Trend lines drawn from the 3/5 low (13d), 3/17 (5d) and today 3/23 (1d).
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, March 23, 2021
Facts: +1.12%, Volume higher, Closing range: 12%, Body: -76%
Good: Nothing
Bad: Back below the 21d EMA with a thick red candle
Highs/Lows: Lower high, lower low
Candle: Mostly red body with tiny upper and lower wicks
Advance/Decline: Ten declining stocks for every advancing stock
Indexes: SPX (-0.76%), DJI (-0.94%), RUT (-3.58%), VIX (+7.54%)
Sectors: Utilities (XLU +1.52%) and Consumer Staples (+0.41%) were top. Industrials (XLI -1.75%) and Materials (XLB -2.08%) were bottom.
Expectation: Lower
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Market Overview
The character of the market continues to swing in opposite directions. Expectation was for Sideways or Higher for today, and we got lower. If we were keeping score, you'd notice the expectations I'm setting on a daily basis are broken very consistently over the past few weeks. But it's a good time to remind the reader that the expectations are not predictions, but they are to set and expectation, get our attention when the expectation is broken, and learn what might have changed in the market. Here we go.
The Nasdaq closed with a -1.12% decline on higher volume. The candle has small upper and lower wicks, but is mostly red body. The closing range of 12% shows the day very much went to the bears. Few bulls came in to buy back the low prices. The selling was broad, across most sectors, segments and impacted all major indexes. There were 10 declining stocks for every advancing stock.
The S&P 500 (SPX) declined -0.76% and the Dow Jones Industrial (DJI) declined -0.94%. The Russell 2000 (RUT) took the worst beating with a -3.58% loss for the day.
The VIX volatility index rose +7.52%.
Utilities (XLU +1.52%) and Consumer Staples (XLP +0.42%) were the top sectors for the day. Real Estate (XLRE +0.31%) was the only other sector with gains. These three sectors at the top mean investor nervousness. If investors can't exit equities, then they'll move to these defensive plays. The four cyclicals were at the bottom of the list with Industrials (XLI -1.75%) and Materials (XLB -2.08%) being the worst two performing sectors of the day.
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Economic Indicators
The US Dollar (DXY) rose +0.65%.
The US 30y treasury bond and 10y and 2y treasury note yields all declined for another day. The spread between long term and short term narrowed.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both advanced for the day. That's an interesting detail given the sell-off in equities.
Silver (SILVER) and Gold (GOLD) both declined for another day. Crude Oil (CRUDEOIL1!) resumed a sharp decline from highs earlier this month. Timber (WOOD) declined. Copper (COPPER1!) and Aluminum (ALI1!) also had sharp declines
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Investor Sentiment
The put/call ratio is at 0.659. 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 near neutral, but moving toward fear.
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Market Leaders
Of the four largest mega-caps, only Apple (AAPL) declined for the day. However, the other three all closed well below their intraday highs as the market dipped in the second half of the session. Microsoft (MSFT) gained +0.67% and is above its 21d EMA and 50d MA. Amazon (AMZN) gained +0.86% but hit resistance at its 50d MA and closed below the line. Alphabet (GOOGL) briefly traded above its 21d EMA, but ended just below the line with a +0.52% gain.
Some mega-caps did much better for the day. Netflix (NFLX) gained +2.29% today. Proctor & Gamble (P&G), Adobe (ADBE) and Walmart (WMT) all closed the day with greater than 1% gains. The mega-cap list has about one advancing for every declining stock.
Growth stocks had much smaller ratio of advancing vs declining. Peloton (PTON) and Zoom (ZM) were top advancers with almost 3.5% gains each.
So we have Netflix, Peloton and Zoom as top advancing stocks of the day. It's morning where I live and I haven't checked the news yet (I usually check before the wrap-up), but I expect to find news about a resurgence of the pandemic. The market is obvious sometimes.
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Looking ahead
Several economic news will be released on Wednesday. Durable Goods Orders for February will give a heads-up on manufacturing activity. That will be measured against Manufacturing and Services purchasing data for March which can indicate some direction on increasing or decreasing activity in these sectors. Crude Oil Inventory data will also be released.
Fed Chairman Jerome Powell is scheduled to continue testimony before congress on Wednesday. His statements are always watched closely for possible sentiment changes.
There will be a 5y treasury note auction tomorrow which will be watched closely.
Tencent (TCEHY), General Mills (GIS), RH (RH), KB Home (KBH), GrowGeneration (GRWG), and Guess (GES) are all reporting earnings on Wednesday.
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Trends, Support and Resistance
The index is back below the 21d EMA.
The trend line from the 3/5 bottom points to a +2.27% gain for tomorrow, which is back above the 21d EMA and 50d MA, but under the 13,600 resistance area.
The five-day trend line points to a 0.66% gain, right at the 21d EMA.
The one-day trend line points to a -0.61% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Even as the end of the pandemic nears, it doesn't seem we can quite get past it. Europe lockdowns were extended at the same time the US questioned data from the AstraZeneca vaccine trial. Global investors reacted to the extended pandemic pressures by buying up US dollar and US treasuries, dropping yields that have been gaining in recent weeks.
At the same time, Treasury Secretary Janet Yellen spoked to the House Financial Services Committee, expressing concerns for the economy but defending future tax increases. That put pressure on US equities, as investors looked to move to safe haven assets and defensive equity plays. Defensive plays moved to the top of the sector list while cyclicals moved to the bottom.
