Summary: Stocks continued to rebound from last week's dip, with small caps leading the march upward, keeping the advance/decline ratio above 2.0 for a second day. Investors are looking more optimistic about the economic recovery among solid earnings reports from market leaders.
Notes
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Wednesday, July 21, 2021
Facts: +0.92%, Volume lower, Closing range: 99%, Body: 92%
Good: Close at high of day, bullish green body, A/D ratio
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: No upper wick, very tiny lower wick, mostly green body
Advanced/Decline: 2.36, almost five advancing stocks for every two declining stocks
Indexes: SPX (+0.82%), DJI (+0.83%), RUT (+1.81%), VIX (-9.23%)
Sectors: Energy (XLE +3.49%) and Financials (XLF +1.72%) at the top. Real Estate (XLRE -0.30%) and Utilities (XLU -1.10%). were bottom.
Expectation: Sideways or Higher
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Market Overview
Stocks continued to rebound from last week's dip, with small caps leading the march upward, keeping the advance/decline ratio above 2.0 for a second day. Investors are looking more optimistic about the economic recovery among solid earnings reports from market leaders.
The Nasdaq closed the day a +0.92%. Volume was lower, but buyers dominated the entire, with almost five advancing stocks for every declining stock. The candle has no upper wick because of the 99% closing range, and the green body covers 92% of the candle.
The Russell 2000 (RUT) led for a second day, as the US Dollar remains in an uptrend and makes undervalued small caps more attractive. The RUT closed with a +1.81% gain today. The S&P 500 (SPX) gained +0.82%, while the Dow Jones Industrial Average (DJI) climbed +0.83%.
The VIX volatility index declined -9.23%.
Energy (XLE +3.49) jumped to the top of the sector list as investors became more optimistic about the recovery. Financials (XLF) was the second-best sector, thanks to rising Treasury yields. At the bottom of the sector list are Real Estate (XLRE -0.30%) and Utilities (XLU -1.10%).
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Economic Indicators
Crude Oil Inventories came in higher than expected, but that did not dampen investors' outlook for oil. The 20y Treasury auction was weak, helping Treasury Yields to rise.
The US Dollar (DXY) declined -0.20% for the day.
The US 30y, 10y, and 2y Treasury Yields all rose today. The 20y auction was weak, helping long-term yields to increase further.
High Yield Corporate Bond (HYG) prices continue to bounce back from Monday's dip. Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) advanced, and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices advanced sharply.
Timber (Wood) advanced.
Copper (COPPER1!) advanced, and Aluminum (ALI1!) declined.
Crypto is back in vogue after another mention from Elon Musk. Bitcoin (BTCUSD) advanced +7.70%. Ethereum (ETHUSD) advanced +10.82%. (Time of writing)
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Investor Sentiment
The put/call ratio rose to 0.619. 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. Below that level is overly bullish.
The CNN Fear & Greed index moved back into Fear (instead of Extreme Fear), heading toward Neutral.
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Market Leaders
Apple (AAPL) declined -0.51% after topping the mega-cap list yesterday. Alphabet (GOOGL) gained +1.06%. Microsoft (MSFT) advanced +0.74%. Amazon (AMZN) rose +0.34%. All four closed above their 21d exponential moving average line.
ASML Holding (ASML), Nvidia (NVDA), Exxon Mobile (XOM), and JP Morgan (JPM) were the top mega-caps for the day. Netflix (NFLX) was the worst-performing mega-cap today after subscriber growth stalled and the company missed earnings estimates. Thermo Fisher Scientific (TMO), Tesla (TSLA), and Apple were also at the bottom of the mega-cap list.
Growth stocks had another great day. At the top of the daily update list were UP Fintech (TIGR), DraftKings (DKNG), Lemonade (LMND), and NIO (NIO). The only losers in the list were Zynga (ZNGA), Tesla (TSLA), and Zoom Video (ZM).
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Looking ahead
The weekly Initial Jobless Claims become available on Thursday before the market opens. After the market opens, Investors will get Existing Home Sales data for June.
Intel (INTC), Abbott Labs (ABT), AT&T (T), Snap (SNAP), ABB (ABB), Twitter (TWTR), DR Horton (DHI), Southwest Airlines (LUV), Dominos Pizza (DPZ), and American Airlines (AAL) release earnings on Thursday.
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Trends, Support, and Resistance
The Nasdaq moved back toward all-time highs as seems to be putting a quick correction behind.
The one-day trend line points to a +0.39% gain for Thursday.
The five-day trend line ends in a -1.02% decline, which would be just above the 21d EMA.
The trend line from the 7/13 high points to a -1.92% decline for Wednesday.
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Wrap-up
While fears grow about the impact of the Delta variant around the world, there is still high optimism for the US economic recovery, supported by upbeat earnings reports in the past two weeks. The combination of fear in other economies and optimism in the US economy put the US Dollar in an uptrend relative to other world currencies.
As investment flows into the US Dollar, global investors need a place to put that money to use. Since Treasury yields remain low, we see investors seek out returns in equities and high-yield corporate bonds. In addition to these favorable conditions, small-cap valuations are low compared to larger-cap stocks. That's helping the Russell 2000 lead the other major indexes in gains the past two days.
