Trend lines drawn from the 10/30 bottom (23d), 11/25 (5d), and today 12/2 (1d).
If you have ideas to make the daily update better, please let me know in the comments.
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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wednesday, December 2, 2020
Running out of chips, you got no line in an 8-bit town
Facts: -0.05% lower, Volume lower, Closing range: 93%, Body: 45%
Good: Filled the gap, but closed near the high
Bad: Did not reach yesterday's high
Highs/Lows: Lower high, Lower low
Candle: Longer lower wick similar to Wed
Advance/Decline: 1.21, more advancing stocks than declining stocks
Sectors: Energy (XLE +3.25%) and Financials (XLF +1.10%) were the leading sectors. Materials (XLB -1.28%) was the bottom sector.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The Nasdaq started the day with a pullback, dropping more than a percentage point off Tuesday’s close. Disappointing employment data added to recent sober outlook on economic recovery. Despite that, by 10am the market made a turn for the better and had steady gains with a little back and forth in the afternoon. The index closed with a small -0.05% loss, but with a closing range of 93% and a green 45% body in the upper half of the candle. The day looks very similar to Monday with a dip in the morning led by the bears, but strength in the afternoon as the bulls came back into the market.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
All the major indexes ended the day with gains. The S&P 500 (SPX +1.13%) finished with gains just behind the Nasdaq. The gains for the Dow Jones Industrial average (DJI +0.63%) and Russell 2000 (RUT +0.89%) were not as high. The DJI closed in the lower part of the trading range.
There was much more focus between the sectors than yesterday with Energy (XLE +3.25%) leading for the day. Financials (XLF +1.10%) and Communications (XLC +0.93%) were the next two sectors. Energy and Financials leading has been the theme of the past few weeks. Materials (XLB -1.28%) was the worst performing sector of the day. Technology (XLK -0.15%) started the morning as the worst sector, but recovered and ended the day just underperforming the SPX index.
The VIX volatility index rose slightly by +1.93%. It is still on a downward trending channel.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Indicators
US30Y and US10Y bond yields rose for the second day and spreads widened slightly again.
Corporate Bond yields dropped for the day while short term treasury bond yields rose. The tightening spread shows investors moving to riskier assets signaling some confidence in the economy.
The US dollar (DXY -0.1%) continues to slide. It is currently at a level not seen since April 2018.
Silver (SILVER +0.50%) and Gold (GOLD +0.83%) gained for a second day in a row. Crude Oil Futures (CRUDEOIL1! +2.19%) rose on news that a vaccine has been approved in the UK. Timber (WOOD -0.98%) pulled back a bit from yesterday’s gain. Aluminum (ALI1! +0.28%) continued to climb higher.
The put/call ratio rose slightly to 0.514, but still showing overly bullish optimism. 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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Apple (APPL +0.29%) and Alphabet (GOOGL +1.65%) both had gains for the day and are showing momentum. Microsoft (MSFT -0.39%) dipped below the 21d EMA to test the 50d MA but closed above both lines with a loss for the day. Amazon (AMZN -0.51%) also tested its 50d MA and then was bought back to close well above the line. Those tests are uncomfortable but show bullish support as investors buy the dip at a commonly used indicator value. Most mega-caps ended the day with gains. Pfizer (PFE +3.53%) got a boost from the vaccine approval in the UK. Walt Disney (DIS +2.79%) continued its recent climb while JP Morgan Chase (JPM +1.92%) and United Health Group (UNH +1.87%) round out the top performing mega-caps for the day.
Growth stocks had a mixed day. SNAP (SNAP +6.72%) and NIO (NIO +5.78%) had significant gains. Crowdstrike (CRWD -3.84%) and ZScaler (ZS -3.22%) both dipped heading into earnings but are up 12% after hours with an expectation beat. Snowflake (SNOW -4.24%) disappointed investors with a net loss higher than expected by analysts.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Tomorrow will bring more employment data with the Initial Jobless Claims. The news is not expected to be great but a surprise in one direction or another would impact the US Dollar.
Non-manufacturing Purchasing Managers Index data for November will be released and show whether non-manufacturing sectors are expanding or contracting. Expectation is for a 56. Anything over 50 is expanding. A surprise higher value would be a positive sign.
