Trend lines drawn from the 10/30 bottom (64d), 1/27 (5d) and today 2/2 (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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Wednesday, February 3, 2021
Facts: -0.02%, Volume higher, Closing range: 18%, Body: 78%
Good: Higher high, higher low, held support above morning low
Bad: Sell off late afternoon
Highs/Lows: Higher high, higher low
Candle: Mostly red body formed from morning and afternoon dips
Advance/Decline: 1.65, almost three advancing stocks for every two declining stocks
Indexes: SPX (+0.10%), DJI (+0.12%), RUT (+0.38%), VIX (-10.37%)
Sectors: Energy (XLE +4.27%) and Communications (XLC +1.34%)were top. Consumer Discretionary (XLY -0.56%) and Health Services (XLV +0.29%) were bottom.
Expectation: Sideways or Lower
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Market Overview
The Nasdaq paused today after two days of big gains. It made an two attempts to have another day of gains, but dipped in morning and late afternoon trading. Still there were advances across a large number of stocks, fueled by great earnings reports from big mega-caps the day before.
The Nasdaq closed with a -0.02% loss, moving sideways after gaining over 4% the past two days. Volume was slightly higher than the previous days. The closing range of 18% and a red body of 78% are the result of the morning and late-afternoon dips. Overall, the candle presents bearish, so expectations are set for sideways or lower. Advancing stocks did outnumber declining stocks on a 3 to 2 ratio.
The S&P 500 (SPX), Dow Jones Industrial (DJI) both advanced for the day, gaining +0.10% and +0.12%. The Russell 2000 (RUT) led the major indexes with a +0.38%. The Russell 2000 presented a much more bullish candle and so we will be watching closely the small caps for the next day or two.
Sectors were mixed for the day. Energy (XLE +4.27%) led the sectors on soaring Crude Oil futures numbers. Communications (XLC +1.34%) was second, gaining momentum from Alphabet (GOOGL) which advanced on a great earnings report. Consumer Discretionary (XLY -0.56%) and Health Services (XLV +0.29%) were bottom.
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Economic Indicators
The US Dollar (DXY) declined -0.11% for the day. US 30y, 10y and 2y treasury bond yields all rose for the day, signaling investors moving to riskier assets. High Yields Corporate bond (HYG) prices advanced.
Silver (SILVER) gained slightly as it resumes a more normalized pattern after volatility earlier in the week. Gold (GOLD) declined slightly for the day. Crude Oil (CRUDEOIL1!) futures continued to climb. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
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Investor Sentiment
The put/call ratio rose to 0.687. 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
Alphabet (GOOGL) ended the day with a +7.28% gain after soaring nearly 10% intraday. Amazon (AMZN) lost -2%. Despite beating expectations on earnings and revenue, the announcement of Jeff Bezos moving from CEO to chairman was enough to pour water on the exciting results. Microsoft (MSFT) gained +1.46% while Apple (AAPL) declined -0.78%.
Exxon Mobil (XOM +3.92%), Alibaba (BABA +3.51%) and Toyota Motor (TM +3.46%) were the other top advancing mega-caps for the day. Tesla (TSLA -2.07%) was the worst performing mega-cap, just behind Amazon.
Chinese fintech company UP Fintech (TIGR) was a top growth stock with a +16.19% gain. GrowGeneration (GRWG) added to recent gains with another 9.15%. Two smaller growth companies that have become popular are Mohawk with a +12.56% gain and HyreCar with a +32.15% gain (almost 60% for the week). Both have been featured in my TradingView ideas.
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Looking ahead
Initial Jobless Claims data will be released in the morning. Hopefully it will add to positive employment news that we received today. Factory Orders data for December will be released after market open.
Additional FOMC members will speak in the afternoon.
Social networking companies SNAP (SNAP) and Pinterest (PINS) will release earnings tomorrow after close. Peloton (PTON), Penn National Gaming (PENN), Unity Software (U), Paylocity (PCTY) are among growth stocks reporting.
There is a long list of earnings reports tomorrow that I won't attempt to include all here. Check the stocks in your portfolio to make sure you aren't surprised by earnings.
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Trends, Support and Resistance
The one-day, five-day and long term trendline from the 10/30 bottom are all pointing to gains for tomorrow. The range is from +0.35% to 1.41%.
Expectation from the candle is sideways or lower, but a positive expectation breaker is always welcome.
The 21d EMA line has provided support before last Friday's close below the line. 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
The sideways move today could be constructive for further gains to come. It allowed the moving average lines to catch a bit. Bullish optimism cooled off as measured by the put/call ratio. It also was a chance for the market to absorb the final two earnings releases from the four big mega-caps.
