Trend lines drawn from the 3/5 low (9d), 3/11 (5d) and today 3/17 (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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Wednesday, March 17, 2021
Facts: +0.40%, Volume higher, Closing range: 78%, Body: 58%
Good: High closing range on slightly higher volume, support at 21d EMA
Bad: Lower high, lower low, dipped below 50d MA
Highs/Lows: Lower high, lower low
Candle: Green body covers most of candle, similar upper and lower wicks
Advance/Decline: About even advancing and declining stocks
Indexes: SPX (+0.29%), DJI (+0.58%), RUT (+0.73%), VIX (-2.83%)
Sectors: Consumer Discretionary (XLY +1.40%) and Industrials (XLI +1.15%) were top. Health (XLV -0.36%) and Utilities (XLU -1.63%) were bottom.
Expectation: Sideways or Higher
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Market Overview
Happy St. Patrick's Day!
Investors got what they needed to hear from the fed's Jerome Powell. Interest rates will remain untouched and there will be no tapering of bond buying despite a big upgrade in the fed's outlook on the economy. The change in investor sentiment mid-day was clear as the indexes made a rally.
The Nasdaq closed with a +0.4% gain after dipping below the 50d MA and 21d EMA in the morning. The dip came as yields soared and investors worried about what was to come from the Fed meeting. After rallying in the afternoon, the index closed on slightly higher volume with a 78% closing range. The short upper wick above a 58% green body was formed from a small pullback just before close. There were about equal number of advancing and declining stocks.
All indexes ended the day positive with the S&P 500 (SPX) gaining +0.29% and the Dow Jones Industrial (DJI) gaining +0.58%. The Russell 2000 was the top performing index for the day with a +0.73% gain.
The VIX volatility index declined another -2.83% and is at its lowest point since February 2020. It is still above levels before the market crash of 2020.
The improved outlook from the Fed had an impact across several sectors. Consumer Discretionary (XLY +1.40%) and Industrials (XLI +1.15%) were top. The cyclical sectors recovered from losses earlier in the week. Health (XLV -0.36%) and Utilities (XLU -1.63%) were bottom.
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Economic Indicators
The US Dollar (DXY) gained -0.46%. The Fed expects inflation to reach around 2.2% which will weaken the dollar in the short term.
The US 30y and 10y treasury bond yields rose for the day, but pulled back from the big increases in the morning. The US 2y treasury bond yield dropped for the day.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both rose today.
Silver (SILVER) and Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) advanced. Most commodities are bullish on the improved economic outlook from the fed.
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Investor Sentiment
The put/call ratio is at 0.605. 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 back toward neutral.
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Market Leaders
Keeping this update brief during vacation. Mega-caps overall were mixed while the majority of growth stocks benefited from the day's news.
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Looking ahead
The weekly initial jobless claims data will be released on Thursday. Better than expected numbers could be a boost to today's optimistic outlook.
Manufacturing data will also be released that will provide insight into how manufacturing is recovering to meet demand.
Nike (NIKE), Accenture (ACN), FedEx (FDX), Dollar General (DG), Weibo Corp (WB), Utz Brands (UTZ) will report earnings.
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Trends, Support and Resistance
The index was able to close above the 50d MA showing some support at that level.
The one-day trend line points to a +1.57% gain tomorrow. The trend line from the 3/5 bottom points to a +1.13% gain.
The five-day trends line points to a -0.26% loss.
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Wrap-up
The market and the fed have been a bit at odds for the past month. Today the fed won. They gave us a firm stance on interest rates and bond buying while acknowledging the improved outlook for growth in the economy this year. That didn't provide any room for the market to argue. Don't fight the fed.
That can put some more steam into the market rally. Still, many sectors have taken quite a beating in the charts this past few weeks and there is still a ways to go to recover prices. Until then, expect those sectors, stocks and indexes to meet with resistance as overhead supply needs to be shaken out before new highs can be made.
Stay healthy and trade safe!
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wednesday, March 17, 2021
Facts: +0.40%, Volume higher, Closing range: 78%, Body: 58%
Good: High closing range on slightly higher volume, support at 21d EMA
Bad: Lower high, lower low, dipped below 50d MA
Highs/Lows: Lower high, lower low
Candle: Green body covers most of candle, similar upper and lower wicks
Advance/Decline: About even advancing and declining stocks
Indexes: SPX (+0.29%), DJI (+0.58%), RUT (+0.73%), VIX (-2.83%)
Sectors: Consumer Discretionary (XLY +1.40%) and Industrials (XLI +1.15%) were top. Health (XLV -0.36%) and Utilities (XLU -1.63%) were bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Happy St. Patrick's Day!
Investors got what they needed to hear from the fed's Jerome Powell. Interest rates will remain untouched and there will be no tapering of bond buying despite a big upgrade in the fed's outlook on the economy. The change in investor sentiment mid-day was clear as the indexes made a rally.
The Nasdaq closed with a +0.4% gain after dipping below the 50d MA and 21d EMA in the morning. The dip came as yields soared and investors worried about what was to come from the Fed meeting. After rallying in the afternoon, the index closed on slightly higher volume with a 78% closing range. The short upper wick above a 58% green body was formed from a small pullback just before close. There were about equal number of advancing and declining stocks.
All indexes ended the day positive with the S&P 500 (SPX) gaining +0.29% and the Dow Jones Industrial (DJI) gaining +0.58%. The Russell 2000 was the top performing index for the day with a +0.73% gain.
The VIX volatility index declined another -2.83% and is at its lowest point since February 2020. It is still above levels before the market crash of 2020.
The improved outlook from the Fed had an impact across several sectors. Consumer Discretionary (XLY +1.40%) and Industrials (XLI +1.15%) were top. The cyclical sectors recovered from losses earlier in the week. Health (XLV -0.36%) and Utilities (XLU -1.63%) were bottom.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) gained -0.46%. The Fed expects inflation to reach around 2.2% which will weaken the dollar in the short term.
The US 30y and 10y treasury bond yields rose for the day, but pulled back from the big increases in the morning. The US 2y treasury bond yield dropped for the day.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both rose today.
Silver (SILVER) and Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) advanced. Most commodities are bullish on the improved economic outlook from the fed.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio is at 0.605. 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 back toward neutral.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Keeping this update brief during vacation. Mega-caps overall were mixed while the majority of growth stocks benefited from the day's news.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
The weekly initial jobless claims data will be released on Thursday. Better than expected numbers could be a boost to today's optimistic outlook.
Manufacturing data will also be released that will provide insight into how manufacturing is recovering to meet demand.
Nike (NIKE), Accenture (ACN), FedEx (FDX), Dollar General (DG), Weibo Corp (WB), Utz Brands (UTZ) will report earnings.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index was able to close above the 50d MA showing some support at that level.
The one-day trend line points to a +1.57% gain tomorrow. The trend line from the 3/5 bottom points to a +1.13% gain.
The five-day trends line points to a -0.26% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
The market and the fed have been a bit at odds for the past month. Today the fed won. They gave us a firm stance on interest rates and bond buying while acknowledging the improved outlook for growth in the economy this year. That didn't provide any room for the market to argue. Don't fight the fed.
That can put some more steam into the market rally. Still, many sectors have taken quite a beating in the charts this past few weeks and there is still a ways to go to recover prices. Until then, expect those sectors, stocks and indexes to meet with resistance as overhead supply needs to be shaken out before new highs can be made.
Stay healthy and trade safe!
