Trend lines drawn from the 3/5 low (20d), 3/26 (5d) and today 4/1 (1d).
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=- Thursday, April 1, 2021
Facts: +1.76%, Volume lower, Closing range: 96% (w/ Gap), Body: +79% Good: Rally above and stayed above 50d MA Bad: Flat after initial rally Highs/Lows: Higher high, higher low Candle: Gap up, Mostly green body with barely visible upper and lower wicks. Advance/Decline: Two advancing stocks for every declining stock Indexes: SPX (+1.18%), DJI (+0.52%), RUT (+1.50%), VIX (-10.67%) Sectors: Energy (XLE +2.55%) and Technology (XLK +2.01%) were top. Health (XLV -0.30%) and Consumer Staples (XLP -0.48%) were bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Market Overview
Hello April and Q2! The Nasdaq leapt into the new month and quarter with a gap up and rise above the 50d moving average while the S&P 5000 closed over 4000 for the first time in history. Solid breakouts from big tech and a breadth of gains across indexes and sectors helped put strength behind the moves.
The Nasdaq closed with a +1.76% gain on lower volume. The 96% closing range includes the gap and represents a quick rise in the morning that leveled off but never gave back the gains. The 79% body includes a few tests of the 50d MA in intraday trading, but support held. There were two advancing stocks for every declining stock.
The S&P 500 (SPX) set a milestone, advancing +1.18%, to close above 4000 for the first time ever. The Russell 2000 (RUT) put in its third day of gains with a +1.50% advance. The Dow Joins Industrial (DJI) average climbed +0.52%.
The VIX volatility index declined -10.67% to close at its lowest point since before the pandemic.
Energy (XLE +2.55%) topped the sector list as crude oil prices spiked on better than expected inventory data for Crude and Gasoline, demonstrating high demand. Technology (XLK +2.01%) also topped the sector list, boosted by big tech gains from Microsoft and Apple and generally great performance across the entire sector. Health (XLV -0.30%) and Consumer Staples (XLP -0.48%) were at the bottom of the list. Utilities (XLU -0.09%) was also at the bottom of the list, not participating in the gains.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Economic Indicators
The US Dollar (DXY) declined -0.02% and has leveled off from recent gains, helping alleviate some risk for large multi-nationals.
The US 30y treasury bond and 10y note yields both dropped while the 2y note yield rose, helping bring back down the steep yield curve.
High Yield Corporate Bond (HYG) prices pulled back from recent gains while Investment Grade Corporate Bond (LQD) prices continued to advance.
Silver (SILVER) and Gold (GOLD) both continued to advance. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) advanced. All of this shows a bullish outlook on the economy.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Investor Sentiment
The put/call ratio dropped to 0.538. 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 back toward Greed, but not at an extreme level.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Market Leaders
All of biggest four mega-caps had gains for the day, gains that had a lot more strength than the previous day. Alphabet (GOOGL) had the largest gain of the four with a +3.26% advance and a record-setting close. Microsoft (MSFT) couldn't quite reach all-time highs but advanced +2.79% in a clear breakout from a base. Amazon (AMZN) had a +2.16% gain but stopped short of its 50d MA line. Apple (AAPL) advanced +0.70%, closing just above its 21d EMA but well below its 50d MA.
Semiconductors and Communication stocks topped the mega-cap list. Taiwan Semiconductor (TSM) Nvidia (NVDA), Netflix (NFLX) and Alphabet were the top four gainers. Most mega-caps advanced for the day. UnitedHealth (UNH), Toyota Motor ™ and Alibaba (BABA) were at the bottom of the list, all declining more than 1%.
Growth Stocks also had a good day. Topping the daily update list were MongoDB (MDB), Pinterest (PINS), DataDog (DDOG) and Fastly (FSLY). All four of these sold off heavily in February and March and are trying to regain ground. At the bottom of the list were Chewy (CHWY), Ehang Holdings (EH) and FUTU Holdings (FUTU).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Looking ahead
Markets are closed on Good Friday, but employment data will be released. At the time of this writing, the data is already released and showed great recovery in the labor market.
Monday will kick-off the week with Purchasing Managers data for March that is a leading indicator for economic activity. That data will be complemented by Factor Orders data just after market open.
There are no notable earnings reports for the daily update next week except maybe PAYX on Tuesday that could confirm a positive outlook for the labor market.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Trends, Support and Resistance
The index moved above the 50d moving average in the morning and stayed above the line.
The five-day trend line points to a +0.47% gain for Monday. The one-day trend line points sideways to a minor -0.05% decline and stays above the 50d MA line.
