Summary: Very strong economic data sent the markets higher on Friday as investors shook off the capital gains worries. Small caps took the lead for another session as gains were shared broadly across segments and sectors.
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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Friday, April 23, 2021
Facts: +1.44%, Volume lower, Closing range: 78%, Body: 75%
Good: Now lower wick, strong buying all morning
Bad: Slight dip into close as the weekend arrives
Highs/Lows: Higher high, higher low
Candle: Mostly green body with a longer upper wick from the dip at close
Advance/Decline: Two advancing stocks for every declining stock
Indexes: SPX (+1.09%), DJI (+0.67%), RUT (+1.76%), VIX (-7.38%)
Sectors: Financial (XLF +1.87%) and Materials (XLB +1.64%) were top. Utilities (XLU -0.13%) and Consumer Staples (XLP -0.26%) were bottom.
Expectation: Higher
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Market Overview
Very strong economic data sent the markets higher on Friday as investors shook off the capital gains worries. Small caps took the lead for another session as gains were shared broadly across segments and sectors.
The Nasdaq gained +1.44% on lower volume than yesterday, but higher volume than earlier in the week. The 75% body is above a very tiny lower wick. The closing range of 78% is just below a longer upper wick that formed in the last 30 minutes of the session from selling into the weekend. There were two advancing stocks for every declining stock.
The Russell 2000 (RUT) led the major indexes for a third day, bucking the trend of lower performance the last few weeks. It gained +1.76% today. The S&P 500 (SPX) closed with a +1.09% advance while the Dow Jones Industrial average (DJI) closed up +0.67%.
The VIX volatility index retreated -7.38%.
Financial (XLF +1.87%) and Materials (XLB +1.64%) were top. Utilities (XLU -0.13%) and Consumer Staples (XLP -0.26%) were the only sectors with declines.
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Economic Indicators
The US Dollar (DXY) declined -0.49%. The sharp decline came as treasury bonds sold off.
The US 30y treasury bond and US 10y and 2y note yields all advanced for the day.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices both advanced.
Silver (SILVER) and Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) both advanced. The commodities advance are after surprisingly strong economic data following a great jobs report yesterday.
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Investor Sentiment
The put/call rose to 0.651. 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 is moving toward the greed side, but not at extreme greed.
The NAAIM money manager exposure index remains about the same as last week at 95.6.
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Market Leaders
All four biggest mega-caps gained today. Alphabet (GOOGL) advanced +2.10%, closing at a new all-time high. Apple (AAPL) gained +1.80%. Microsoft (MSFT) advanced +1.55%. Amazon (AMZN) held onto a +0.96% despite fading later in the session.
ASML Holding (ASML), Taiwan Semiconductor (TSM), Nvidia (NVDA) and Bank of America (BAC) led the mega-caps for the day, all with more than 2% gains. Intel (INTC), Netflix (NFLX), Procter & Gamble) and Pepsico (PEP) were at the bottom of the list.
Almost every stock in the daily update growth list had gains for the day. UP Fintech (TIGR) led the list with a +14.18% gain. Cloudflare (NET), SNAP (SNAP) and FUTU Holdings (FUTU) round out the top four. MongoDb (MDB), Peloton (PTON) and Beyond Meat (BYND) were at the bottom of the list.
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Looking ahead
Monday will kick-off the week with Core Durable Goods orders data for March. The data is a leading indicator showing increased manufacturing data to respond to higher consumer demand.
The frequency of earnings reports will really start to pick up next week. Kicking off on Monday will be reports from Tesla (TSLA), NXP Semiconductors (NXPI), Canon (CAJ), Albertsons (ACI). Investors will be watching all earnings reports closely to measure sector performance in the economic recovery.
Be sure to check your portfolio for earnings reports so you are not surprised.
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Trends, Support and Resistance
The index was able to get back above the 14,000 area and hold that line even with the dip at close.
The one-day trend line points to a +1.40% gain for Monday. The trend line from the 3/5 low, points to a +0.35% gain.
The five-day trend line points to a -0.23% loss.
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Wrap-up
The worries about higher capital gains tax was short lived. Biden has always said he would raise taxes and so those worries were likely already priced in. Today's rally easily erased yesterday's downward reversal from the sell the news event.
The economic data this morning included higher Services and Manufacturing PMI and New Home Sales data that exceeded even high expectations. Add that to the positive jobs data yesterday and it was enough to excite investors over the strong economy today.