The candle does indicate further pressure tomorrow, but the market can decide what it wants to do. Another day of mostly positive earnings reports could turn into more optimism and energy tomorrow, leading into another set of reports.
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=-
Wednesday, February 3, 2021
Facts: -0.02%, Volume higher, Closing range: 18%, Body: 78%
Good: Higher high, higher low, held support above morning low
Bad: Sell off late afternoon
Highs/Lows: Higher high, higher low
Candle: Mostly red body formed from morning and afternoon dips
Advance/Decline: 1.65, almost three advancing stocks for every two declining stocks
Indexes: SPX (+0.10%), DJI (+0.12%), RUT (+0.38%), VIX (-10.37%)
Sectors: Energy (XLE +4.27%) and Communications (XLC +1.34%)were top. Consumer Discretionary (XLY -0.56%) and Health Services (XLV +0.29%) were bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The Nasdaq paused today after two days of big gains. It made an two attempts to have another day of gains, but dipped in morning and late afternoon trading. Still there were advances across a large number of stocks, fueled by great earnings reports from big mega-caps the day before.
The Nasdaq closed with a -0.02% loss, moving sideways after gaining over 4% the past two days. Volume was slightly higher than the previous days. The closing range of 18% and a red body of 78% are the result of the morning and late-afternoon dips. Overall, the candle presents bearish, so expectations are set for sideways or lower. Advancing stocks did outnumber declining stocks on a 3 to 2 ratio.
The S&P 500 (SPX), Dow Jones Industrial (DJI) both advanced for the day, gaining +0.10% and +0.12%. The Russell 2000 (RUT) led the major indexes with a +0.38%. The Russell 2000 presented a much more bullish candle and so we will be watching closely the small caps for the next day or two.
Sectors were mixed for the day. Energy (XLE +4.27%) led the sectors on soaring Crude Oil futures numbers. Communications (XLC +1.34%) was second, gaining momentum from Alphabet (GOOGL) which advanced on a great earnings report. Consumer Discretionary (XLY -0.56%) and Health Services (XLV +0.29%) were bottom.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) declined -0.11% for the day. US 30y, 10y and 2y treasury bond yields all rose for the day, signaling investors moving to riskier assets. High Yields Corporate bond (HYG) prices advanced.
Silver (SILVER) gained slightly as it resumes a more normalized pattern after volatility earlier in the week. Gold (GOLD) declined slightly for the day. Crude Oil (CRUDEOIL1!) futures continued to climb. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose to 0.687. 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
Alphabet (GOOGL) ended the day with a +7.28% gain after soaring nearly 10% intraday. Amazon (AMZN) lost -2%. Despite beating expectations on earnings and revenue, the announcement of Jeff Bezos moving from CEO to chairman was enough to pour water on the exciting results. Microsoft (MSFT) gained +1.46% while Apple (AAPL) declined -0.78%.
Exxon Mobil (XOM +3.92%), Alibaba (BABA +3.51%) and Toyota Motor (TM +3.46%) were the other top advancing mega-caps for the day. Tesla (TSLA -2.07%) was the worst performing mega-cap, just behind Amazon.
Chinese fintech company UP Fintech (TIGR) was a top growth stock with a +16.19% gain. GrowGeneration (GRWG) added to recent gains with another 9.15%. Two smaller growth companies that have become popular are Mohawk with a +12.56% gain and HyreCar with a +32.15% gain (almost 60% for the week). Both have been featured in my TradingView ideas.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Initial Jobless Claims data will be released in the morning. Hopefully it will add to positive employment news that we received today. Factory Orders data for December will be released after market open.
Additional FOMC members will speak in the afternoon.
Social networking companies SNAP (SNAP) and Pinterest (PINS) will release earnings tomorrow after close. Peloton (PTON), Penn National Gaming (PENN), Unity Software (U), Paylocity (PCTY) are among growth stocks reporting.
There is a long list of earnings reports tomorrow that I won't attempt to include all here. Check the stocks in your portfolio to make sure you aren't surprised by earnings.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The one-day, five-day and long term trendline from the 10/30 bottom are all pointing to gains for tomorrow. The range is from +0.35% to 1.41%.
Expectation from the candle is sideways or lower, but a positive expectation breaker is always welcome.
The 21d EMA line has provided support before last Friday's close below the line. 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
The sideways move today could be constructive for further gains to come. It allowed the moving average lines to catch a bit. Bullish optimism cooled off as measured by the put/call ratio. It also was a chance for the market to absorb the final two earnings releases from the four big mega-caps.
The candle does indicate further pressure tomorrow, but the market can decide what it wants to do. Another day of mostly positive earnings reports could turn into more optimism and energy tomorrow, leading into another set of reports.
Stay healthy and take care!