The expectation is for sideways or higher tomorrow. Keep an eye on the Zweig Breadth Thrust Indicator.
Stay healthy and trade safe!
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=-
Wednesday, July 21, 2021
Facts: +0.92%, Volume lower, Closing range: 99%, Body: 92%
Good: Close at high of day, bullish green body, A/D ratio
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: No upper wick, very tiny lower wick, mostly green body
Advanced/Decline: 2.36, almost five advancing stocks for every two declining stocks
Indexes: SPX (+0.82%), DJI (+0.83%), RUT (+1.81%), VIX (-9.23%)
Sectors: Energy (XLE +3.49%) and Financials (XLF +1.72%) at the top. Real Estate (XLRE -0.30%) and Utilities (XLU -1.10%). were bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Stocks continued to rebound from last week's dip, with small caps leading the march upward, keeping the advance/decline ratio above 2.0 for a second day. Investors are looking more optimistic about the economic recovery among solid earnings reports from market leaders.
The Nasdaq closed the day a +0.92%. Volume was lower, but buyers dominated the entire, with almost five advancing stocks for every declining stock. The candle has no upper wick because of the 99% closing range, and the green body covers 92% of the candle.
The Russell 2000 (RUT) led for a second day, as the US Dollar remains in an uptrend and makes undervalued small caps more attractive. The RUT closed with a +1.81% gain today. The S&P 500 (SPX) gained +0.82%, while the Dow Jones Industrial Average (DJI) climbed +0.83%.
The VIX volatility index declined -9.23%.
Energy (XLE +3.49) jumped to the top of the sector list as investors became more optimistic about the recovery. Financials (XLF) was the second-best sector, thanks to rising Treasury yields. At the bottom of the sector list are Real Estate (XLRE -0.30%) and Utilities (XLU -1.10%).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
Crude Oil Inventories came in higher than expected, but that did not dampen investors' outlook for oil. The 20y Treasury auction was weak, helping Treasury Yields to rise.
The US Dollar (DXY) declined -0.20% for the day.
The US 30y, 10y, and 2y Treasury Yields all rose today. The 20y auction was weak, helping long-term yields to increase further.
High Yield Corporate Bond (HYG) prices continue to bounce back from Monday's dip. Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) advanced, and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices advanced sharply.
Timber (Wood) advanced.
Copper (COPPER1!) advanced, and Aluminum (ALI1!) declined.
Crypto is back in vogue after another mention from Elon Musk. Bitcoin (BTCUSD) advanced +7.70%. Ethereum (ETHUSD) advanced +10.82%. (Time of writing)
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Investor Sentiment
The put/call ratio rose to 0.619. 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. Below that level is overly bullish.
The CNN Fear & Greed index moved back into Fear (instead of Extreme Fear), heading toward Neutral.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Apple (AAPL) declined -0.51% after topping the mega-cap list yesterday. Alphabet (GOOGL) gained +1.06%. Microsoft (MSFT) advanced +0.74%. Amazon (AMZN) rose +0.34%. All four closed above their 21d exponential moving average line.
ASML Holding (ASML), Nvidia (NVDA), Exxon Mobile (XOM), and JP Morgan (JPM) were the top mega-caps for the day. Netflix (NFLX) was the worst-performing mega-cap today after subscriber growth stalled and the company missed earnings estimates. Thermo Fisher Scientific (TMO), Tesla (TSLA), and Apple were also at the bottom of the mega-cap list.
Growth stocks had another great day. At the top of the daily update list were UP Fintech (TIGR), DraftKings (DKNG), Lemonade (LMND), and NIO (NIO). The only losers in the list were Zynga (ZNGA), Tesla (TSLA), and Zoom Video (ZM).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
The weekly Initial Jobless Claims become available on Thursday before the market opens. After the market opens, Investors will get Existing Home Sales data for June.
Intel (INTC), Abbott Labs (ABT), AT&T (T), Snap (SNAP), ABB (ABB), Twitter (TWTR), DR Horton (DHI), Southwest Airlines (LUV), Dominos Pizza (DPZ), and American Airlines (AAL) release earnings on Thursday.
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Trends, Support, and Resistance
The Nasdaq moved back toward all-time highs as seems to be putting a quick correction behind.
The one-day trend line points to a +0.39% gain for Thursday.
The five-day trend line ends in a -1.02% decline, which would be just above the 21d EMA.
The trend line from the 7/13 high points to a -1.92% decline for Wednesday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
While fears grow about the impact of the Delta variant around the world, there is still high optimism for the US economic recovery, supported by upbeat earnings reports in the past two weeks. The combination of fear in other economies and optimism in the US economy put the US Dollar in an uptrend relative to other world currencies.
As investment flows into the US Dollar, global investors need a place to put that money to use. Since Treasury yields remain low, we see investors seek out returns in equities and high-yield corporate bonds. In addition to these favorable conditions, small-cap valuations are low compared to larger-cap stocks. That's helping the Russell 2000 lead the other major indexes in gains the past two days.
The expectation is for sideways or higher tomorrow. Keep an eye on the Zweig Breadth Thrust Indicator.
Stay healthy and trade safe!