Still, investors will watch earnings reports closely next week to see what sectors are performing best in the recovery. Not only will earnings be compared to last year's pandemic numbers, but guidance for the next quarter and year will be watch closely.
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.
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Friday, April 23, 2021
Facts: +1.44%, Volume lower, Closing range: 78%, Body: 75%
Good: Now lower wick, strong buying all morning
Bad: Slight dip into close as the weekend arrives
Highs/Lows: Higher high, higher low
Candle: Mostly green body with a longer upper wick from the dip at close
Advance/Decline: Two advancing stocks for every declining stock
Indexes: SPX (+1.09%), DJI (+0.67%), RUT (+1.76%), VIX (-7.38%)
Sectors: Financial (XLF +1.87%) and Materials (XLB +1.64%) were top. Utilities (XLU -0.13%) and Consumer Staples (XLP -0.26%) were bottom.
Expectation: Higher
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Market Overview
Very strong economic data sent the markets higher on Friday as investors shook off the capital gains worries. Small caps took the lead for another session as gains were shared broadly across segments and sectors.
The Nasdaq gained +1.44% on lower volume than yesterday, but higher volume than earlier in the week. The 75% body is above a very tiny lower wick. The closing range of 78% is just below a longer upper wick that formed in the last 30 minutes of the session from selling into the weekend. There were two advancing stocks for every declining stock.
The Russell 2000 (RUT) led the major indexes for a third day, bucking the trend of lower performance the last few weeks. It gained +1.76% today. The S&P 500 (SPX) closed with a +1.09% advance while the Dow Jones Industrial average (DJI) closed up +0.67%.
The VIX volatility index retreated -7.38%.
Financial (XLF +1.87%) and Materials (XLB +1.64%) were top. Utilities (XLU -0.13%) and Consumer Staples (XLP -0.26%) were the only sectors with declines.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) declined -0.49%. The sharp decline came as treasury bonds sold off.
The US 30y treasury bond and US 10y and 2y note yields all advanced for the day.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices both advanced.
Silver (SILVER) and Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) both advanced. The commodities advance are after surprisingly strong economic data following a great jobs report yesterday.
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Investor Sentiment
The put/call rose to 0.651. 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 is moving toward the greed side, but not at extreme greed.
The NAAIM money manager exposure index remains about the same as last week at 95.6.
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Market Leaders
All four biggest mega-caps gained today. Alphabet (GOOGL) advanced +2.10%, closing at a new all-time high. Apple (AAPL) gained +1.80%. Microsoft (MSFT) advanced +1.55%. Amazon (AMZN) held onto a +0.96% despite fading later in the session.
ASML Holding (ASML), Taiwan Semiconductor (TSM), Nvidia (NVDA) and Bank of America (BAC) led the mega-caps for the day, all with more than 2% gains. Intel (INTC), Netflix (NFLX), Procter & Gamble) and Pepsico (PEP) were at the bottom of the list.
Almost every stock in the daily update growth list had gains for the day. UP Fintech (TIGR) led the list with a +14.18% gain. Cloudflare (NET), SNAP (SNAP) and FUTU Holdings (FUTU) round out the top four. MongoDb (MDB), Peloton (PTON) and Beyond Meat (BYND) were at the bottom of the list.
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Looking ahead
Monday will kick-off the week with Core Durable Goods orders data for March. The data is a leading indicator showing increased manufacturing data to respond to higher consumer demand.
The frequency of earnings reports will really start to pick up next week. Kicking off on Monday will be reports from Tesla (TSLA), NXP Semiconductors (NXPI), Canon (CAJ), Albertsons (ACI). Investors will be watching all earnings reports closely to measure sector performance in the economic recovery.
Be sure to check your portfolio for earnings reports so you are not surprised.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index was able to get back above the 14,000 area and hold that line even with the dip at close.
The one-day trend line points to a +1.40% gain for Monday. The trend line from the 3/5 low, points to a +0.35% gain.
The five-day trend line points to a -0.23% loss.
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Wrap-up
The worries about higher capital gains tax was short lived. Biden has always said he would raise taxes and so those worries were likely already priced in. Today's rally easily erased yesterday's downward reversal from the sell the news event.
The economic data this morning included higher Services and Manufacturing PMI and New Home Sales data that exceeded even high expectations. Add that to the positive jobs data yesterday and it was enough to excite investors over the strong economy today.
Still, investors will watch earnings reports closely next week to see what sectors are performing best in the recovery. Not only will earnings be compared to last year's pandemic numbers, but guidance for the next quarter and year will be watch closely.
Stay healthy and trade safe!