A few notable earnings releases tomorrow include Ollie’s Bargain Outlet (OLLI -1.75%), Kroger (KR -2.18%) and Lands End (LE +1.46%), and Dollar General (DG -1.05%) are among retail companies reporting. Cloudera (CLDR -1.15%), DocuSign (DOCU +0.92%), Marvell (MRVL -2.19%) and PagerDuty (PD -1.44%) are some of the tech growth stocks reporting.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
All the trend lines are pointing to positive gains for tomorrow. There is a range from +0.28% for the long-term trend line from the 10/30 bottom to +1.01% for the five-day trend line.
There may be a support/resistance area forming at the 12,230 area. It acted as resistance on Friday and Monday, and then was tested as support in this mornings trading.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Yesterday, I set an expectation for a “sideways” move today. Don’t consider it a prediction that I got right, since predictions are more often wrong. The point is to have an expectation that when confirmed, it can tell us the market is acting normally (or at least what I view as normal).
I have an expectation for "higher" tomorrow. It is also not a prediction. The market will do whatever it decides to do. But if the market does not move higher, it could be a cause for concern, especially with the contrarian indicators at concerning levels. Assuming a support area at 12,230 is forming I would want to see that hold. I also would want to see the momentum of the big four mega-caps continue upwards, and that would almost certainly draw up the indexes. That seems very possible as the US Dollar weakens and benefits those large multi-nationals.
Jerome Powell finished is comments in front of congress today and asked for more stimulus for the economy. And unlike a few weeks ago, the Treasury’s Steven Mnuchin agrees. That’s good news for continued liquidity in the market. The only question then becomes where the liquidity goes, which cap sectors, which industrial groups, which market leaders.
Take care!
If you have ideas to make the daily update better, please let me know in the comments.
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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wednesday, December 2, 2020
Running out of chips, you got no line in an 8-bit town
Facts: -0.05% lower, Volume lower, Closing range: 93%, Body: 45%
Good: Filled the gap, but closed near the high
Bad: Did not reach yesterday's high
Highs/Lows: Lower high, Lower low
Candle: Longer lower wick similar to Wed
Advance/Decline: 1.21, more advancing stocks than declining stocks
Sectors: Energy (XLE +3.25%) and Financials (XLF +1.10%) were the leading sectors. Materials (XLB -1.28%) was the bottom sector.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The Nasdaq started the day with a pullback, dropping more than a percentage point off Tuesday’s close. Disappointing employment data added to recent sober outlook on economic recovery. Despite that, by 10am the market made a turn for the better and had steady gains with a little back and forth in the afternoon. The index closed with a small -0.05% loss, but with a closing range of 93% and a green 45% body in the upper half of the candle. The day looks very similar to Monday with a dip in the morning led by the bears, but strength in the afternoon as the bulls came back into the market.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
All the major indexes ended the day with gains. The S&P 500 (SPX +1.13%) finished with gains just behind the Nasdaq. The gains for the Dow Jones Industrial average (DJI +0.63%) and Russell 2000 (RUT +0.89%) were not as high. The DJI closed in the lower part of the trading range.
There was much more focus between the sectors than yesterday with Energy (XLE +3.25%) leading for the day. Financials (XLF +1.10%) and Communications (XLC +0.93%) were the next two sectors. Energy and Financials leading has been the theme of the past few weeks. Materials (XLB -1.28%) was the worst performing sector of the day. Technology (XLK -0.15%) started the morning as the worst sector, but recovered and ended the day just underperforming the SPX index.
The VIX volatility index rose slightly by +1.93%. It is still on a downward trending channel.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Indicators
US30Y and US10Y bond yields rose for the second day and spreads widened slightly again.
Corporate Bond yields dropped for the day while short term treasury bond yields rose. The tightening spread shows investors moving to riskier assets signaling some confidence in the economy.
The US dollar (DXY -0.1%) continues to slide. It is currently at a level not seen since April 2018.
