Summary: Investors survived another Fed meeting with stocks gaining after the Fed left monetary policy untouched but confirmed the economy is still on track and inflation appears transitory. Small caps and growth stocks soared while only a few of the SPDR sectors registered gains.
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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Wednesday, July 28, 2021
Facts: +0.70%, Volume lower, Closing range: 76%, Body: 31%
Good: Rally in morning and afternoon to close with gain, A/D ratio above 1.0
Bad: Lower high, lower volume, dip at end of day
Highs/Lows: Lower high, higher low
Candle: Inside day, slightly longer lower wick
Advanced/Decline: 2.0, two advancing stocks for every declining stock
Indexes: SPX (-0.02%), DJI (-0.36%), RUT (+1.51%), VIX (-5.43%)
Sectors: Energy (XLE +0.91%) and Communications (XLC +0.78%) at the top. Utilities (XLU -0.76%) and Consumer Staples (XLP -0.88%) at the bottom.
Expectation: Sideways
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Market Overview
Investors survived another Fed meeting with stocks gaining after the Fed left monetary policy untouched but confirmed the economy is still on track and inflation appears transitory. Small caps and growth stocks soared while only a few of the SPDR sectors registered gains.
The Nasdaq dipped at open but recovered quickly and ended the day with a +0.70% gain. Volume was lower for the day, but the 76% closing range and 31% green body are positive outcomes on an Inside day (lower high, higher low). The lower wick is slightly longer than the upper wick. There were two advancing stocks for every declining stock.
The Russell 2000 (RUT) led the major indexes with a +1.51% gain but still closing below its 21d exponential moving average line. The S&P 500 (SPX) declined -0.02% and registered a spinning top candle, signaling indecision. The Dow Jones Industrial Average (DJI) fell -0.36% with a bearish outside day.
The VIX volatility index declined -5.43%.
Only four sectors finished the day with gains. Energy (XLE +0.91%) and Communications (XLC +0.78%) were the top sectors. Alphabet (GOOGL) boosted the Communications sector after solid earnings results. Utilities (XLU -0.76%) and Consumer Staples (XLP -0.88%) were at the bottom of the list.
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Economic Indicators
Crude Oil Inventories showed much higher demand than expected. The two-day Fed meeting ended without much policy change from the group. The Fed emphasized that the economy is on track for recovery and that inflation still appears to be from transitory factors.
The US Dollar (DXY) declined -0.20%. The index fell after the market open, recovered some losses, and declined sharply after the Fed statements.
The US 30y, 10y, and 2y Treasury yields all declined.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices both advanced.
Silver (SILVER) and Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) prices advanced.
Timber (Wood) declined.
Copper (COPPER1!) declined, and Aluminum (ALI1!) advanced.
Bitcoin (BTCUSD) advanced +1.61%. Ethereum (ETHUSD) remained flat after giving back some intraday gains. (Time of writing)
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Investor Sentiment
The put/call ratio declined to 0.620. 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. Below that level is overly bullish.
The CNN Fear & Greed index is nearly in the Extreme Fear area.
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Market Leaders
Three of the four largest mega-caps released earnings yesterday. The reports were all positive, but reactions mixed. Alphabet (GOOGL) registered a +3.18% gain for the day after gapping up at the open. Microsoft (MSFT) had an initial negative reaction in after-hours trading, then opened up with positive gains but turned in a -0.11% decline by the end of the day. Apple (AAPL) gapped down at the open. After a volatile session, the company closed the day with a -1.21% gain. Amazon (AMZN), which will report earnings on Thursday, had an +0.11% gain today.
Alibaba (BABA) topped the mega-cap list as the Chinese stocks rebounded from recent losses. Also at the top of the list are Pfizer (PFE), Alphabet, and Novo Nordisk (NVO). MasterCard (MA), Visa (V), Procter & Gamble (PG), and United Health (UNH) were at the bottom of the list.
Chinese stocks topped the gains in the daily update growth list. UP Fintech (TIGR) and FUTU Holdings (FUTU) gained over 10%, while Ehang Holdings (EH) and JD.com (JD) rose +9.7% and +8.5%. There was only one losing stock, D.R. Horton (DHI), on my list. The other stocks at the bottom of the list were Tesla (TSLA), ServiceNow (NOW), and RH (RH), but all had small gains.
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Looking ahead
GDP data for Q2 will publish on Thursday. Initial Jobless Claims and Pending Home Sales will also get an update.
Amazon.com (AMZN), Mastercard (MA), AstraZeneca (AZN), Twilio (TWLO), Baidu (BIDU), Pinterest (PINS), Fortinet (FTNT), DexCom (DXCM), Yum! Brands (YUM), and Expedia (EXPE) are a few earnings reports that stand out among another huge list.
There are many earnings reports this week. Keep an eye out for reports from companies in your portfolio.
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Trends, Support, and Resistance
The Nasdaq traded inside yesterday's range which could be a continuation pattern in a downtrend from Monday's high.
The trend-line from the 7/19 low ends with a +1.10% gain for tomorrow.
The one-day trend line leads to a +0.48% gain.
The five-day trend line points to a +0.48% loss.
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Wrap-up
At market open, we did get a continuation from yesterday's afternoon bounce off the 14,500 area. The rally softened late in the morning as investors anticipated statements from the Fed. Once that was clear, we got another short rally before a dip at the close.
Earnings reports continue to get mixed reactions from investors in today's after-hours trading. Most earnings reports are smashing the comparable year-over-year numbers. However, investors now have to consider what the next two quarters will look like since the opposite might occur after last year's tremendous growth in the second half.
