Summary: Mixed reactions to economic data moved investors into defensive mode on Thursday while they await more news on the labor market scheduled for Friday. Today's data gave a boost to the US Dollar, but stoked fears of the fed tapering off monetary policy earlier than expected. The defensive sectors were up for the day while growth sectors took a step back from recent 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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Thursday, June 3, 2021
Facts: -1.03%, Volume higher, Closing range: 47% (w/gap), Body: 30%
Good: Not much
Bad: Gap down at open, broke support at 13,700, close below major moving averages
Highs/Lows: Lower high, lower low
Candle: Long lower wick, red body in upper half of the candle
Advanced/Decline: 0.6, More than three declining stocks for every advancing stock
Indexes: SPX (-0.36%), DJI (-0.07%), RUT (-0.81%), VIX (+3.09%)
Sectors: Consumer Staples (XLP +0.62%) and Utilities (XLU +0.60%) were top. Technology (XLK -0.93%) and Consumer Discretionary (XLY -1.19%) were bottom.
Expectation: Sideways or Lower
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Market Overview
Mixed reactions to economic data moved investors into defensive mode on Thursday while they await more news on the labor market scheduled for Friday. Today's data gave a boost to the US Dollar , but stoked fears of the fed tapering off monetary policy earlier than expected. The defensive sectors were up for the day while growth sectors took a step back from recent gains.
The Nasdaq closed with a -1.03% decline on higher volume, marking a day of distribution for investors. The closing range of 47% is not terrible but the 30% red body shows the index could not fully recover from the sell-off after market open. The longer lower wick is representative of the failed attempt to rally back to above key moving average lines. There were more than three declining stocks for every two advancing stocks.
The Russell 2000 (RUT) declined -0.81% for the day. The S&P 500 (SPX) lost -0.36%. The Dow Jones Industrial Average (DJI) declined only -0.07%.
The VIX volatility index advanced +3.09%.
The defensive sectors of Consumer Staples (XLP +0.62%), Utilities (XLU +0.60%) and Health (XLV +0.30%) were top performing for the day, signaling investors nervousness over economic data. Technology (XLK -0.93%) and Consumer Discretionary (XLY -1.19%) were at the bottom of the sector list.
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Economic Indicators
The US Dollar (DXY) gained +0.65%.
The US 30y, 10y, and 2y Treasury yields all advanced.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined, due to the advance in the US Dollar.
Crude Oil (CRUDEOIL1!) declined slightly from its recent record high.
Timber (WOOD) declined.
Copper (COPPER1!) and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) advanced +4.34%. Ethereum (ETHUSD) advanced +5.49%.
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Investor Sentiment
The put/call ratio rose to 0.563. 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 slightly on the fear side, but close to neutral.
The NAAIM investment manager exposure index rose to 82.27.
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Market Leaders
All four largest mega-caps declined for the day. Alphabet (GOOGL) lost -0.97%, testing its 21d EMA, but remaining above the line. The other three are trading below the 21d EMA and 50d MA. Apple (AAPL) lost -1.22%. Microsoft declined -0.64%. Amazon (AMZN) dropped -1.45%.
Procter & Gamble (PG), Toyota Motor (TM ), Nvidia (NVDA), and Oracle (ORCL) were the top mega-caps for the day, all gaining more than 1% despite the drop in the overall market. Tesla (TSLA), Intel (INTC), Netflix (NFLX), and Taiwan Semiconductor (TSM) were at the bottom of the list.
Most of the daily update growth stocks declined for the day. UP Fintech (TIGR), Digital Turbine (APPS), Moderna (MRNA), and FUTU Holdings (FUTU) topped the list with advances. At the bottom of the list were Etsy (ETSY), Ehang Holdings (EH), MongoDb (MDB) , and DoorDash (DASH).
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Looking ahead
Fed Chair Jerome Powell is scheduled to speak early in the morning on Friday. The anticipated employment data will be released before markets open and should have a big impact on investor sentiment. After the market opens, Factory Orders data will be released.
There are no earnings reports relevant for the daily update on Friday.
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Trends, Support, and Resistance
The index dipped below the 13,600 level, but closed just above it and within the 13,600 - 13,700 support area. It also closed below the key 21d EMA and 50d MA lines.
The trend-line from the low on 5/13 points to a +1.95% gain on Friday.
The one-day trend line points to a +0.31% advance.
Following the five-day trend-line would result in a +0.09% sideways move.
Following the trend-line from the 4/2 high would result in a -0.41% decline for tomorrow.
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Wrap-up
After spending seven days without much direction in the Nasdaq, Thursday brought a character change. Maybe not the one we are hoping for, but it at least helps set some expectations leading into Friday. From the chart, I'll expect a sideways or lower move for Friday.
