Summary: Only two sectors advanced today in a small gain for the Nasdaq while other major indexes took a step backward. Employment data disappointed investors already worried about the impact of the resurgence in the COVID pandemic, while the Fed's Clarida signaled possibly earlier tapering and interest rate hikes.
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, August 4, 2021
Facts: +0.13%, Volume higher, Closing range: 59%, Body: 43%
Good: Higher high/low, good closing range
Bad: Dip after intra-day high, low a/d ratio
Highs/Lows: Higher high, higher low
Candle: Over half green body, but in the lower part of the candle, longer upper wick
Advanced/Decline: 0.54, nearly two declining stocks for every advancing stock
Indexes: SPX (-0.46%), DJI (-0.92%), RUT (-1.23%), VIX (-0.28%)
Sectors: Communications (XLC +0.28%) and Technology (XLK +0.20%) at the top. Industrials (XLI -1.36%) and Energy (XLE -1.36%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
Only two sectors advanced today in a small gain for the Nasdaq while other major indexes took a step backward. Employment data disappointed investors already worried about the impact of the resurgence in the COVID pandemic, while the Fed's Clarida signaled possibly earlier tapering and interest rate hikes.
The Nasdaq ended the day with a +0.13%, but nearly two declining stocks for every advancing stock. The green body covers over half the candle, sitting near the bottom under a longer upper wick. The closing range of 59% is not bad but comes after a pullback from the intraday high on a worsening outlook. Volume was higher than the previous day.
The S&P 500 (SPX) declined -0.46% after a record close the previous day. The Dow Jones Industrial Average (DJI) lost -0.92%. The Russell 2000 (RUT) fell -1.23%.
The VIX volatility index declined -0.28%.
Communications (XLC +0.28%) and Technology (XLK +0.20%) were the only two sectors ending the day with gains. Industrials (XLI -1.36%) and Energy (XLE -1.36%) were the worst-performing sectors.
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Economic Indicators
ADP Nonfarm Employment data for July grew only half the amount expected, raising concerns with investors. However, Services and Non-Manufacturing PMI data came in higher than expected. Crude Oil Inventories showed less than expected demand for oil.
The US Dollar (DXY) gained +0.23%.
The US 30y Treasury yield declined while the 10y and 2y Treasury yields advanced for the day.
High Yield Corporate Bond (HYG) prices declined, and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) declined, and Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) prices declined.
Timber (Wood) declined.
Copper (COPPER1!) declined. Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) advanced +4.56%. Ethereum (ETHUSD) advanced +9.34%. (Time of writing)
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Investor Sentiment
The put/call ratio rose to 0.635. 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 moved back toward Extreme Fear.
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Market Leaders
All four largest mega-caps declined for the day. Alphabet (GOOGL) lost -0.37%. Amazon (AMZN) declined -0.34%. Apple (AAPL) fell -0.28%. Microsoft (MSFT) lost -0.21%. Only Amazon is trading below key moving average lines.
Novo Nordisk (NVO), Ely Lilly (LLY), Nvidia (NVDA), and Facebook (FB) were the top mega-cap gainers for the day, all advancing over 2%. Exxon Mobil (XOM), Toyota Motor (TM ), Pepsico (PEP), and Coca-Cola (KO) were at the bottom of the mega-cap list.
Robin Hood (HOOD) became the latest meme stock with investors pouring into the recent IPO. The stock gained 50% today. Paycom (PAYC) gained over 10%. Zoom video (ZM) and Etsy (ETSY) fill out the top four in the daily update growth list, with over 6% gains each. Most stocks in the list gained today. The biggest losers were Ehang Holding (EH), Sumo Digital (SUMO), Fastly (FSLY), and Snowflake (SNOW).
Roku (ROKU), Lemonade (LMND), Etsy (ETSY), and Fastly (FSLY) all disappointed investors in earnings calls and are trading significantly lower in after hours. Those earnings reports are a sour note in a relatively positive earnings season and may impact sentiment tomorrow.
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Looking ahead
Initial Jobless Claims gets an update on Thursday. Let's hope the data reverses today's reaction from July's payroll data. We will also get new Exports, Imports, and Trade Balance data.
Novo Nordisk (NVO), Moderna (MRNS), Square (SQ), MercadoLibre (MELI), Cloudflare (NET), DataDog (DDOG), Zillow (Z), Penn National Gaming (PENN), Zynga (ZNGA), Virgin Galactic (SPCE), and Redfin (RDFN) report earnings. Many of these and others not listed had tremendous growth over the past year, and investors will be watching the year-over-year comparisons closely to see if growth continues at the same or similar pace.
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 made a small gain today but did not test any critical support or resistance levels.
The trend-line from the 7/19 low ends with a +0.59% advance for tomorrow.
The one-day trend line leads to a +0.38% gain.
The five-day trend line points to a -0.35% loss.
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Wrap-up
Everything was looking good for growth stocks as we continue through an earnings season that is largely positive. However, Investor sentiment may be changing quite a bit after today's economic data and several disappointing earnings reports among growth favorites.
