Summary: Friday brought a confident end to a short but volatile week. After the bond yield slide caused a sell-off the previous day, yields recovered, and investors moved back into equities. In contrast to Thursday, all sectors closed with gains on Friday.
Notes
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Friday, July 9, 2021
Facts: +0.98%, Volume lower, Closing range: 78%, Body: 98%
Good: Close above the weekly open, high closing range, A/D ratio
Bad: Lower volume
Highs/Lows: Higher high, higher low
Candle: Mostly green body, slightly longer lower wick
Advanced/Decline: 2.51, five advancing stocks for every two declining stocks
Indexes: SPX (+1.13%), DJI (+1.30%), RUT (+2.17%), VIX (-14.94%)
Sectors: Financials (XLF +2.89%) and Energy (XLE +2.13%) at the top. Health (XLV +0.34%) and Utilities (XLU +0.12%) were bottom.
Expectation: Higher
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Market Overview
Friday brought a confident end to a short but volatile week. After the bond yield slide caused a sell-off the previous day, yields recovered, and investors moved back into equities. In contrast to Thursday, all sectors closed with gains on Friday.
The Nasdaq closed with a +0.98% advance, with gains broadly shared across the index. There were five advancing stocks for every declining stock. The only thing missing was the volume which was much lower than the previous day. Nonetheless, the high closing range of 95% and the green body that spans 78% of the candle are bullish. It also helps close the week with a positive weekly gain.
The Russell 2000 (RUT) performed the best for the day as investors swung back into small caps. The index gained +2.17% but still closed with a weekly loss. The Dow Jones Industrial Average (DJI) and S&P 500 (SPX) soared back to another set of record closes with +1.30% and +1.13% gains today.
The VIX volatility index declined -14.94%.
All sectors gained today, and cyclical sectors moved back to the top of the sector list. Financials (XLF +2.89%) and Energy (XLE +2.13%) were at the top of the list, followed by Materials (XLB +1.97%) and Industrials (XLI +1.58%). Health (XLV +0.34%) and Utilities (XLU +0.12%) were at the bottom of the list, as investors did not take defensive positions heading into the weekend.
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Economic Indicators
The US Dollar (DXY) declined -0.27% for the day.
Bond yields recovered from the previous day's drop. The US 30y, 10y, and 2y Treasury yields all advanced.
High Yield Corporate Bond (HYG) prices advanced while Investment Grade Corporate Bond (LQD) prices declined. Both are in an uptrend.
Silver (SILVER) and Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) advanced.
Timber (Wood) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) advanced.
Bitcoin (BTCUSD) advanced +2.82%. Ethereum (ETHUSD) advanced +1.50%.
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Investor Sentiment
The put/call ratio rose to 0.735. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, moving back toward neutral.
The NAAIM Exposure Index shows money managers at 82.54 average exposure among active money managers. The survey occurs on Wednesdays, so the number does not include any of the selling on Thursday.
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Market Leaders
Apple (AAPL) climbed back to all-time highs with a +1.31% advance on Friday. Alphabet (GOOGL) gained +0.38%. Microsoft (MSFT) advanced +0.19%. Amazon (AMZN) was the only of the largest four mega-caps to decline for the day, losing -0.32% but still very extended above moving average lines.
Big banks led the mega-cap list, with Bank of America (BAC) and JP Morgan Chase (JPM) gaining more than 3%. Also in the top four were Alibaba (BABA) and ASML Holding (ASML). At the bottom of the list were Eli Lilly (LLY), Comcast (CMCSA), and Amazon (AMZN). The handful of losers in the mega-cap list all lost less than 1%.
There were also only a handful of losers in the daily update growth list. The top gainers were Snowflake (SNOW), SNAP (SNAP), Chewy (CHWY), and Upwork (UPWK). At the bottom of the list were Peloton (PTON), Zynga (ZNGA), Etsy (ETSY), and DocuSign (DOCU)
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Looking ahead
The USDA will release the monthly agriculture supply and demand estimate report on Monday. Investors will also watch the 10y and 3y note auction closely in the afternoon.
There are no relevant earnings reports for the daily update on Monday, but that will change by Tuesday as earnings season kicks off next week.
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Trends, Support, and Resistance
The Nasdaq was able to close with a weekly gain, recovering from yesterday's losses. It's in a position to make another new all-time high in the next week if trends continue.
The one-day trend line points to a +0.85% gain for Monday.
The trend line from the 5/12 low shows a +0.30% gain.
The five-day trend line leads to a -0.45% loss to start the week.
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Wrap-up
After a "the sky is falling" moment with bond yields on Thursday, everything seemed to be back to normal on Friday. The thesis that bond traders were covering for short positions seemed to be correct. The performance of the treasury note auctions on Monday afternoon will be a better signal of the health of the bond market.
