Trend lines drawn from the 10/30 bottom (56d), 1/14 (5d) and today 1/21 (1d).
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.
I'm working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.
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Thursday, January 21, 2021
Facts:+0.55%, Volume higher, Closing range: 72%, Body: 9%
Good: New all-time high, support at yesterday's close for higher low
Bad: Thin body, indecisive candle
Highs/Lows: Higher high, higher low
Candle: Thin green body with visible upper and lower wicks could be a spinning top
Advance/Decline: 0.79, more declining stocks than advancing stocks.
Indexes: SPX (+0.03%), DJI (-0.04%), RUT (-0.89%), VIX (-1.20%)
Sectors: Technology (XLK +1.29%), Consumer Discretionary (XLY +0.47%), and Communications (XLC +0.35%) were the only advancing sectors. Energy (XLE -3.38%) was the worst performing sector.
Expectation: Sideways
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Market Overview
It was a choppy session with some indecision from open to close on which direction the indexes wanted to move. In the end, investors ignored bleak unemployment data and ended the day with gains, albeit very concentrated in specific sectors.
The Nasdaq ended with a +0.55% gain on higher volume. However the 9% body shows the indecision from open to close. The index dipped to create a long lower wick, then made new all-time highs before closing just above the open. The closing range of 72% and the higher high and higher low, makes for a slightly bullish candle. More stocks declined than advanced.
The Russell 2000 (RUT) declined -0.89% for the day, continuing to trail the other major indexes this week. The S&P 500 (SPX) and Dow Jones Industrial (DJI) stayed about even for the day. The VIX declined -1.20%.
Technology (XLK +1.29%), Consumer Discretionary (XLY +0.47%), and Communications (XLC +0.35%) were the only advancing sectors. These three sectors all have large exposure to the biggest mega-caps which helped drive gains for the day. Energy (XLE -3.38%) was the worst performing sector. Energy dipped as crude oil prices took a hit from a surprise increase in US supply, and slower recovery in demand than expected.
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Economic Indicators
The US Dollar (DXY) declined -0.44% for the day. US 30y and US 20y treasury bond yields climbed back to recent highs while shorter term yields remained flat. Corporate Bonds (HYG) prices decreased slightly for the day, but remain near recent highs.
Silver (SILVER) advanced while Gold (GOLD) declined for the day. Crude Oil (CRUDEOIL1!) futures declined. Timber (WOOD) advanced to a new multi-year high. Copper (COPPER1!) declined while Aluminum (ALI1!) advanced. The +3.67% increase in Aluminum futures comes after several weeks of declines. The commodity prices have pivoted today from recent trends. This will be something to watch for a continuation and new trend.
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Investor Sentiment
The put/call ratio rose to 0.609. 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 continues to rise. The NAAIM exposure is at its highest value since 2017. Money Managers are well into leverage with a mix of bullish and bearish sentiment.
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Market Leaders
The four biggest mega-caps, Apple (AAPL, Microsoft (MSFT), Amazon (AMZN) and Alphabet (GOOGL) all continued advances from yesterday. Apple and Alphabet set new all-time highs before retreating a bit. All four are well above the key moving average lines now.
Intel (INTC) was the leading mega-cap, gaining +6.46% as investors anticipated the earnings announcement after hours. However earnings slipped despite record revenue and the stock fell back 4.74% in aftermarket trading
Overall mega-caps were mixed. Energy and Financial stocks were at the bottom of the list.
Growth stocks were also mixed, but there were some big winners for the day. FUTU gained another 9.95%, but was outshined by the similar stock UP Fintech (TIGR) which gained 23.72%. Chinese FinTech companies have had quite a run the past few weeks.
AirBnB (ABNB) gained 11.48%. Fastly (FSLY), Solar Edge (SEDG) and Moderna (MRNA) all gained over 6%. Digital Turbine (APPS -3.67%) fell back from yesterday's gains.
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Looking ahead
Manufacturing and Services purchasing data will be released just after market open. These numbers show economic activity in the two sectors. Additional real estate data will be released a few minutes later.
Crude Oil Inventories will be provided at 11:00 and could add to yesterday's negative news for the energy sector.
Big oil company, Schlumberger (SLB) will release earnings before market open.
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Trends, Support and Resistance
The one-day and five-day trend lines point to a gain of +0.40% to +0.77%.
After a few days of gains, the index is well above the long-term trend line from the 10/30 bottom. That line points to a loss of -0.96%.
If there is a downside move, 13,000 support seems to be holding up well for the index and that's just above the 21d EMA now. The 21d EMA is around 3.8% below the index which should also offer support at the 13,000 level. The index also held the 12,550 area recently. If it passes that area, the next support area is 12,250.
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Wrap-up
Yesterday was an explosive day of gains. It's no surprise that the index would take a breather today. The choppiness during the day is a reason for some caution. The gains were focused on larger caps that are breaking out from recent bases.
