Summary: Value stocks were in the spotlight today after the passing of the infrastructure bill in the Senate initiated a rotation into cyclical sectors. The result was new record closes for the Dow Jones and S&P 500.
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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Tuesday, August 10, 2021
Facts: -0.49%, Volume lower, Closing range: 24%, Body: 71%
Good: Higher high, lower volume on decline
Bad: Lower low, low closing range
Highs/Lows: Higher high, lower low
Candle: Outside day made of mostly selling after the morning high.
Advanced/Decline: 0.66, three declining stocks for every advancing stock
Indexes: SPX (+0.10%), DJI (+0.46%), RUT (+0.20%), VIX (+0.42%)
Sectors: Energy (XLE +1.76%) and Materials (XLB +1.51%) at the top. Technology (XLK -0.72%) and Real Estate (XLRE -1.07%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
Value stocks were in the spotlight today after the passing of the infrastructure bill in the Senate initiated a rotation into cyclical sectors. The result was new record closes for the Dow Jones and S&P 500.
The Nasdaq closed with a -0.49% loss for the day. Volume was lower than the previous day. Three stocks declined for every two advancing stocks. The index attempted a rally in the morning but sold off quickly, resulting in a 71% red body and 24% closing range. The lower wick is longer than the upper wick. The higher high and lower low create an outside day following two inside days.
The Dow Jones Industrial Average (DJI) advanced +0.46%, and the S&P 500 (SPX) rose +0.10%. Both closed at new records. The Russell 2000 (RUT) also closed the day with a gain, advancing +0.20%.
The VIX volatility index advanced +0.42%.
The four cyclical sectors led the sector list, with Energy (XLE +1.76%) and Materials (XLB +1.51%) topping the list. Only three sectors declined for the day. Technology (XLK -0.72%) and Real Estate (XLRE -1.07%) were the worst-performing sectors of the day.
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Economic Indicators
Nonfarm Productivity for Q2 as well as Unit Labor Costs was lower than expected. API Weekly Crude Oil stock showed lower than expected demand. The Senate passed the Infrastructure Bill, which had the most significant influence on today's market.
The US Dollar (DXY) advanced +0.11%.
The US 30y, 10y, and 2y Treasury yields advanced for the day. The yield curve continues to steepen.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices advanced.
Timber (Wood) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) advanced.
Bitcoin (BTCUSD) declined -1.43%. Ethereum (ETHUSD) declined -0.79%. (Time of writing)
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Investor Sentiment
The put/call ratio declined to 0.557. The put/call ratio (PCCE) is a contrarian indicator of 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 is in the middle of the Fear range, moving toward neutral.
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Market Leaders
All four largest mega-caps declined for the day, weighed down by the strengthening US dollar and rising Treasury yields. Alphabet (GOOGL) declined -0.08% after closing at a new high yesterday. Apple (AAPL) dropped -0.34% while Microsoft (MSFT) lost -0.66%. Both tested their 21d exponential moving average lines and found support. Amazon (AMN) declined -0.63% and continues to trade around its 200d simple moving average.
Pfizer (PFE) topped the mega-cap list today as the COVID resurgence continues to grow, prompting more demand for vaccines. Walmart (WMT), Wells-Fargo (WFC), and Bank of America (BAC) filled out the top four mega-caps for the day. Salesforce.com (CRM), Nvidia (NVDA), Taiwan Semiconductor (TSM), and PayPal (PYPL) were the worst-performing mega-cap stocks for the day.
The daily update growth list had mostly losses today. Top gainers included RH (RH), DoorDash (DASH), Etsy (ETSY), and Cloudflare (NET). At the bottom of the list are MongoDB (MDB), Roku (ROKU), RobinHood (HOOD), and Digital Turbine (APPS).
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Looking ahead
We'll get another look at inflation data on Wednesday with an update to the Consumer Price Index data in the morning. Crude Oil Inventories will come after the market opens. There is a 10y Treasury Note auction in the afternoon.
Nio (NIO), eBay (EBAY), Opendoor (OPEN), Bumble (BMBL), Wendy's (WEN), and Lordstown Motors (RIDE) release earnings on Wednesday.
There are many earnings reports next week. Keep an eye out for reports from companies in your portfolio.
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Trends, Support, and Resistance
The Nasdaq faded after a quick rally after the market open.
The trend from the 7/19 low points to a +0.91% gain for Wednesday.
The five-day trend line ends with a +0.37% gain.
The one-day trend would put the index just above the 21d EMA with a -0.57% decline.
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Wrap-up
Infrastructure FTW. Today's passing of the infrastructure bill had investors rotating into value stocks that are sensitive to economic cycles. Tomorrow we'll get new inflation data that may shift investor sentiment further into value or swing them back toward growth.
