Summary: A rebound from the Omicron sell-off was helped along by great earnings reports from Nike and Micron Technology.
Notes
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=- Tuesday, December 21, 2021
Facts: +2.40%, Volume lower, Closing Range: 98%, Body: 60% Green Good: Broad gain with high advance/decline ratio, high closing range Bad: Lower volume Highs/Lows: Higher high, Higher low Candle: Large green body at top of candle, long lower wick Advance/Decline: 2.9, almost three advancing stocks for every declining stock Indexes: SPX (+1.78%), DJI (+1.60%), RUT (+2.95%), VIX (-8.13%) Sector List: Energy (XLE +2.85%) and Consumer Discretionary (XLY +2.59%) at the top. Consumer Staples (XLP -0.13%) and Utilities (XLU -0.14%) at the bottom. Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Market Overview
A rebound from the Omicron sell-off was helped along by great earnings reports from Nike and Micron Technology.
The Nasdaq climbed by +2.40%. Volume was lower than the previous day and below the 50-day average. The candle has a 60% green body above a long lower wick. The closing range of 98% shows a bullish day all the way into the close. There were nearly 3 advancing stocks for every declining stock.
Small-caps outperformed, sending the Russell 2000 (RUT) up by +2.95%. The S&P 500 (SPX) gained +1.78% and the Dow Jones Industrial Average (DJI) climbed by +1.60%. The VIX Volatility index declined -8.13%.
Energy (XLE +2.85%) and Consumer Discretionary (XLY +2.59%) led the sector list. The only two sectors to decline were Consumer Staples (XLP -0.13%) and Utilities (XLU -0.14%).
The US Dollar index (DXY) declined -0.17%. US 30y, 10y, and 2y Treasury Yields all advanced for the day. High Yield (HYG) and Investment Grade (LQD) Corporate Bond Prices rose. Crude Oil Prices rebounded from yesterday's dip. Timber, Copper, and Aluminum all advanced.
The put/call ratio (PCCE) dropped to 0.621. The CNN Fear & Greed Index moved back to the Fear range after dipping into Extreme Fear yesterday.
All four largest mega-caps gained for the day. Microsoft (MSFT) gained +2.31%. Amazon (AMZN) rose by +2.00%. Apple (APPL) climbed +1.91%. Alphabet (GOOGL) advanced +1.32%. Only Apple is trading above its 21d EMA and 50d MA.
Alibaba (BABA) topped the mega-cap list with a +6.94% gain. Nike (NKE) also climbed over 6% after exceeding expectations on earnings. Pfizer (PFE) declined -3.39% landing at the bottom of the list. Yesterday, Pfizer was the top mega-cap while Alibaba (BABA) was the bottom.
The Daily Update Growth List had only two declining stocks. The biggest gainer was Sea Limited (SE), which rose +10.82%. After topping the list yesterday, Chewy (CHWY) was at the bottom of the list today, declining -2.30%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Looking ahead
Tomorrow will kick off with an update to GDP for Q3 before the market opens.
After the market opens, CB Consumer Confidence for December will be available. We'll also get a look at Existing Home Sales for November and the weekly Crude Oil Inventories.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Trends, Support, and Resistance
The Nasdaq dipped after a gap-up at open, getting support at 15,000 before climbing the rest of the day to close near the intraday high.
If the one-day trend line continues into Wednesday, expect a +2.32% gain.
If the index returns to the high from the 11/22 high or the five-day trend line, that would mean a -1.76% decline.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Wrap-up
Fears over Omicron seem to be as volatile as the market. The upside reversal today is a positive sign, but don't get too comfortable too quick. We can still see a lot of up and downs, especially with the lower volume that will only get lower as we head into the final week of December.
Based on the chart, the expectation for tomorrow is Sideways or Higher.
Hi. Great updates. Can you explain a little your take on the importance of the wick 'Body' percentage. I can get a general feel for what it means, but I'm sure you can shed some light on this ...
drewby4321
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@sipiceanu, Hi there! In technical analysis, the "shape" of the candle is a key piece of information to see what happened for each time period. A body that covers most of the candle would show that either bulls (green candle) or bears (red candle) were in control most of the day. Then, the length of the candle can tell you how bullish or bearish.
For candles with 30-60% bodies, the position of the body can tell you a lot. If it's green and in the upper part of the candle, with a long lower wick, you can see that bears had control during part of the session (probably early), but things turned bullish. If at the bottom of the candle, then bulls had the early part of the session and bears took over later in the session. Similar but different incites can be determined by red candles with those shapes.
Another good example is a thin, less than 10%, body in the middle of the candle. These often happen on indecision days right before a news event or arrival of important economic data. It shows the indecision that bulls/bears have and the index closes near where it opened. These also can be part of the evidence in tops and bottoms as the sentiment changes in the market.
sipiceanu
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@drewby4321, Yes. Thank you. It's good to see it in writing. Helps. The candles are simple yet convey so much meaning. Have a Merry Xmas. Justin.