Based on the two thick-bodied, green candles on Thursday and Friday, the expectation is for Higher on Monday.
Stay healthy and trade safe!
Notes
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Friday, July 9, 2021
Facts: +0.98%, Volume lower, Closing range: 78%, Body: 98%
Good: Close above the weekly open, high closing range, A/D ratio
Bad: Lower volume
Highs/Lows: Higher high, higher low
Candle: Mostly green body, slightly longer lower wick
Advanced/Decline: 2.51, five advancing stocks for every two declining stocks
Indexes: SPX (+1.13%), DJI (+1.30%), RUT (+2.17%), VIX (-14.94%)
Sectors: Financials (XLF +2.89%) and Energy (XLE +2.13%) at the top. Health (XLV +0.34%) and Utilities (XLU +0.12%) were bottom.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Friday brought a confident end to a short but volatile week. After the bond yield slide caused a sell-off the previous day, yields recovered, and investors moved back into equities. In contrast to Thursday, all sectors closed with gains on Friday.
The Nasdaq closed with a +0.98% advance, with gains broadly shared across the index. There were five advancing stocks for every declining stock. The only thing missing was the volume which was much lower than the previous day. Nonetheless, the high closing range of 95% and the green body that spans 78% of the candle are bullish. It also helps close the week with a positive weekly gain.
The Russell 2000 (RUT) performed the best for the day as investors swung back into small caps. The index gained +2.17% but still closed with a weekly loss. The Dow Jones Industrial Average (DJI) and S&P 500 (SPX) soared back to another set of record closes with +1.30% and +1.13% gains today.
The VIX volatility index declined -14.94%.
All sectors gained today, and cyclical sectors moved back to the top of the sector list. Financials (XLF +2.89%) and Energy (XLE +2.13%) were at the top of the list, followed by Materials (XLB +1.97%) and Industrials (XLI +1.58%). Health (XLV +0.34%) and Utilities (XLU +0.12%) were at the bottom of the list, as investors did not take defensive positions heading into the weekend.
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Economic Indicators
The US Dollar (DXY) declined -0.27% for the day.
Bond yields recovered from the previous day's drop. The US 30y, 10y, and 2y Treasury yields all advanced.
High Yield Corporate Bond (HYG) prices advanced while Investment Grade Corporate Bond (LQD) prices declined. Both are in an uptrend.
Silver (SILVER) and Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) advanced.
Timber (Wood) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) advanced.
Bitcoin (BTCUSD) advanced +2.82%. Ethereum (ETHUSD) advanced +1.50%.
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Investor Sentiment
The put/call ratio rose to 0.735. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, moving back toward neutral.
The NAAIM Exposure Index shows money managers at 82.54 average exposure among active money managers. The survey occurs on Wednesdays, so the number does not include any of the selling on Thursday.
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Market Leaders
Apple (AAPL) climbed back to all-time highs with a +1.31% advance on Friday. Alphabet (GOOGL) gained +0.38%. Microsoft (MSFT) advanced +0.19%. Amazon (AMZN) was the only of the largest four mega-caps to decline for the day, losing -0.32% but still very extended above moving average lines.
Big banks led the mega-cap list, with Bank of America (BAC) and JP Morgan Chase (JPM) gaining more than 3%. Also in the top four were Alibaba (BABA) and ASML Holding (ASML). At the bottom of the list were Eli Lilly (LLY), Comcast (CMCSA), and Amazon (AMZN). The handful of losers in the mega-cap list all lost less than 1%.
There were also only a handful of losers in the daily update growth list. The top gainers were Snowflake (SNOW), SNAP (SNAP), Chewy (CHWY), and Upwork (UPWK). At the bottom of the list were Peloton (PTON), Zynga (ZNGA), Etsy (ETSY), and DocuSign (DOCU)
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Looking ahead
The USDA will release the monthly agriculture supply and demand estimate report on Monday. Investors will also watch the 10y and 3y note auction closely in the afternoon.
There are no relevant earnings reports for the daily update on Monday, but that will change by Tuesday as earnings season kicks off next week.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq was able to close with a weekly gain, recovering from yesterday's losses. It's in a position to make another new all-time high in the next week if trends continue.
The one-day trend line points to a +0.85% gain for Monday.
The trend line from the 5/12 low shows a +0.30% gain.
The five-day trend line leads to a -0.45% loss to start the week.
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Wrap-up
After a "the sky is falling" moment with bond yields on Thursday, everything seemed to be back to normal on Friday. The thesis that bond traders were covering for short positions seemed to be correct. The performance of the treasury note auctions on Monday afternoon will be a better signal of the health of the bond market.
Based on the two thick-bodied, green candles on Thursday and Friday, the expectation is for Higher on Monday.
Stay healthy and trade safe!