Based on the outside day with a sizeable red body, the expectation for tomorrow is Sideways or Lower.
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=-
Tuesday, August 10, 2021
Facts: -0.49%, Volume lower, Closing range: 24%, Body: 71%
Good: Higher high, lower volume on decline
Bad: Lower low, low closing range
Highs/Lows: Higher high, lower low
Candle: Outside day made of mostly selling after the morning high.
Advanced/Decline: 0.66, three declining stocks for every advancing stock
Indexes: SPX (+0.10%), DJI (+0.46%), RUT (+0.20%), VIX (+0.42%)
Sectors: Energy (XLE +1.76%) and Materials (XLB +1.51%) at the top. Technology (XLK -0.72%) and Real Estate (XLRE -1.07%) at the bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Value stocks were in the spotlight today after the passing of the infrastructure bill in the Senate initiated a rotation into cyclical sectors. The result was new record closes for the Dow Jones and S&P 500.
The Nasdaq closed with a -0.49% loss for the day. Volume was lower than the previous day. Three stocks declined for every two advancing stocks. The index attempted a rally in the morning but sold off quickly, resulting in a 71% red body and 24% closing range. The lower wick is longer than the upper wick. The higher high and lower low create an outside day following two inside days.
The Dow Jones Industrial Average (DJI) advanced +0.46%, and the S&P 500 (SPX) rose +0.10%. Both closed at new records. The Russell 2000 (RUT) also closed the day with a gain, advancing +0.20%.
The VIX volatility index advanced +0.42%.
The four cyclical sectors led the sector list, with Energy (XLE +1.76%) and Materials (XLB +1.51%) topping the list. Only three sectors declined for the day. Technology (XLK -0.72%) and Real Estate (XLRE -1.07%) were the worst-performing sectors of the day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
Nonfarm Productivity for Q2 as well as Unit Labor Costs was lower than expected. API Weekly Crude Oil stock showed lower than expected demand. The Senate passed the Infrastructure Bill, which had the most significant influence on today's market.
The US Dollar (DXY) advanced +0.11%.
The US 30y, 10y, and 2y Treasury yields advanced for the day. The yield curve continues to steepen.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices advanced.
Timber (Wood) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) advanced.
Bitcoin (BTCUSD) declined -1.43%. Ethereum (ETHUSD) declined -0.79%. (Time of writing)
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Investor Sentiment
The put/call ratio declined to 0.557. The put/call ratio (PCCE) is a contrarian indicator of 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 is in the middle of the Fear range, moving toward neutral.
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Market Leaders
All four largest mega-caps declined for the day, weighed down by the strengthening US dollar and rising Treasury yields. Alphabet (GOOGL) declined -0.08% after closing at a new high yesterday. Apple (AAPL) dropped -0.34% while Microsoft (MSFT) lost -0.66%. Both tested their 21d exponential moving average lines and found support. Amazon (AMN) declined -0.63% and continues to trade around its 200d simple moving average.
Pfizer (PFE) topped the mega-cap list today as the COVID resurgence continues to grow, prompting more demand for vaccines. Walmart (WMT), Wells-Fargo (WFC), and Bank of America (BAC) filled out the top four mega-caps for the day. Salesforce.com (CRM), Nvidia (NVDA), Taiwan Semiconductor (TSM), and PayPal (PYPL) were the worst-performing mega-cap stocks for the day.
The daily update growth list had mostly losses today. Top gainers included RH (RH), DoorDash (DASH), Etsy (ETSY), and Cloudflare (NET). At the bottom of the list are MongoDB (MDB), Roku (ROKU), RobinHood (HOOD), and Digital Turbine (APPS).
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Looking ahead
We'll get another look at inflation data on Wednesday with an update to the Consumer Price Index data in the morning. Crude Oil Inventories will come after the market opens. There is a 10y Treasury Note auction in the afternoon.
Nio (NIO), eBay (EBAY), Opendoor (OPEN), Bumble (BMBL), Wendy's (WEN), and Lordstown Motors (RIDE) release earnings on Wednesday.
There are many earnings reports next week. Keep an eye out for reports from companies in your portfolio.
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Trends, Support, and Resistance
The Nasdaq faded after a quick rally after the market open.
The trend from the 7/19 low points to a +0.91% gain for Wednesday.
The five-day trend line ends with a +0.37% gain.
The one-day trend would put the index just above the 21d EMA with a -0.57% decline.
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Wrap-up
Infrastructure FTW. Today's passing of the infrastructure bill had investors rotating into value stocks that are sensitive to economic cycles. Tomorrow we'll get new inflation data that may shift investor sentiment further into value or swing them back toward growth.
Based on the outside day with a sizeable red body, the expectation for tomorrow is Sideways or Lower.
Stay healthy and trade safe!
