Summary: It was not a great end to the month of April, with a failed rally in the morning that turned into lower lows in the afternoon. Investors are watching economic data closely, especially focused on measures of inflation driving expectations for an overheated economy.
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, April 30, 2021
Facts: -0.85%, Volume lower, Closing range: 15%, Body: 6%
Good: Not much
Bad: Failed rally in the morning, newer low in the afternoon
Highs/Lows: Lower high, lower low
Candle: Long upper wick and thin red body show the failed morning rally
Advance/Decline: Three declining stocks for every advancing stock
Indexes: SPX (-0.72%), DJI (-0.54%), RUT (-1.26%), VIX (+5.68%)
Sectors: Utilities (XLU +0.79%) and Real Estate (XLRE +0.66%) were top sectors. Technology (XLK -1.36%) and Energy (XLE -2.53%) were bottom.
Expectation: Lower
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Market Overview
It was not a great end to the month of April, with a failed rally in the morning that turned into lower lows in the afternoon. Investors are watching economic data closely, especially focused on measures of inflation driving expectations for an overheated economy.
The Nasdaq closed the last day of April with a -0.85% decline on lower volume. The 6% body under a long upper wick and 15% closing range are the result of a morning rally attempt that faded quickly and turned into lower lows at the end of the day. The index was able to close just above the intraday low. Three stocks declined for every advancing stock.
The S&P 500 (SPX) closed down -0.85% after a record close the previous day. The Dow Jones Industrial (DJI) closed down -0.54%. The Russell 2000 (RUT) was the worst performing index of the day with a -1.26% decline.
The VIX volatility index advanced +5.68%.
Utilities (XLU +0.79%) and Real Estate (XLRE +0.66%) were top sectors as investors fled for safety within equity markets. Only four sectors closed the day with gains. Technology (XLK -1.36%) and Energy (XLE -2.53%) were the worst performing sectors for the day.
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Economic Indicators
The US Dollar (DXY) had advanced +0.73% on very bullish consumer data.
The US 30y treasury bond yield remained flat while the 10y and 2y note yields declined.
High Yield Corporate Bond (HYG) prices declined while the Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) declined. Copper (COPPER1!) and Aluminum (ALI1!) declined.
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Investor Sentiment
The put/call ratio rose to 0.790. 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 moved back toward neutral.
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Market Leaders
All four big mega-caps declined for the day. Microsoft (MSFT) recovered from lows to close just -0.13% and a nice thick green candle on lower volume. It's trading below its 21d EMA. Apple (AAPL) declined -1.51% and closed just above the 21d EMA. Amazon (AMZN) declined -0.11% and Alphabet (GOOGL) declined -1.64%. Both are still trading well above key moving average lines and near all-time highs. Amazon could not hold onto aftermarket gains from a positive earnings report. A bit of a theme for the week.
Tesla (TSLA), Netflix (NFLX), Verizon (VZ) and Proctor & Gamble (PG) were the top mega-cap gainers for the day. At the bottom of the mega-cap list were Exxon Mobile (XOM), ASML Holdings (ASML), PayPal (PYPL) and Nvidia (NVDA).
Only a handful of the daily update growth stocks rose for the day. Digital Turbine (APPS), NIO (NIO), Moderna (MRNA) and Snowflake (SNOW) topped the list. At the bottom of the list was Twitter (TWTR) with a huge -15.16% declined after providing disappointing guidance on user growth. Roku (ROKU), Solar Edge (SEDG) and Etsy (ETSY) were also at the bottom of the list.
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Looking ahead
Monday will kick off the month of May with Manufacturing data, which should show growth in the sector given the other economic recovery data.
Earnings reports on Monday will include Alibaba (BABA), Estee Lauder (EL), Loews (LO), SolarEdge (SEDG), and Avis (CAR).
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Trends, Support and Resistance
The index is back just below the 14,000 line. If it dips again, expect some resistance at this line before making new highs.
The trend line from the 3/5 low, points to a +1.65% advance. The five-day trend line results in a +0.16% gain.
The one-day trend line points to a -0.61% loss.
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Wrap-up
The week was full of positive earnings reports that turned into lower prices for the stocks. Investors seem worried that some of these outperforming companies will not be able to hold the growth into the next few quarters, especially relative to the previous year. Investors were especially sensitive to any guidance that was neutral to negative for the coming quarters.
In addition to that sentiment, investors are watching economic indicators very closely. Although inflation is a positive sign that economic activity is returning, driving demand faster than supply, too much inflation could cause a reaction from the Fed. Not everyone believes the Fed will sit back indefinitely waiting for transitional inflation to subside.