Given the inside day and lower volume, the expectation for tomorrow is Sideways.
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=-
Wednesday, July 28, 2021
Facts: +0.70%, Volume lower, Closing range: 76%, Body: 31%
Good: Rally in morning and afternoon to close with gain, A/D ratio above 1.0
Bad: Lower high, lower volume, dip at end of day
Highs/Lows: Lower high, higher low
Candle: Inside day, slightly longer lower wick
Advanced/Decline: 2.0, two advancing stocks for every declining stock
Indexes: SPX (-0.02%), DJI (-0.36%), RUT (+1.51%), VIX (-5.43%)
Sectors: Energy (XLE +0.91%) and Communications (XLC +0.78%) at the top. Utilities (XLU -0.76%) and Consumer Staples (XLP -0.88%) at the bottom.
Expectation: Sideways
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Investors survived another Fed meeting with stocks gaining after the Fed left monetary policy untouched but confirmed the economy is still on track and inflation appears transitory. Small caps and growth stocks soared while only a few of the SPDR sectors registered gains.
The Nasdaq dipped at open but recovered quickly and ended the day with a +0.70% gain. Volume was lower for the day, but the 76% closing range and 31% green body are positive outcomes on an Inside day (lower high, higher low). The lower wick is slightly longer than the upper wick. There were two advancing stocks for every declining stock.
The Russell 2000 (RUT) led the major indexes with a +1.51% gain but still closing below its 21d exponential moving average line. The S&P 500 (SPX) declined -0.02% and registered a spinning top candle, signaling indecision. The Dow Jones Industrial Average (DJI) fell -0.36% with a bearish outside day.
The VIX volatility index declined -5.43%.
Only four sectors finished the day with gains. Energy (XLE +0.91%) and Communications (XLC +0.78%) were the top sectors. Alphabet (GOOGL) boosted the Communications sector after solid earnings results. Utilities (XLU -0.76%) and Consumer Staples (XLP -0.88%) were at the bottom of the list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
Crude Oil Inventories showed much higher demand than expected. The two-day Fed meeting ended without much policy change from the group. The Fed emphasized that the economy is on track for recovery and that inflation still appears to be from transitory factors.
The US Dollar (DXY) declined -0.20%. The index fell after the market open, recovered some losses, and declined sharply after the Fed statements.
The US 30y, 10y, and 2y Treasury yields all declined.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices both advanced.
Silver (SILVER) and Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) prices advanced.
Timber (Wood) declined.
Copper (COPPER1!) declined, and Aluminum (ALI1!) advanced.
Bitcoin (BTCUSD) advanced +1.61%. Ethereum (ETHUSD) remained flat after giving back some intraday gains. (Time of writing)
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio declined to 0.620. 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. Below that level is overly bullish.
The CNN Fear & Greed index is nearly in the Extreme Fear area.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Three of the four largest mega-caps released earnings yesterday. The reports were all positive, but reactions mixed. Alphabet (GOOGL) registered a +3.18% gain for the day after gapping up at the open. Microsoft (MSFT) had an initial negative reaction in after-hours trading, then opened up with positive gains but turned in a -0.11% decline by the end of the day. Apple (AAPL) gapped down at the open. After a volatile session, the company closed the day with a -1.21% gain. Amazon (AMZN), which will report earnings on Thursday, had an +0.11% gain today.
Alibaba (BABA) topped the mega-cap list as the Chinese stocks rebounded from recent losses. Also at the top of the list are Pfizer (PFE), Alphabet, and Novo Nordisk (NVO). MasterCard (MA), Visa (V), Procter & Gamble (PG), and United Health (UNH) were at the bottom of the list.
Chinese stocks topped the gains in the daily update growth list. UP Fintech (TIGR) and FUTU Holdings (FUTU) gained over 10%, while Ehang Holdings (EH) and JD.com (JD) rose +9.7% and +8.5%. There was only one losing stock, D.R. Horton (DHI), on my list. The other stocks at the bottom of the list were Tesla (TSLA), ServiceNow (NOW), and RH (RH), but all had small gains.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
GDP data for Q2 will publish on Thursday. Initial Jobless Claims and Pending Home Sales will also get an update.
Amazon.com (AMZN), Mastercard (MA), AstraZeneca (AZN), Twilio (TWLO), Baidu (BIDU), Pinterest (PINS), Fortinet (FTNT), DexCom (DXCM), Yum! Brands (YUM), and Expedia (EXPE) are a few earnings reports that stand out among another huge list.
There are many earnings reports this week. Keep an eye out for reports from companies in your portfolio.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq traded inside yesterday's range which could be a continuation pattern in a downtrend from Monday's high.
The trend-line from the 7/19 low ends with a +1.10% gain for tomorrow.
The one-day trend line leads to a +0.48% gain.
The five-day trend line points to a +0.48% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
At market open, we did get a continuation from yesterday's afternoon bounce off the 14,500 area. The rally softened late in the morning as investors anticipated statements from the Fed. Once that was clear, we got another short rally before a dip at the close.
Earnings reports continue to get mixed reactions from investors in today's after-hours trading. Most earnings reports are smashing the comparable year-over-year numbers. However, investors now have to consider what the next two quarters will look like since the opposite might occur after last year's tremendous growth in the second half.
Given the inside day and lower volume, the expectation for tomorrow is Sideways.
Stay healthy and trade safe!