The higher high and higher low is a great sign and we will hopefully continue the trend to finish the short week.
Stay healthy and take care!
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.
I'm working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Thursday, January 21, 2021
Facts:+0.55%, Volume higher, Closing range: 72%, Body: 9%
Good: New all-time high, support at yesterday's close for higher low
Bad: Thin body, indecisive candle
Highs/Lows: Higher high, higher low
Candle: Thin green body with visible upper and lower wicks could be a spinning top
Advance/Decline: 0.79, more declining stocks than advancing stocks.
Indexes: SPX (+0.03%), DJI (-0.04%), RUT (-0.89%), VIX (-1.20%)
Sectors: Technology (XLK +1.29%), Consumer Discretionary (XLY +0.47%), and Communications (XLC +0.35%) were the only advancing sectors. Energy (XLE -3.38%) was the worst performing sector.
Expectation: Sideways
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
It was a choppy session with some indecision from open to close on which direction the indexes wanted to move. In the end, investors ignored bleak unemployment data and ended the day with gains, albeit very concentrated in specific sectors.
The Nasdaq ended with a +0.55% gain on higher volume. However the 9% body shows the indecision from open to close. The index dipped to create a long lower wick, then made new all-time highs before closing just above the open. The closing range of 72% and the higher high and higher low, makes for a slightly bullish candle. More stocks declined than advanced.
The Russell 2000 (RUT) declined -0.89% for the day, continuing to trail the other major indexes this week. The S&P 500 (SPX) and Dow Jones Industrial (DJI) stayed about even for the day. The VIX declined -1.20%.
Technology (XLK +1.29%), Consumer Discretionary (XLY +0.47%), and Communications (XLC +0.35%) were the only advancing sectors. These three sectors all have large exposure to the biggest mega-caps which helped drive gains for the day. Energy (XLE -3.38%) was the worst performing sector. Energy dipped as crude oil prices took a hit from a surprise increase in US supply, and slower recovery in demand than expected.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) declined -0.44% for the day. US 30y and US 20y treasury bond yields climbed back to recent highs while shorter term yields remained flat. Corporate Bonds (HYG) prices decreased slightly for the day, but remain near recent highs.
Silver (SILVER) advanced while Gold (GOLD) declined for the day. Crude Oil (CRUDEOIL1!) futures declined. Timber (WOOD) advanced to a new multi-year high. Copper (COPPER1!) declined while Aluminum (ALI1!) advanced. The +3.67% increase in Aluminum futures comes after several weeks of declines. The commodity prices have pivoted today from recent trends. This will be something to watch for a continuation and new trend.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose to 0.609. 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 continues to rise. The NAAIM exposure is at its highest value since 2017. Money Managers are well into leverage with a mix of bullish and bearish sentiment.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
The four biggest mega-caps, Apple (AAPL, Microsoft (MSFT), Amazon (AMZN) and Alphabet (GOOGL) all continued advances from yesterday. Apple and Alphabet set new all-time highs before retreating a bit. All four are well above the key moving average lines now.
Intel (INTC) was the leading mega-cap, gaining +6.46% as investors anticipated the earnings announcement after hours. However earnings slipped despite record revenue and the stock fell back 4.74% in aftermarket trading
Overall mega-caps were mixed. Energy and Financial stocks were at the bottom of the list.
Growth stocks were also mixed, but there were some big winners for the day. FUTU gained another 9.95%, but was outshined by the similar stock UP Fintech (TIGR) which gained 23.72%. Chinese FinTech companies have had quite a run the past few weeks.
AirBnB (ABNB) gained 11.48%. Fastly (FSLY), Solar Edge (SEDG) and Moderna (MRNA) all gained over 6%. Digital Turbine (APPS -3.67%) fell back from yesterday's gains.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Manufacturing and Services purchasing data will be released just after market open. These numbers show economic activity in the two sectors. Additional real estate data will be released a few minutes later.
Crude Oil Inventories will be provided at 11:00 and could add to yesterday's negative news for the energy sector.
Big oil company, Schlumberger (SLB) will release earnings before market open.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The one-day and five-day trend lines point to a gain of +0.40% to +0.77%.
After a few days of gains, the index is well above the long-term trend line from the 10/30 bottom. That line points to a loss of -0.96%.
If there is a downside move, 13,000 support seems to be holding up well for the index and that's just above the 21d EMA now. The 21d EMA is around 3.8% below the index which should also offer support at the 13,000 level. The index also held the 12,550 area recently. If it passes that area, the next support area is 12,250.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Yesterday was an explosive day of gains. It's no surprise that the index would take a breather today. The choppiness during the day is a reason for some caution. The gains were focused on larger caps that are breaking out from recent bases.
The higher high and higher low is a great sign and we will hopefully continue the trend to finish the short week.
Stay healthy and take care!