That results in investors moving into safer assets as they look over the coming quarters. Still, reactions are sometimes temporary and we could see investments rotate back into equities. For now, the expectation for the index is lower.
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, April 30, 2021
Facts: -0.85%, Volume lower, Closing range: 15%, Body: 6%
Good: Not much
Bad: Failed rally in the morning, newer low in the afternoon
Highs/Lows: Lower high, lower low
Candle: Long upper wick and thin red body show the failed morning rally
Advance/Decline: Three declining stocks for every advancing stock
Indexes: SPX (-0.72%), DJI (-0.54%), RUT (-1.26%), VIX (+5.68%)
Sectors: Utilities (XLU +0.79%) and Real Estate (XLRE +0.66%) were top sectors. Technology (XLK -1.36%) and Energy (XLE -2.53%) were bottom.
Expectation: Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
It was not a great end to the month of April, with a failed rally in the morning that turned into lower lows in the afternoon. Investors are watching economic data closely, especially focused on measures of inflation driving expectations for an overheated economy.
The Nasdaq closed the last day of April with a -0.85% decline on lower volume. The 6% body under a long upper wick and 15% closing range are the result of a morning rally attempt that faded quickly and turned into lower lows at the end of the day. The index was able to close just above the intraday low. Three stocks declined for every advancing stock.
The S&P 500 (SPX) closed down -0.85% after a record close the previous day. The Dow Jones Industrial (DJI) closed down -0.54%. The Russell 2000 (RUT) was the worst performing index of the day with a -1.26% decline.
The VIX volatility index advanced +5.68%.
Utilities (XLU +0.79%) and Real Estate (XLRE +0.66%) were top sectors as investors fled for safety within equity markets. Only four sectors closed the day with gains. Technology (XLK -1.36%) and Energy (XLE -2.53%) were the worst performing sectors for the day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) had advanced +0.73% on very bullish consumer data.
The US 30y treasury bond yield remained flat while the 10y and 2y note yields declined.
High Yield Corporate Bond (HYG) prices declined while the Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) declined. Copper (COPPER1!) and Aluminum (ALI1!) declined.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose to 0.790. 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 moved back toward neutral.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four big mega-caps declined for the day. Microsoft (MSFT) recovered from lows to close just -0.13% and a nice thick green candle on lower volume. It's trading below its 21d EMA. Apple (AAPL) declined -1.51% and closed just above the 21d EMA. Amazon (AMZN) declined -0.11% and Alphabet (GOOGL) declined -1.64%. Both are still trading well above key moving average lines and near all-time highs. Amazon could not hold onto aftermarket gains from a positive earnings report. A bit of a theme for the week.
Tesla (TSLA), Netflix (NFLX), Verizon (VZ) and Proctor & Gamble (PG) were the top mega-cap gainers for the day. At the bottom of the mega-cap list were Exxon Mobile (XOM), ASML Holdings (ASML), PayPal (PYPL) and Nvidia (NVDA).
Only a handful of the daily update growth stocks rose for the day. Digital Turbine (APPS), NIO (NIO), Moderna (MRNA) and Snowflake (SNOW) topped the list. At the bottom of the list was Twitter (TWTR) with a huge -15.16% declined after providing disappointing guidance on user growth. Roku (ROKU), Solar Edge (SEDG) and Etsy (ETSY) were also at the bottom of the list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Monday will kick off the month of May with Manufacturing data, which should show growth in the sector given the other economic recovery data.
Earnings reports on Monday will include Alibaba (BABA), Estee Lauder (EL), Loews (LO), SolarEdge (SEDG), and Avis (CAR).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index is back just below the 14,000 line. If it dips again, expect some resistance at this line before making new highs.
The trend line from the 3/5 low, points to a +1.65% advance. The five-day trend line results in a +0.16% gain.
The one-day trend line points to a -0.61% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
The week was full of positive earnings reports that turned into lower prices for the stocks. Investors seem worried that some of these outperforming companies will not be able to hold the growth into the next few quarters, especially relative to the previous year. Investors were especially sensitive to any guidance that was neutral to negative for the coming quarters.
In addition to that sentiment, investors are watching economic indicators very closely. Although inflation is a positive sign that economic activity is returning, driving demand faster than supply, too much inflation could cause a reaction from the Fed. Not everyone believes the Fed will sit back indefinitely waiting for transitional inflation to subside.
That results in investors moving into safer assets as they look over the coming quarters. Still, reactions are sometimes temporary and we could see investments rotate back into equities. For now, the expectation for the index is lower.
Stay healthy and trade safe!
