Trend lines drawn from the 10/30 bottom (76d), 2/12 (5d) and today 2/19 (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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Friday, February 19, 2021
Facts: +0.07%, Volume higher, Closing range: 22%, Body: 38%
Good: Higher high, lower low
Bad: Morning gains lost in afternoon selling, low closing range and red body
Highs/Lows: Higher high, higher low
Candle: Red body in lower half of candle with longer upper wick
Advance/Decline: 1.67, 3 advancing stocks for every two declining
Indexes: SPX (-0.19%), DJI (-0.0%), RUT (+2.18%), VIX (+1.96%)
Sectors: Materials (XLB +1.83%) and Energy (XLE +1.67%) were top. Consumer Staples (XLP -1.26%) and Utilities (XLU -1.49%) were bottom.
Expectation: Sideways
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Market Overview
It was day for almost everyone but the mega-caps. Gainers outnumbered losers at more than a three to two ratio. But the mega-caps, especially in tech, lost ground while the rest of the market advanced. Equal weighted QQQE gained +0.36% while the cap weighted QQQ lost -0.44%.
The Nasdaq closed with a +0.07% gain on higher volume. The candle has a longer upper wick over a 38% red body and a dismal 22% range that was created from morning gains being sold off in the afternoon. There were over three advancing stocks for every declining stock.
The Russell 2000 showed up big after bouncing off its 21d exponential moving average and advancing +2.18% for today. The S&P 500 (SPX) declined -0.19% while the Dow Jones Industrial average (DJI) remained flat.
The VIX volatility index dropped -1.96%.
Utilities (XLU -1.49%) moved back to the bottom of the sector list after topping the list yesterday. Moving to the top were cyclical sectors Materials (XLB +1.83%) and Industrials (XLI +1.64%). Energy (XLE +1.67%) also moved back to the top just behind Materials. The final cyclical sector, Financials (XLF +1.19%), was in fourth place. Having these sectors at the top is a great sign for a recovering economy. They at the bottom during the March 2020 crash.
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Economic Indicators
The US Dollar (DXY) declined -0.25%. Yields on the 20y, 10y and 2y treasury bonds all rose for the day. The spread between long term and short term bonds widened back to high levels not seen since 2015.
High Yield (HYG) corporate bonds remained flat while Investor Grade (LQD) corporate bonds prices declined.
Silver (SILVER) and Gold (GOLD) both advanced. Crude Oil (CRUDEOIL1!) declined -2.54%. Timber (WOOD) advanced. Copper (COPPER1!) made a huge jump of +5.30%. Aluminum (ALI1!) declined. Analysts are predicting a big shortage of copper as economic activity returns and makes up for previous low activity.
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Investor Sentiment
The put/call ratio declined to 0.575. 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.
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Market Leaders
Apple (AAPL) was the only of the biggest four mega-caps to advance but it was only a +0.12% gain. Amazon (AMZN) saw the largest decline with a -2.35% returning to the weekly open price after three days of gains. Microsoft (MSFT) and Alphabet (GOOGL) lost -1.16% and -0.81%. Amazon moved back below its 21d EMA while Apple continues to trade below both the 21d EMA and 50d MA.
Mega-caps had few big winners for the day. Intel Corp (INTC) and ASML Holdings (ASML) topped the list with greater than 2% gains. At the bottom of the list was Facebook (FB) with a -2.91% loss.
Growth stocks did much better for the day. Palantir (PLTR) had a massive gain with a +15.22% advance. Chinese fintech companies Up Fintech (TIGER) and FUTU Holdings (FUTU) gained +11.33% and +10.41%. Magnite (MGNI) also had a big gain, moving up +8.65%.
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Looking ahead
There is not much economic news scheduled for Monday.
Next week will be a busy one for earnings with many popular growth stocks reporting as well as some big tech. Monday will be a somewhat slow start though with only Berkshire (BRKa) being of much interest to this daily update.
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Trends, Support and Resistance
The index is in the bottom half of the long-term regression trend channel. The trend lines I draw are the mid-point of the channels.
The long-term trend line from the 10/30 bottom points to a +1.73% gain.
The five-day trend line points to a decline of -0.67%. The one-day trend line is just below that point.
If there is further downside, the 21d EMA line offers an area of support and is -1.03% below Friday's close. The 13,000 level also seems to be an area of support. The index held the 12,550 area recently. If it passes that area, the next support area is 12,250.
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Wrap-up
Manufacturing and Services data in the morning was positive as well as a surprise in Existing Home Sales data. That was enough for the market to have a bullish morning, but not enough to keep those gains in the afternoon.
As the economy begins to heat up, investors are getting more nervous about what the stimulus will do to inflation and eventually interest rates. Fed's Rosengren reinforced the need for the larger package to return the economy and full employment back to pre-pandemic levels. However, what's good for the economy may not be good for your favorite companies.