Investors will be watching remarks from Jerome Powell closely and will certainly react to the labor market data released before the market opens. Great news might be met with more fear over a fed reaction to the recovering economy, and have an opposite impact for growth stocks. So Powell's remarks will be even more important, and may be why they are scheduled for Friday morning.
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.
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Thursday, June 3, 2021
Facts: -1.03%, Volume higher, Closing range: 47% (w/gap), Body: 30%
Good: Not much
Bad: Gap down at open, broke support at 13,700, close below major moving averages
Highs/Lows: Lower high, lower low
Candle: Long lower wick, red body in upper half of the candle
Advanced/Decline: 0.6, More than three declining stocks for every advancing stock
Indexes: SPX (-0.36%), DJI (-0.07%), RUT (-0.81%), VIX (+3.09%)
Sectors: Consumer Staples (XLP +0.62%) and Utilities (XLU +0.60%) were top. Technology (XLK -0.93%) and Consumer Discretionary (XLY -1.19%) were bottom.
Expectation: Sideways or Lower
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Market Overview
Mixed reactions to economic data moved investors into defensive mode on Thursday while they await more news on the labor market scheduled for Friday. Today's data gave a boost to the US Dollar , but stoked fears of the fed tapering off monetary policy earlier than expected. The defensive sectors were up for the day while growth sectors took a step back from recent gains.
The Nasdaq closed with a -1.03% decline on higher volume, marking a day of distribution for investors. The closing range of 47% is not terrible but the 30% red body shows the index could not fully recover from the sell-off after market open. The longer lower wick is representative of the failed attempt to rally back to above key moving average lines. There were more than three declining stocks for every two advancing stocks.
The Russell 2000 (RUT) declined -0.81% for the day. The S&P 500 (SPX) lost -0.36%. The Dow Jones Industrial Average (DJI) declined only -0.07%.
The VIX volatility index advanced +3.09%.
The defensive sectors of Consumer Staples (XLP +0.62%), Utilities (XLU +0.60%) and Health (XLV +0.30%) were top performing for the day, signaling investors nervousness over economic data. Technology (XLK -0.93%) and Consumer Discretionary (XLY -1.19%) were at the bottom of the sector list.
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Economic Indicators
The US Dollar (DXY) gained +0.65%.
The US 30y, 10y, and 2y Treasury yields all advanced.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined, due to the advance in the US Dollar.
Crude Oil (CRUDEOIL1!) declined slightly from its recent record high.
Timber (WOOD) declined.
Copper (COPPER1!) and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) advanced +4.34%. Ethereum (ETHUSD) advanced +5.49%.
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Investor Sentiment
The put/call ratio rose to 0.563. 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 slightly on the fear side, but close to neutral.
The NAAIM investment manager exposure index rose to 82.27.
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Market Leaders
All four largest mega-caps declined for the day. Alphabet (GOOGL) lost -0.97%, testing its 21d EMA, but remaining above the line. The other three are trading below the 21d EMA and 50d MA. Apple (AAPL) lost -1.22%. Microsoft declined -0.64%. Amazon (AMZN) dropped -1.45%.
Procter & Gamble (PG), Toyota Motor (TM ), Nvidia (NVDA), and Oracle (ORCL) were the top mega-caps for the day, all gaining more than 1% despite the drop in the overall market. Tesla (TSLA), Intel (INTC), Netflix (NFLX), and Taiwan Semiconductor (TSM) were at the bottom of the list.
Most of the daily update growth stocks declined for the day. UP Fintech (TIGR), Digital Turbine (APPS), Moderna (MRNA), and FUTU Holdings (FUTU) topped the list with advances. At the bottom of the list were Etsy (ETSY), Ehang Holdings (EH), MongoDb (MDB) , and DoorDash (DASH).
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Looking ahead
Fed Chair Jerome Powell is scheduled to speak early in the morning on Friday. The anticipated employment data will be released before markets open and should have a big impact on investor sentiment. After the market opens, Factory Orders data will be released.
There are no earnings reports relevant for the daily update on Friday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The index dipped below the 13,600 level, but closed just above it and within the 13,600 - 13,700 support area. It also closed below the key 21d EMA and 50d MA lines.
The trend-line from the low on 5/13 points to a +1.95% gain on Friday.
The one-day trend line points to a +0.31% advance.
Following the five-day trend-line would result in a +0.09% sideways move.
Following the trend-line from the 4/2 high would result in a -0.41% decline for tomorrow.
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Wrap-up
After spending seven days without much direction in the Nasdaq, Thursday brought a character change. Maybe not the one we are hoping for, but it at least helps set some expectations leading into Friday. From the chart, I'll expect a sideways or lower move for Friday.
Investors will be watching remarks from Jerome Powell closely and will certainly react to the labor market data released before the market opens. Great news might be met with more fear over a fed reaction to the recovering economy, and have an opposite impact for growth stocks. So Powell's remarks will be even more important, and may be why they are scheduled for Friday morning.
Stay healthy and trade safe!
