Summary: Markets followed the strong rebound on Thursday with one more push higher on Friday. With sanctions announced and a more modest impact than expected on oil prices, investors are buying up stocks at low prices. Still, the question remains if this week was the bottom.
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, February 25, 2022
Facts: +1.64%, Volume lower, Closing Range: 99%, Body: 62% Green
Good: Higher high, higher low, closing range
Bad: Nothing
Highs/Lows: Higher high, Higher low
Candle: Medium lower wick under large green body
Advance/Decline: 2.47, five advancing stocks for every two declining
Indexes: SPX (+2.24%), DJI (+2.51%), RUT (+2.25%), VIX (-9.00%)
Sector List: Materials (XLB +3.65%) and Consumer Staples (XLP +3.22%) at the top. Communications (XLC +1.62%) and Technology (XLK +1.36%) at the bottom.
Expectation: Sideways or Higher
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Market Overview
Markets followed the strong rebound on Thursday with one more push higher on Friday. With sanctions announced and a more modest impact than expected on oil prices, investors are buying up stocks at low prices. Still, the question remains if this week was the bottom.
The Nasdaq climbed +1.64% today. Volume was lower than the previous day when investors rushed back into equities. Still, the long lower wick that formed at the opening dip progressed into a 62% green body and a 99% closing range. The higher high and higher low helped end the volatile week with a gain and the first positive week for the index in the last three. There were five stocks that advanced for every two stocks that declined.
The Dow Jones Industrial Average (DJI) was the top index with a +2.51% thanks to the rotation back into cyclical sectors. The S&P 500 (SPX) grew +2.24%. The small-cap Russell 2000 (RUT) climbed by +2.25%. The VIX Volatility Index dropped by -9.00%.
All eleven S&P 500 sectors gained today. Materials (XLB +3.65%) and Consumer Staples (XLP +3.22%) were the top-performing sectors Communications (XLC +1.62%) and Technology (XLK +1.36%) were at the bottom.
Durable Goods Orders for January were higher than expected, a good sign for those worried about a slowing economy. On the other hand, the increased demand continues to drive prices higher with the Core PCE Price Index (YoY) outpacing the forecast by 0.1%. Personal Spending in January was up by 2.1% compared to a 1.5% forecast.
Michigan Consumer Expectations and Consumer Sentiment were also higher than expected, signaling a happy consumer despite higher prices.
Pending Home Sales dropped by -5.7% in January compared to a forecast of 1.0% growth. That could be due to the Omicron spike in COVID cases.
The US Dollar index (DXY) fell back by -0.52% after spiking the previous day. US 30y and 10y Treasury Yields rose for the day while the 2y yield fell. High Yield (HYG) and Investment Grade (LQD) Corporate bond prices rose for a second day. Oil prices continued to fall back after topping $100 a barrel on Thursday morning.
The put/call ratio (PCCE) fell to 0.820. The CNN Fear & Greed index is in the Fear range but remains close to Extreme Fear. The NAAIM money manager exposure index dropped to 44.41.
All big six mega-caps gained today. Nvidia (NVDA) had the biggest gain, rising +1.72%. Amazon (AMZN) closed above its 21d EMA with a +1.61% gain.
Johnson & Johnson (JNJ) was the top mega-cap, rising by +4.97%. The top three include United Health (UNH) and Procter & Gamble (PG). Even with such great performance, the Health sector (XLV +3.06%) was still only the fifth-best of the eleven sectors. Only three mega-caps declined with the worst loss being Alibaba (BABA) which fell by -0.91%.
The Daily Update Growth List had some big winners and big losers. Block (SQ) soared +26.14% after the company beat earnings expectations and provided rosy guidance for 2022. Etsy (ETSY) rose +16.21%, also on a good earnings beat. Sea Unlimited (SE) shares rose by +11.98% after the Singapore government petitioned India about why it blocked the companies app along with Chinese apps. The biggest loser in the list was Zscaler (ZS), dropping by -15.77% today.
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Looking ahead
Monday morning will bring the goods Trade Balance and Retail Inventories for January.
Workday (WDAY), Lucid Group (LCIDE), HP Inc (HPQ), McAfee (MCFE), and Trex (TREX) are among some of the earnings reports to start the week.
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Trends, Support, and Resistance
The Nasdaq rose to just below the 13,800 support/resistance area.
If the one-day trend line continues, we can expect a +1.64% gain on Monday.
The five-day trend line and trend line from the 2/10 high point to -2.91% and -4.33% declines, respectively.
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Wrap-up
I thought the big intraday move yesterday would result in a bit of a pullback today, but the Nasdaq continued higher. Assuming the news out of Ukraine doesn't get worse, then investors' attention will move to the upcoming Fed meeting and rate hike. Many analysts are now betting on a more dovish response to inflation given the geopolitical situation.
