Summary: Despite being at a historically high level, Manufacturing activity data was lower than the previous month and lower than expectations. The result was a failed morning rally that took indexes higher before selling off in the afternoon. The only positive holding back more selling was the progress of the Infrastructure bill in congress.
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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Monday, August 2, 2021
Facts: +0.06%, Volume higher, Closing range: 15%, Body: 74%
Good: Higher high, higher low, support at 14,650 area
Bad: Could not hold morning highs, low A/D ratio
Highs/Lows: Higher high, higher low
Candle: Mostly red body with tiny upper and lower wicks
Advanced/Decline: 0.79, more declining stocks than advancing stocks
Indexes: SPX (-0.18%), DJI (-0.28%), RUT (-0.48%), VIX (+6.80%)
Sectors: Utilities (XLU +0.77%) and Consumer Discretionary (XLY +0.29%) at the top. Energy (XLE -0.75%) and Materials (XLB -1.21%) at the bottom.
Expectation: Sideways
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Market Overview
Despite being at a historically high level, Manufacturing activity data was lower than the previous month and lower than expectations. The result was a failed morning rally that took indexes higher before selling off in the afternoon. The only positive holding back more selling was the progress of the Infrastructure bill in congress.
The Nasdaq finished the day with a +0.06% gain on higher volume than the previous day. The candle is mostly red body with tiny upper and lower wicks, reflecting the full day of selling after the markets opened higher in the morning. The closing range of 15% is below a 74% red body. There were more declining stocks than advancing stocks.
The other major indexes all lost for the day. The Russell 2000 (RUT) started the day outperforming but sold off more than the other indexes and ended with a -0.48% loss. The Dow Jones Industrial Average (DJI) declined -0.28%. The S&P 500 (SPX) lost -0.18%.
The VIX volatility index advanced +6.80%.
Utilities (XLU +0.77%) led the sector list, signaling caution among investors. Consumer Discretionary (XLY +0.29%)was the second-best sector for the day as Personal spending data on Friday did come in higher than expected. Energy (XLE -0.75%) and Materials (XLB -1.21%) were at the bottom of today's sector list.
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Economic Indicators
For July, the ISM Manufacturing PMI came in at 59.5 vs. the previous month at 60.6 and was lower than the forecasted 60.9 level.
The result is that the US Dollar (DXY) declined -0.02%.
The US 30y, 10y, and 2y Treasury yields all declined for the day.
High Yield Corporate Bond (HYG) declined sharply while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices declined.
Timber (Wood) was flat.
Copper (COPPER1!) declined. Aluminum (ALI1!) continued to advance.
Bitcoin (BTCUSD) advanced +0.44%. Ethereum (ETHUSD) advanced +0.55%. (Time of writing)
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Investor Sentiment
The put/call ratio declined to 0.618. 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 back in Extreme Fear.
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Market Leaders
Amazon (AMZN) advanced slightly, gaining +0.12%, but is still well below last week's high and the moving average lines. Alphabet (GOOGL) also had a small gain of +0.10%. Microsoft (MSFT) and Apple (AAPL) declined -0.03% and -0.23%, respectively.
Tesla (TSLA), Pfizer (PFE), Alibaba (BABA), and Nvidia (NVDA) were the top mega-caps for today. Mastercard (MA), Visa (V), and PayPal (PYPL) were the bottom three mega-caps, with the former two losing more than -2.5% each as investors see fierce competition from Square (SQ) with the acquisition of Afterpay.
Square (SQ) topped the daily update growth list with a 10% gain. The other three at the top of the list were Chinese stocks UP Fintech (TIGR), FUTU Holdings (FUTU), and Ehang Holding (EH). PayPal (PYPL), Pinterest (PINS), Enphase (ENPH), and Fiverr (FVRR) were the worst performers in the growth list.
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Looking ahead
Factory Orders data will be available in the morning, with the API Weekly Crude Oil Stock data coming after the market close.
Alibaba (BABA), Eli Lilly (LLY), Amgen (AMGN), Fidelity (FIS), Marriott (MAR), Match Group (MTCH), Occidental (OXY), Ringcentral (RNG), LYFT (LYFT), Hyatt (H), and Skillz (SKLZ) are some of the many earnings reports for Tuesday.
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
There seems to be support forming around 14,650-14,700. I'll watch this level over the next few days to see if it holds.
The trend-line from the 7/19 low ends with a +1.37% gain for tomorrow.
The five-day trend line points to a +0.60% gain.
The one-day trend line leads to a -0.13% decline.
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Wrap-up
As the Delta variant of COVID continues to force new measures worldwide to contain the virus, investors are nervous about the impact on the economic recovery. Even though manufacturing activity is historically high (the ISM index today is higher than it ever was in 2019 and through the start of the pandemic), investors are still seeing the slowing activity and looking for what to trade next.