The market has spent the week pricing in the expected impact of higher inflation. Although that has meant some pullback, it hasn't caused a mass run for the exits. As sellers cool off, there is a good possibility for more growth in the coming weeks.
Have a great weekend!
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=-
Friday, February 19, 2021
Facts: +0.07%, Volume higher, Closing range: 22%, Body: 38%
Good: Higher high, lower low
Bad: Morning gains lost in afternoon selling, low closing range and red body
Highs/Lows: Higher high, higher low
Candle: Red body in lower half of candle with longer upper wick
Advance/Decline: 1.67, 3 advancing stocks for every two declining
Indexes: SPX (-0.19%), DJI (-0.0%), RUT (+2.18%), VIX (+1.96%)
Sectors: Materials (XLB +1.83%) and Energy (XLE +1.67%) were top. Consumer Staples (XLP -1.26%) and Utilities (XLU -1.49%) were bottom.
Expectation: Sideways
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
It was day for almost everyone but the mega-caps. Gainers outnumbered losers at more than a three to two ratio. But the mega-caps, especially in tech, lost ground while the rest of the market advanced. Equal weighted QQQE gained +0.36% while the cap weighted QQQ lost -0.44%.
The Nasdaq closed with a +0.07% gain on higher volume. The candle has a longer upper wick over a 38% red body and a dismal 22% range that was created from morning gains being sold off in the afternoon. There were over three advancing stocks for every declining stock.
The Russell 2000 showed up big after bouncing off its 21d exponential moving average and advancing +2.18% for today. The S&P 500 (SPX) declined -0.19% while the Dow Jones Industrial average (DJI) remained flat.
The VIX volatility index dropped -1.96%.
Utilities (XLU -1.49%) moved back to the bottom of the sector list after topping the list yesterday. Moving to the top were cyclical sectors Materials (XLB +1.83%) and Industrials (XLI +1.64%). Energy (XLE +1.67%) also moved back to the top just behind Materials. The final cyclical sector, Financials (XLF +1.19%), was in fourth place. Having these sectors at the top is a great sign for a recovering economy. They at the bottom during the March 2020 crash.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) declined -0.25%. Yields on the 20y, 10y and 2y treasury bonds all rose for the day. The spread between long term and short term bonds widened back to high levels not seen since 2015.
High Yield (HYG) corporate bonds remained flat while Investor Grade (LQD) corporate bonds prices declined.
Silver (SILVER) and Gold (GOLD) both advanced. Crude Oil (CRUDEOIL1!) declined -2.54%. Timber (WOOD) advanced. Copper (COPPER1!) made a huge jump of +5.30%. Aluminum (ALI1!) declined. Analysts are predicting a big shortage of copper as economic activity returns and makes up for previous low activity.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio declined to 0.575. 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 (AAPL) was the only of the biggest four mega-caps to advance but it was only a +0.12% gain. Amazon (AMZN) saw the largest decline with a -2.35% returning to the weekly open price after three days of gains. Microsoft (MSFT) and Alphabet (GOOGL) lost -1.16% and -0.81%. Amazon moved back below its 21d EMA while Apple continues to trade below both the 21d EMA and 50d MA.
Mega-caps had few big winners for the day. Intel Corp (INTC) and ASML Holdings (ASML) topped the list with greater than 2% gains. At the bottom of the list was Facebook (FB) with a -2.91% loss.
Growth stocks did much better for the day. Palantir (PLTR) had a massive gain with a +15.22% advance. Chinese fintech companies Up Fintech (TIGER) and FUTU Holdings (FUTU) gained +11.33% and +10.41%. Magnite (MGNI) also had a big gain, moving up +8.65%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
There is not much economic news scheduled for Monday.
Next week will be a busy one for earnings with many popular growth stocks reporting as well as some big tech. Monday will be a somewhat slow start though with only Berkshire (BRKa) being of much interest to this daily update.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index is in the bottom half of the long-term regression trend channel. The trend lines I draw are the mid-point of the channels.
The long-term trend line from the 10/30 bottom points to a +1.73% gain.
The five-day trend line points to a decline of -0.67%. The one-day trend line is just below that point.
If there is further downside, the 21d EMA line offers an area of support and is -1.03% below Friday's close. The 13,000 level also seems to be an area of support. The index 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
Manufacturing and Services data in the morning was positive as well as a surprise in Existing Home Sales data. That was enough for the market to have a bullish morning, but not enough to keep those gains in the afternoon.
As the economy begins to heat up, investors are getting more nervous about what the stimulus will do to inflation and eventually interest rates. Fed's Rosengren reinforced the need for the larger package to return the economy and full employment back to pre-pandemic levels. However, what's good for the economy may not be good for your favorite companies.
The market has spent the week pricing in the expected impact of higher inflation. Although that has meant some pullback, it hasn't caused a mass run for the exits. As sellers cool off, there is a good possibility for more growth in the coming weeks.
Have a great weekend!
Stay healthy and trade safe!