The top pandemic stocks of Peloton (PTON), Zoom (ZM) and Netflix (NFLX) all popped again. The recovery stocks, including travel, leisure, airlines all suffered losses for the day.
Stay healthy and trade safe!
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, March 23, 2021
Facts: +1.12%, Volume higher, Closing range: 12%, Body: -76%
Good: Nothing
Bad: Back below the 21d EMA with a thick red candle
Highs/Lows: Lower high, lower low
Candle: Mostly red body with tiny upper and lower wicks
Advance/Decline: Ten declining stocks for every advancing stock
Indexes: SPX (-0.76%), DJI (-0.94%), RUT (-3.58%), VIX (+7.54%)
Sectors: Utilities (XLU +1.52%) and Consumer Staples (+0.41%) were top. Industrials (XLI -1.75%) and Materials (XLB -2.08%) were bottom.
Expectation: Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The character of the market continues to swing in opposite directions. Expectation was for Sideways or Higher for today, and we got lower. If we were keeping score, you'd notice the expectations I'm setting on a daily basis are broken very consistently over the past few weeks. But it's a good time to remind the reader that the expectations are not predictions, but they are to set and expectation, get our attention when the expectation is broken, and learn what might have changed in the market. Here we go.
The Nasdaq closed with a -1.12% decline on higher volume. The candle has small upper and lower wicks, but is mostly red body. The closing range of 12% shows the day very much went to the bears. Few bulls came in to buy back the low prices. The selling was broad, across most sectors, segments and impacted all major indexes. There were 10 declining stocks for every advancing stock.
The S&P 500 (SPX) declined -0.76% and the Dow Jones Industrial (DJI) declined -0.94%. The Russell 2000 (RUT) took the worst beating with a -3.58% loss for the day.
The VIX volatility index rose +7.52%.
Utilities (XLU +1.52%) and Consumer Staples (XLP +0.42%) were the top sectors for the day. Real Estate (XLRE +0.31%) was the only other sector with gains. These three sectors at the top mean investor nervousness. If investors can't exit equities, then they'll move to these defensive plays. The four cyclicals were at the bottom of the list with Industrials (XLI -1.75%) and Materials (XLB -2.08%) being the worst two performing sectors of the day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) rose +0.65%.
The US 30y treasury bond and 10y and 2y treasury note yields all declined for another day. The spread between long term and short term narrowed.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both advanced for the day. That's an interesting detail given the sell-off in equities.
Silver (SILVER) and Gold (GOLD) both declined for another day. Crude Oil (CRUDEOIL1!) resumed a sharp decline from highs earlier this month. Timber (WOOD) declined. Copper (COPPER1!) and Aluminum (ALI1!) also had sharp declines
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio is at 0.659. 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 near neutral, but moving toward fear.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Of the four largest mega-caps, only Apple (AAPL) declined for the day. However, the other three all closed well below their intraday highs as the market dipped in the second half of the session. Microsoft (MSFT) gained +0.67% and is above its 21d EMA and 50d MA. Amazon (AMZN) gained +0.86% but hit resistance at its 50d MA and closed below the line. Alphabet (GOOGL) briefly traded above its 21d EMA, but ended just below the line with a +0.52% gain.
Some mega-caps did much better for the day. Netflix (NFLX) gained +2.29% today. Proctor & Gamble (P&G), Adobe (ADBE) and Walmart (WMT) all closed the day with greater than 1% gains. The mega-cap list has about one advancing for every declining stock.
Growth stocks had much smaller ratio of advancing vs declining. Peloton (PTON) and Zoom (ZM) were top advancers with almost 3.5% gains each.
So we have Netflix, Peloton and Zoom as top advancing stocks of the day. It's morning where I live and I haven't checked the news yet (I usually check before the wrap-up), but I expect to find news about a resurgence of the pandemic. The market is obvious sometimes.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Several economic news will be released on Wednesday. Durable Goods Orders for February will give a heads-up on manufacturing activity. That will be measured against Manufacturing and Services purchasing data for March which can indicate some direction on increasing or decreasing activity in these sectors. Crude Oil Inventory data will also be released.
Fed Chairman Jerome Powell is scheduled to continue testimony before congress on Wednesday. His statements are always watched closely for possible sentiment changes.
There will be a 5y treasury note auction tomorrow which will be watched closely.
Tencent (TCEHY), General Mills (GIS), RH (RH), KB Home (KBH), GrowGeneration (GRWG), and Guess (GES) are all reporting earnings on Wednesday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index is back below the 21d EMA.
The trend line from the 3/5 bottom points to a +2.27% gain for tomorrow, which is back above the 21d EMA and 50d MA, but under the 13,600 resistance area.
The five-day trend line points to a 0.66% gain, right at the 21d EMA.
The one-day trend line points to a -0.61% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Even as the end of the pandemic nears, it doesn't seem we can quite get past it. Europe lockdowns were extended at the same time the US questioned data from the AstraZeneca vaccine trial. Global investors reacted to the extended pandemic pressures by buying up US dollar and US treasuries, dropping yields that have been gaining in recent weeks.
At the same time, Treasury Secretary Janet Yellen spoked to the House Financial Services Committee, expressing concerns for the economy but defending future tax increases. That put pressure on US equities, as investors looked to move to safe haven assets and defensive equity plays. Defensive plays moved to the top of the sector list while cyclicals moved to the bottom.
The top pandemic stocks of Peloton (PTON), Zoom (ZM) and Netflix (NFLX) all popped again. The recovery stocks, including travel, leisure, airlines all suffered losses for the day.
Stay healthy and trade safe!