With yesterday's big move and two days of 99% closing range, the expectation for Monday is Sideways or Higher. However, we could get that pullback that I expected today.
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=-
Friday, February 25, 2022
Facts: +1.64%, Volume lower, Closing Range: 99%, Body: 62% Green
Good: Higher high, higher low, closing range
Bad: Nothing
Highs/Lows: Higher high, Higher low
Candle: Medium lower wick under large green body
Advance/Decline: 2.47, five advancing stocks for every two declining
Indexes: SPX (+2.24%), DJI (+2.51%), RUT (+2.25%), VIX (-9.00%)
Sector List: Materials (XLB +3.65%) and Consumer Staples (XLP +3.22%) at the top. Communications (XLC +1.62%) and Technology (XLK +1.36%) at the bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Markets followed the strong rebound on Thursday with one more push higher on Friday. With sanctions announced and a more modest impact than expected on oil prices, investors are buying up stocks at low prices. Still, the question remains if this week was the bottom.
The Nasdaq climbed +1.64% today. Volume was lower than the previous day when investors rushed back into equities. Still, the long lower wick that formed at the opening dip progressed into a 62% green body and a 99% closing range. The higher high and higher low helped end the volatile week with a gain and the first positive week for the index in the last three. There were five stocks that advanced for every two stocks that declined.
The Dow Jones Industrial Average (DJI) was the top index with a +2.51% thanks to the rotation back into cyclical sectors. The S&P 500 (SPX) grew +2.24%. The small-cap Russell 2000 (RUT) climbed by +2.25%. The VIX Volatility Index dropped by -9.00%.
All eleven S&P 500 sectors gained today. Materials (XLB +3.65%) and Consumer Staples (XLP +3.22%) were the top-performing sectors Communications (XLC +1.62%) and Technology (XLK +1.36%) were at the bottom.
Durable Goods Orders for January were higher than expected, a good sign for those worried about a slowing economy. On the other hand, the increased demand continues to drive prices higher with the Core PCE Price Index (YoY) outpacing the forecast by 0.1%. Personal Spending in January was up by 2.1% compared to a 1.5% forecast.
Michigan Consumer Expectations and Consumer Sentiment were also higher than expected, signaling a happy consumer despite higher prices.
Pending Home Sales dropped by -5.7% in January compared to a forecast of 1.0% growth. That could be due to the Omicron spike in COVID cases.
The US Dollar index (DXY) fell back by -0.52% after spiking the previous day. US 30y and 10y Treasury Yields rose for the day while the 2y yield fell. High Yield (HYG) and Investment Grade (LQD) Corporate bond prices rose for a second day. Oil prices continued to fall back after topping $100 a barrel on Thursday morning.
The put/call ratio (PCCE) fell to 0.820. The CNN Fear & Greed index is in the Fear range but remains close to Extreme Fear. The NAAIM money manager exposure index dropped to 44.41.
All big six mega-caps gained today. Nvidia (NVDA) had the biggest gain, rising +1.72%. Amazon (AMZN) closed above its 21d EMA with a +1.61% gain.
Johnson & Johnson (JNJ) was the top mega-cap, rising by +4.97%. The top three include United Health (UNH) and Procter & Gamble (PG). Even with such great performance, the Health sector (XLV +3.06%) was still only the fifth-best of the eleven sectors. Only three mega-caps declined with the worst loss being Alibaba (BABA) which fell by -0.91%.
The Daily Update Growth List had some big winners and big losers. Block (SQ) soared +26.14% after the company beat earnings expectations and provided rosy guidance for 2022. Etsy (ETSY) rose +16.21%, also on a good earnings beat. Sea Unlimited (SE) shares rose by +11.98% after the Singapore government petitioned India about why it blocked the companies app along with Chinese apps. The biggest loser in the list was Zscaler (ZS), dropping by -15.77% today.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Monday morning will bring the goods Trade Balance and Retail Inventories for January.
Workday (WDAY), Lucid Group (LCIDE), HP Inc (HPQ), McAfee (MCFE), and Trex (TREX) are among some of the earnings reports to start the week.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq rose to just below the 13,800 support/resistance area.
If the one-day trend line continues, we can expect a +1.64% gain on Monday.
The five-day trend line and trend line from the 2/10 high point to -2.91% and -4.33% declines, respectively.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
I thought the big intraday move yesterday would result in a bit of a pullback today, but the Nasdaq continued higher. Assuming the news out of Ukraine doesn't get worse, then investors' attention will move to the upcoming Fed meeting and rate hike. Many analysts are now betting on a more dovish response to inflation given the geopolitical situation.
With yesterday's big move and two days of 99% closing range, the expectation for Monday is Sideways or Higher. However, we could get that pullback that I expected today.
Stay healthy and trade safe!