Based on the longer upper wick and low advance/decline ratio signaling a weak gain among heavy selling, the expectation is for sideways or lower tomorrow.
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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Wednesday, August 4, 2021
Facts: +0.13%, Volume higher, Closing range: 59%, Body: 43%
Good: Higher high/low, good closing range
Bad: Dip after intra-day high, low a/d ratio
Highs/Lows: Higher high, higher low
Candle: Over half green body, but in the lower part of the candle, longer upper wick
Advanced/Decline: 0.54, nearly two declining stocks for every advancing stock
Indexes: SPX (-0.46%), DJI (-0.92%), RUT (-1.23%), VIX (-0.28%)
Sectors: Communications (XLC +0.28%) and Technology (XLK +0.20%) at the top. Industrials (XLI -1.36%) and Energy (XLE -1.36%) at the bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Only two sectors advanced today in a small gain for the Nasdaq while other major indexes took a step backward. Employment data disappointed investors already worried about the impact of the resurgence in the COVID pandemic, while the Fed's Clarida signaled possibly earlier tapering and interest rate hikes.
The Nasdaq ended the day with a +0.13%, but nearly two declining stocks for every advancing stock. The green body covers over half the candle, sitting near the bottom under a longer upper wick. The closing range of 59% is not bad but comes after a pullback from the intraday high on a worsening outlook. Volume was higher than the previous day.
The S&P 500 (SPX) declined -0.46% after a record close the previous day. The Dow Jones Industrial Average (DJI) lost -0.92%. The Russell 2000 (RUT) fell -1.23%.
The VIX volatility index declined -0.28%.
Communications (XLC +0.28%) and Technology (XLK +0.20%) were the only two sectors ending the day with gains. Industrials (XLI -1.36%) and Energy (XLE -1.36%) were the worst-performing sectors.
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Economic Indicators
ADP Nonfarm Employment data for July grew only half the amount expected, raising concerns with investors. However, Services and Non-Manufacturing PMI data came in higher than expected. Crude Oil Inventories showed less than expected demand for oil.
The US Dollar (DXY) gained +0.23%.
The US 30y Treasury yield declined while the 10y and 2y Treasury yields advanced for the day.
High Yield Corporate Bond (HYG) prices declined, and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) declined, and Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) prices declined.
Timber (Wood) declined.
Copper (COPPER1!) declined. Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) advanced +4.56%. Ethereum (ETHUSD) advanced +9.34%. (Time of writing)
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Investor Sentiment
The put/call ratio rose to 0.635. 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 moved back toward Extreme Fear.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four largest mega-caps declined for the day. Alphabet (GOOGL) lost -0.37%. Amazon (AMZN) declined -0.34%. Apple (AAPL) fell -0.28%. Microsoft (MSFT) lost -0.21%. Only Amazon is trading below key moving average lines.
Novo Nordisk (NVO), Ely Lilly (LLY), Nvidia (NVDA), and Facebook (FB) were the top mega-cap gainers for the day, all advancing over 2%. Exxon Mobil (XOM), Toyota Motor (TM ), Pepsico (PEP), and Coca-Cola (KO) were at the bottom of the mega-cap list.
Robin Hood (HOOD) became the latest meme stock with investors pouring into the recent IPO. The stock gained 50% today. Paycom (PAYC) gained over 10%. Zoom video (ZM) and Etsy (ETSY) fill out the top four in the daily update growth list, with over 6% gains each. Most stocks in the list gained today. The biggest losers were Ehang Holding (EH), Sumo Digital (SUMO), Fastly (FSLY), and Snowflake (SNOW).
Roku (ROKU), Lemonade (LMND), Etsy (ETSY), and Fastly (FSLY) all disappointed investors in earnings calls and are trading significantly lower in after hours. Those earnings reports are a sour note in a relatively positive earnings season and may impact sentiment tomorrow.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Initial Jobless Claims gets an update on Thursday. Let's hope the data reverses today's reaction from July's payroll data. We will also get new Exports, Imports, and Trade Balance data.
Novo Nordisk (NVO), Moderna (MRNS), Square (SQ), MercadoLibre (MELI), Cloudflare (NET), DataDog (DDOG), Zillow (Z), Penn National Gaming (PENN), Zynga (ZNGA), Virgin Galactic (SPCE), and Redfin (RDFN) report earnings. Many of these and others not listed had tremendous growth over the past year, and investors will be watching the year-over-year comparisons closely to see if growth continues at the same or similar pace.
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 made a small gain today but did not test any critical support or resistance levels.
The trend-line from the 7/19 low ends with a +0.59% advance for tomorrow.
The one-day trend line leads to a +0.38% gain.
The five-day trend line points to a -0.35% loss.
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Wrap-up
Everything was looking good for growth stocks as we continue through an earnings season that is largely positive. However, Investor sentiment may be changing quite a bit after today's economic data and several disappointing earnings reports among growth favorites.
Based on the longer upper wick and low advance/decline ratio signaling a weak gain among heavy selling, the expectation is for sideways or lower tomorrow.
Stay healthy and trade safe!
