Summary: A lighter volume but positive day followed lower than expected economic indicators, including Retail Sales and Consumer Sentiment. Perhaps the economic recovery is pausing as consumers react to the increases in prices. A little water on the fire could be good news to investors who are afraid things are overheating.
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, May 14, 2021
Facts: +2.32%, Volume lower, Closing range: 86%, Body: 80%
Good: Higher high, higher low, buying all day until just before close
Bad: Lower volume
Highs/Lows: Higher high, higher low
Candle: Thick green body under a small upper wick. Tiny lower wick.
Advanced/Decline: More than three advancing stocks for every declining stock
Indexes: SPX (+1.49%), DJI (+1.06%), RUT (+2.47%), VIX (-18.68%)
Sectors: Energy (XLE +3.10%) and Technology (XLK +2.20%) were top. Utilities (XLU +0.49%) and Consumer Staples (XLP +0.44%) were bottom.
Expectation: Sideways or Higher
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Market Overview
A lighter volume but positive day followed lower than expected economic indicators, including Retail Sales and Consumer Sentiment. Perhaps the economic recovery is pausing as consumers react to the increases in prices. A little water on the fire could be good news to investors who are afraid things are overheating.
The Nasdaq closed with a +2.32% advance on lower volume. The thick green body over a tiny lower wick represents the buying throughout the day. A short upper wick came in the last hour of trading as investors took profits heading into the weekend. There were more than three advancing stocks for every declining stock.
The major indices all did well for the day. The S&P 500 (SPX) advanced +1.49%. The Dow Jones Industrial Average (DJI) rose +1.06%. The Russell 2000 (RUT) was the best performing, ending the day with a +2.47% gain.
The VIX volatility index declined another -18.68%.
Flip-flopping from top to bottom throughout the week, the Energy sector (XLE +3.10%) is back on top Friday. Technology (XLK +2.20%) followed closely behind after losing ground through most of the week. All sectors gained for the day. Utilities (XLU +0.49%) and Consumer Staples (XLP +0.44%) were at the bottom of the list as investors focused on riskier assets.
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Economic Indicators
The US Dollar (DXY) declined -0.46%.
The US 30y, 10y, and 2y Treasury yields all declined for a second day. The yield curve is flattening again after steepening earlier in the week.
Both High Yield Corporate Bond (HYG) prices and Investment Grade Corporate Bond (LQD) prices advanced for another day.
Silver (SILVER) and Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) advanced.
Copper (COPPER1!) declined while Aluminum (ALI1!) advanced just slightly.
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Investor Sentiment
The put/call ratio dropped to 0.658. 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 still in the fear zone.
The NAAIM money manager exposure index is at 46.86 after moving above 100 two weeks ago.
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Market Leaders
All four big mega-caps advanced. Apple (AAPL) and Microsoft (MSFT) both closed back above their 50d MA, gaining +1.98% and +2.11%, respectively. Alphabet (GOOGL) moved back above its 21d EMA, advancing +2.21%. Amazon (AMZN) closed just below the 50d MA, gaining +1.94%.
Topping the mega-cap list are Nvidia (NVDA), ASML Holding (ASML), Facebook (FB), and Taiwan Semiconductor (TSM).
The top four growth stocks all gained more than 10%. DoorDash (DASH) rose gained 20%. Chinese fintech firms UP Fintech (TIGR) and FUTU Holdings (FUTU) topped the list, with GrowGeneration (GRWG) and Snowflake (SNOW) rounding out the top five. Only one stock in the daily update list declined, Ehang Holdings (EH) lost -1.45. Hyre (HYRE) is not on the daily list but might need to be added, gaining 44.57% on a massive earnings beat.
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Looking ahead
The week will open with Manufacturing data on Monday morning. Several FOMC members will speak after the market opens.
Tencent Music (TME), Niu Tech (NIU), Desktop Metal (DM), Fisker (FSR), Riot Blockchain (RIOT) will report earnings on Monday.
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Trends, Support, and Resistance
The index made a move back toward the 50d moving average line today but couldn't quite make it that high on the lower volume.
If the one-day trend-line continues on Monday, it points to a +1.43% gain that takes the index back above both the 21d EMA and the 50d MA.
The five-day trend line leads to a -2.13% decline.
The trend-line from the 4/2 high shows a -2.88% decline on Monday.
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Wrap-up
It's been a hectic week, and it feels good to have a few days over the weekend to take a deep breath. The gains on Thursday and Friday are a relief to see, but there is still much to prove. Going into next week, I want to see another move up, but on higher volume and continued breath across equities.
