curve continued its trend of flattening.
Both High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices both advanced.
Silver (SILVER) and Gold (GOLD) both advanced. Crude Oil (CRUDEOIL1!) declined just slightly. Timber (WOOD) advanced. Copper (COPPER1!) advanced while Aluminum (ALI1!) declined. All are showing strong demand and bullish for the economic recovery.
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Investor Sentiment
The put/call ratio ended the day at 0.592. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index is remained about the same, on the greed side.
The NAAIM exposure index rose to 89.95 from 52.02 the previous week. The index, released on Wednesday evenings represents the amount of exposure in active investment managers portfolios.
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Market Leaders
All four big mega-caps gained for another day. Apple (AAPL) and Microsoft (MSFT) climbed +1.92% and +1.34%, helping carry the indexes into close. Amazon (AMZN) and Alphabet (GOOGL) gained +0.61% and +0.51%, but closed in the lower half of the intraday range. We are still anticipating the crossover of the 21d EMA over the 50d MA for Apple and Amazon which will signal a confident uptrend. Microsoft and Alphabet have already met that milestone.
PayPal (PYPL +3.48%), Taiwan Semiconductor (TSM +2.95%), ASML Holding (ASML +2.13%), Tesla (TSLA +1.91%) were at the top of the mega-cap list. Big communications companies Verizon (VZ) and AT&T (T) joined Nike (NIKE) at the bottom of the list, all with over 2% declines.
Today was much better for growth stocks than the previous day, with the majority of growth in the daily update list having gains. UP Fintech (TIGR), GrowGeneration (GRWG), FUTU Holdings (FUTU) topped the list with over 10% gains each. Draft Kings (DKNG) and Dr Horton (DHI) were at the bottom of the list.
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Looking ahead
On Friday, the producer price index data will be released that gives a view into inflation. Expect the US dollar and Treasury Yields to be impacted if the number is far off forecast.
There are no notable earnings reports for Thursday for the daily update.
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Trends, Support and Resistance
The index is nearing the 14,000 support/resistance area. A breakthrough of that line will be a confidence booster on the way to new all-time highs for the Nasdaq.
The five-day trend line points to a +1.16% gain on Friday. The one-day trend line points to a small gain of +0.16%.
The trend line from the 3/5 low points to a -1.85% loss.
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Wrap-up
Everything lined up nicely for big tech and growth stocks today. Yields dropped back as the yield curve continues to flatten. The US dollar weakened, benefiting big multinational companies. Commodities show high demand indicating economic activity picking back up.
Eyes will be on the produce price index data tomorrow before market opens. Higher prices would indicate more demand for products as a result of increased spending, but it may also make investors nervous about inflation. Still, Jerome Powell held firm today that inflation was unlikely, so investors will have to balance their worries with assurances from the Fed that changes in economic policy are still long off in the future. Don't fight the fed.
The resurgence of growth stocks continues to accelerate relative to value stocks. The gains were broad across the category today. Many of the charts for growth have a long way to go to get past overhead supply and reach new all-time highs. Value stocks have leveled off for the past few weeks, could be basing and may have some more growth of their own.
Stay healthy and trade safe!
IXIC 3/29/2021Daily Chart:
Breakout out of its previous consolidation phase, NASDAQ went on a run between 11/24/20 thru 2/17/21 peaking at almost 14200.00 for All-time highs. During that move, price respected the 10EMA before breaking down on 2/19/21. From its peak, price has fallen as low as 12% from the all-time highs. A Support area has been established around 13000 with multiple touches. Price has fallen below this price twice and twice the lower prices were rejected with the buyers showing their strength and buying it up. To further display the strength, higher lows were made and a previous trendline was respected as well. After making its way back above the Support Area of 13000, we finished the day with a spinning top candlestick.
The current state of the market can be compared to the previous consolidation that occurred after stocks reached all-time highs and peaked on 9/20/20. From that peak, stocks fell as low as 12.7% from highs. After multiple touches, a Support area was established at 10800.00. Here we had price fall below it once and reject lower prices. A trendline was created after a series of higher lows where price then made a move to Resistance area and breaking out shortly after. Look for history to repeat itself.
A lot of positives and strength can be taken away here from a “Long” perspective. The price rejections, higher lows, respect of previous trendline, and the price making its way back to Support area all display the buyer strength. We are also currently in an Uptrend and the spinning top candlestick at support during Uptrend is the que to reenter the markets. All these factors have led me to believe we are at a bottom. I will investigate the other major indexes for further confirmation and look to reenter the market.
The American Stock Market makes me proud to be an American. God Bless America.