Silver (SILVER +0.50%) and Gold (GOLD +0.83%) gained for a second day in a row. Crude Oil Futures (CRUDEOIL1! +2.19%) rose on news that a vaccine has been approved in the UK. Timber (WOOD -0.98%) pulled back a bit from yesterday’s gain. Aluminum (ALI1! +0.28%) continued to climb higher.
The put/call ratio rose slightly to 0.514, but still showing overly bullish optimism. 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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Apple (APPL +0.29%) and Alphabet (GOOGL +1.65%) both had gains for the day and are showing momentum. Microsoft (MSFT -0.39%) dipped below the 21d EMA to test the 50d MA but closed above both lines with a loss for the day. Amazon (AMZN -0.51%) also tested its 50d MA and then was bought back to close well above the line. Those tests are uncomfortable but show bullish support as investors buy the dip at a commonly used indicator value. Most mega-caps ended the day with gains. Pfizer (PFE +3.53%) got a boost from the vaccine approval in the UK. Walt Disney (DIS +2.79%) continued its recent climb while JP Morgan Chase (JPM +1.92%) and United Health Group (UNH +1.87%) round out the top performing mega-caps for the day.
Growth stocks had a mixed day. SNAP (SNAP +6.72%) and NIO (NIO +5.78%) had significant gains. Crowdstrike (CRWD -3.84%) and ZScaler (ZS -3.22%) both dipped heading into earnings but are up 12% after hours with an expectation beat. Snowflake (SNOW -4.24%) disappointed investors with a net loss higher than expected by analysts.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Tomorrow will bring more employment data with the Initial Jobless Claims. The news is not expected to be great but a surprise in one direction or another would impact the US Dollar.
Non-manufacturing Purchasing Managers Index data for November will be released and show whether non-manufacturing sectors are expanding or contracting. Expectation is for a 56. Anything over 50 is expanding. A surprise higher value would be a positive sign.
A few notable earnings releases tomorrow include Ollie’s Bargain Outlet (OLLI -1.75%), Kroger (KR -2.18%) and Lands End (LE +1.46%), and Dollar General (DG -1.05%) are among retail companies reporting. Cloudera (CLDR -1.15%), DocuSign (DOCU +0.92%), Marvell (MRVL -2.19%) and PagerDuty (PD -1.44%) are some of the tech growth stocks reporting.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
All the trend lines are pointing to positive gains for tomorrow. There is a range from +0.28% for the long-term trend line from the 10/30 bottom to +1.01% for the five-day trend line.
There may be a support/resistance area forming at the 12,230 area. It acted as resistance on Friday and Monday, and then was tested as support in this mornings trading.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Yesterday, I set an expectation for a “sideways” move today. Don’t consider it a prediction that I got right, since predictions are more often wrong. The point is to have an expectation that when confirmed, it can tell us the market is acting normally (or at least what I view as normal).
I have an expectation for "higher" tomorrow. It is also not a prediction. The market will do whatever it decides to do. But if the market does not move higher, it could be a cause for concern, especially with the contrarian indicators at concerning levels. Assuming a support area at 12,230 is forming I would want to see that hold. I also would want to see the momentum of the big four mega-caps continue upwards, and that would almost certainly draw up the indexes. That seems very possible as the US Dollar weakens and benefits those large multi-nationals.
Jerome Powell finished is comments in front of congress today and asked for more stimulus for the economy. And unlike a few weeks ago, the Treasury’s Steven Mnuchin agrees. That’s good news for continued liquidity in the market. The only question then becomes where the liquidity goes, which cap sectors, which industrial groups, which market leaders.
Take care!
Comment:
Correction
I failed to replace the opening paragraph for Indexes and Sectors. Was in too much hurry today.
>>
The S&P 500 (SPX +0.18%), Dow Jones Industrial average (DJI +0.20%) and Russell 2000 (RUT +0.11%) all finished with gains, outperforming the Nasdaq.
I failed to replace the opening paragraph for Indexes and Sectors. Was in too much hurry today.
>>
The S&P 500 (SPX +0.18%), Dow Jones Industrial average (DJI +0.20%) and Russell 2000 (RUT +0.11%) all finished with gains, outperforming the Nasdaq.
Candle: Longer lower wick similar to Mon