The lowered retail sales and consumer expectations may be just the thing investors needed to look away from inflation for a while. We'll take a closer look at this in the Week in Review.
Have a great weekend!
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, May 14, 2021
Facts: +2.32%, Volume lower, Closing range: 86%, Body: 80%
Good: Higher high, higher low, buying all day until just before close
Bad: Lower volume
Highs/Lows: Higher high, higher low
Candle: Thick green body under a small upper wick. Tiny lower wick.
Advanced/Decline: More than three advancing stocks for every declining stock
Indexes: SPX (+1.49%), DJI (+1.06%), RUT (+2.47%), VIX (-18.68%)
Sectors: Energy (XLE +3.10%) and Technology (XLK +2.20%) were top. Utilities (XLU +0.49%) and Consumer Staples (XLP +0.44%) were bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
A lighter volume but positive day followed lower than expected economic indicators, including Retail Sales and Consumer Sentiment. Perhaps the economic recovery is pausing as consumers react to the increases in prices. A little water on the fire could be good news to investors who are afraid things are overheating.
The Nasdaq closed with a +2.32% advance on lower volume. The thick green body over a tiny lower wick represents the buying throughout the day. A short upper wick came in the last hour of trading as investors took profits heading into the weekend. There were more than three advancing stocks for every declining stock.
The major indices all did well for the day. The S&P 500 (SPX) advanced +1.49%. The Dow Jones Industrial Average (DJI) rose +1.06%. The Russell 2000 (RUT) was the best performing, ending the day with a +2.47% gain.
The VIX volatility index declined another -18.68%.
Flip-flopping from top to bottom throughout the week, the Energy sector (XLE +3.10%) is back on top Friday. Technology (XLK +2.20%) followed closely behind after losing ground through most of the week. All sectors gained for the day. Utilities (XLU +0.49%) and Consumer Staples (XLP +0.44%) were at the bottom of the list as investors focused on riskier assets.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) declined -0.46%.
The US 30y, 10y, and 2y Treasury yields all declined for a second day. The yield curve is flattening again after steepening earlier in the week.
Both High Yield Corporate Bond (HYG) prices and Investment Grade Corporate Bond (LQD) prices advanced for another day.
Silver (SILVER) and Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) advanced.
Copper (COPPER1!) declined while Aluminum (ALI1!) advanced just slightly.
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Investor Sentiment
The put/call ratio dropped to 0.658. 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 still in the fear zone.
The NAAIM money manager exposure index is at 46.86 after moving above 100 two weeks ago.
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Market Leaders
All four big mega-caps advanced. Apple (AAPL) and Microsoft (MSFT) both closed back above their 50d MA, gaining +1.98% and +2.11%, respectively. Alphabet (GOOGL) moved back above its 21d EMA, advancing +2.21%. Amazon (AMZN) closed just below the 50d MA, gaining +1.94%.
Topping the mega-cap list are Nvidia (NVDA), ASML Holding (ASML), Facebook (FB), and Taiwan Semiconductor (TSM).
The top four growth stocks all gained more than 10%. DoorDash (DASH) rose gained 20%. Chinese fintech firms UP Fintech (TIGR) and FUTU Holdings (FUTU) topped the list, with GrowGeneration (GRWG) and Snowflake (SNOW) rounding out the top five. Only one stock in the daily update list declined, Ehang Holdings (EH) lost -1.45. Hyre (HYRE) is not on the daily list but might need to be added, gaining 44.57% on a massive earnings beat.
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Looking ahead
The week will open with Manufacturing data on Monday morning. Several FOMC members will speak after the market opens.
Tencent Music (TME), Niu Tech (NIU), Desktop Metal (DM), Fisker (FSR), Riot Blockchain (RIOT) will report earnings on Monday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The index made a move back toward the 50d moving average line today but couldn't quite make it that high on the lower volume.
If the one-day trend-line continues on Monday, it points to a +1.43% gain that takes the index back above both the 21d EMA and the 50d MA.
The five-day trend line leads to a -2.13% decline.
The trend-line from the 4/2 high shows a -2.88% decline on Monday.
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Wrap-up
It's been a hectic week, and it feels good to have a few days over the weekend to take a deep breath. The gains on Thursday and Friday are a relief to see, but there is still much to prove. Going into next week, I want to see another move up, but on higher volume and continued breath across equities.
The lowered retail sales and consumer expectations may be just the thing investors needed to look away from inflation for a while. We'll take a closer look at this in the Week in Review.
Have a great weekend!
Stay healthy and trade safe!