The trend line from the 3/5 low points to a -1.67% loss, which below the 50d MA and just above the 21d EMA.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Wrap-up
The expectation was higher for today. Thankfully the market didn't pull an April Fools.
Thursday was the kind of day we want to see as a new month and new quarter starts. Gains across all the indexes and most of the sectors. Volatility at its lowest in over a year. Energy and Technology leading the sector list. Solid moves from the large mega-caps. Commodity prices advanced on expected demand. The US Dollar is strengthening but not out of control. The yield curve is starting to show some control.
The only thing missing was volume. It was lower than the previous day. However, that may also be a positive sign as volume has been running high since the beginning of December and peaked in February. Maybe, just maybe, some of the frenzy of retail investing as subsided and volume is coming back down to normal levels. Maybe, just maybe, lower volume means continued lower volatility as well.
That looks good, but things can change quickly, so always trade with a stop loss. :)
Is there any chance that you could provide a specific EV focus on some days?
Kind Regards, Phil.
drewby4321
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@philbest313, What do you have in mind? Any particular data points I should surface? I'm open to the idea as long as it doesn't add too much time to the prep. Or another option is I cover it in the weekly update.
philbest313
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@drewby4321,
The EV system is taking the world and stock market by storm, plus this is expected to get much stronger towards the end of 2021. Hence I propose that we need an EV spectrum of specific stock values and produce a report on these.
I know that this is not going to be easy, however others such as RK Equity are focusing solely on this, plus there are other YouTube and Patreon channels who are doing this, but because it is not just USA and Canada, it becomes difficult for the each stock market to provide an actual EV index.
Ivan at the EV Stock Channel has been very helpful and unbiased, it was him who highlighted the Piedmont stock, which allowed me to greatly improve the value of my holding.
RKEquity.com may be biassed more towards earning consulting money, but they would help you.
Most of my stocks are Australian ASX, because I can set conditional sell orders (stop loss) orders.
I have ALB:US, AMY:CA, AOU, ARL, ARU, AUZ, CCW:CA, CLQDB, CXO, CYP:CA EMH, EMN, FCC:CA, GLN, LEG, LIT (this is Lithium ETF), LKE, LTHM:US (this is Livent), LYC, MCR, MN:CA, NIC, NTU, ORE, OWLI:CA, PLL (in Aus but changing to US), PLS, REE, SYA, SYR, TLO:CA, TN:CA, VUL, WSA.
So there are specific areas:
Lithium mines: Hard Rock (Spodumene), Brine, Clay, Brine with DLE (very popular).
There is Lithium Hydroxide (from hard rock ) and Lithium Carbonate (from brine), however Direct Lithium Extraction DLE has the media news, and LKE Lake Resources is a leader.
Piedmont PLL has a hard rock mine in Carolinas, plus refinery and a contract with Tesla.
Livent is huge and recently took over the Nemaska Mine.
Clay is CYP:CA, can they get the lithium out.
Nickel Mines: There is Vale, but I do have some Aussie mines WSA and NIC. Also TLO:CA and TN:CA.
Recycling is big money as it is much cheaper and much less carbon pollution: I have FCC:US First Cobalt Refinery, AMY:CA American Manganese, CCW:CA Silver Cobalt.
USA Manganese is in very short US supply, so I have MN:CA.
European I have: VUL (amazing story), plus EMH and EMN.
Rare Earths are desperate for USA because they have none. Aussie REE, LYC, NTU & ARU, otherwise China has most of the world's supply.
So you can see that many of the mines are owned by Aussies but operated overseas.
New mines have the problem that it takes 5 years to get into production or start a new mine.
But to create an actual EV Stock Index, then focus on the bigger operational important USA & Canadian & Chinese ones.
And then there are the car manufacturers themselves, which might be out of scope. However you could track the sales (as others have done).
And then there is Genetics, I have ARKG:US.
Hope this helps, regards, Phil.
zAngus
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@philbest313, good review. You should create your own chart / comparison. I agree with the above (also being an Aussie). I use Interactive Brokers for conditional orders for ASX and US if useful.
philbest313
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@Angusmck, RK Equity provided a new email today, with lists of everything important for EV. If somebody was to roll these all together and average out the % value, then this could be the basis of an EV Investing Index.
drewby4321
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@philbest313, TradingView allows you to type math equations into the ticker box. For example, you could type FB+AAPL+NFLX+GOOGL to get a "FANG" ticker. If you took some of the above and added them together, you'd basically have an Index ticker. I'm not sure if there is a limit to the number of symbols that can be added together.
Kind Regards, Phil.