We did get a higher high and a higher low, but given the primarily red day after a morning high and failed rally, the expectation is for sideways 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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Monday, August 2, 2021
Facts: +0.06%, Volume higher, Closing range: 15%, Body: 74%
Good: Higher high, higher low, support at 14,650 area
Bad: Could not hold morning highs, low A/D ratio
Highs/Lows: Higher high, higher low
Candle: Mostly red body with tiny upper and lower wicks
Advanced/Decline: 0.79, more declining stocks than advancing stocks
Indexes: SPX (-0.18%), DJI (-0.28%), RUT (-0.48%), VIX (+6.80%)
Sectors: Utilities (XLU +0.77%) and Consumer Discretionary (XLY +0.29%) at the top. Energy (XLE -0.75%) and Materials (XLB -1.21%) at the bottom.
Expectation: Sideways
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Despite being at a historically high level, Manufacturing activity data was lower than the previous month and lower than expectations. The result was a failed morning rally that took indexes higher before selling off in the afternoon. The only positive holding back more selling was the progress of the Infrastructure bill in congress.
The Nasdaq finished the day with a +0.06% gain on higher volume than the previous day. The candle is mostly red body with tiny upper and lower wicks, reflecting the full day of selling after the markets opened higher in the morning. The closing range of 15% is below a 74% red body. There were more declining stocks than advancing stocks.
The other major indexes all lost for the day. The Russell 2000 (RUT) started the day outperforming but sold off more than the other indexes and ended with a -0.48% loss. The Dow Jones Industrial Average (DJI) declined -0.28%. The S&P 500 (SPX) lost -0.18%.
The VIX volatility index advanced +6.80%.
Utilities (XLU +0.77%) led the sector list, signaling caution among investors. Consumer Discretionary (XLY +0.29%)was the second-best sector for the day as Personal spending data on Friday did come in higher than expected. Energy (XLE -0.75%) and Materials (XLB -1.21%) were at the bottom of today's sector list.
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Economic Indicators
For July, the ISM Manufacturing PMI came in at 59.5 vs. the previous month at 60.6 and was lower than the forecasted 60.9 level.
The result is that the US Dollar (DXY) declined -0.02%.
The US 30y, 10y, and 2y Treasury yields all declined for the day.
High Yield Corporate Bond (HYG) declined sharply while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices declined.
Timber (Wood) was flat.
Copper (COPPER1!) declined. Aluminum (ALI1!) continued to advance.
Bitcoin (BTCUSD) advanced +0.44%. Ethereum (ETHUSD) advanced +0.55%. (Time of writing)
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Investor Sentiment
The put/call ratio declined to 0.618. 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 back in Extreme Fear.
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Market Leaders
Amazon (AMZN) advanced slightly, gaining +0.12%, but is still well below last week's high and the moving average lines. Alphabet (GOOGL) also had a small gain of +0.10%. Microsoft (MSFT) and Apple (AAPL) declined -0.03% and -0.23%, respectively.
Tesla (TSLA), Pfizer (PFE), Alibaba (BABA), and Nvidia (NVDA) were the top mega-caps for today. Mastercard (MA), Visa (V), and PayPal (PYPL) were the bottom three mega-caps, with the former two losing more than -2.5% each as investors see fierce competition from Square (SQ) with the acquisition of Afterpay.
Square (SQ) topped the daily update growth list with a 10% gain. The other three at the top of the list were Chinese stocks UP Fintech (TIGR), FUTU Holdings (FUTU), and Ehang Holding (EH). PayPal (PYPL), Pinterest (PINS), Enphase (ENPH), and Fiverr (FVRR) were the worst performers in the growth list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Factory Orders data will be available in the morning, with the API Weekly Crude Oil Stock data coming after the market close.
Alibaba (BABA), Eli Lilly (LLY), Amgen (AMGN), Fidelity (FIS), Marriott (MAR), Match Group (MTCH), Occidental (OXY), Ringcentral (RNG), LYFT (LYFT), Hyatt (H), and Skillz (SKLZ) are some of the many earnings reports for Tuesday.
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
There seems to be support forming around 14,650-14,700. I'll watch this level over the next few days to see if it holds.
The trend-line from the 7/19 low ends with a +1.37% gain for tomorrow.
The five-day trend line points to a +0.60% gain.
The one-day trend line leads to a -0.13% decline.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
As the Delta variant of COVID continues to force new measures worldwide to contain the virus, investors are nervous about the impact on the economic recovery. Even though manufacturing activity is historically high (the ISM index today is higher than it ever was in 2019 and through the start of the pandemic), investors are still seeing the slowing activity and looking for what to trade next.
We did get a higher high and a higher low, but given the primarily red day after a morning high and failed rally, the expectation is for sideways tomorrow.
Stay healthy and trade safe!
