Summary: Better than expected Retail Sales data help the Consumer Discretionary sector advance to the top of the sector list. However, rising Treasury Yields subdued other sectors and sent three of the four major indexes to losses for the day.
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, September 16, 2021
Facts: +0.13%, Volume lower, Closing Range: 85%, Body: 39% Green
Good: Higher high, good closing range
Bad: Dip below 21d EMA, low A/D ratio
Highs/Lows: Higher high, Higher low
Candle: Short body in upper half of candle, long lower wick
Advance/Decline: 0.81, more declining than advancing stocks
Indexes: SPX (-0.16%), DJI (-0.18%), RUT (-0.07%), VIX (+2.81%)
Sector List: Consumer Discretionary (XLY +0.46%) and Real Estate (XLRE +0.19%) at the top. Materials (XLB -1.08%) and Energy (XLE -1.13%) at the bottom.
Expectation: Sideways
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Market Overview
Better than expected Retail Sales data help the Consumer Discretionary sector advance to the top of the sector list. However, rising Treasury Yields subdued other sectors and sent three of the four major indexes to losses for the day.
The Nasdaq closed the day with a +0.13% gain after dipping in the morning. The 39% green body is in the upper half of the candle, with a long lower wick representing the morning decline. After hitting the intraday low, the index rose through the afternoon to end with an 85% closing range. Volume was lower than the previous day, and there were more declining stocks than advancing stocks.
The S&P 500 (SPX) declined -0.16%. The Dow Jones Industrial Average (DJI) lost -0.18%. The Russell 2000 (RUT) fell just -0.07%. The VIX Volatility Index rose +2.81%.
Consumer Discretionary (XLY +0.46%) was at the top of the sector list after the positive Retail Sales data in the morning. Real Estate (XLRE +0.19%) was the second-best sector. Technology (XLK +0.06%) was the only other sector with gains. Materials (XLB -1.08%) and Energy (XLE -1.13%) were the worst-performing sectors for the day.
Retail Sales grew +1.8% for August, while analysts expected a -0.1% decline for the month. The Philadelphia Manufacturing Index was 30.7, compared to the 18.8 expectation. Initial Jobless Claims were slightly higher than expected but not alarming. Altogether, the data showed a more optimistic view of economic growth. However, that also raises questions of when the Fed will begin bond tapering.
Treasury Yields rose for the day, with the spread between long-term and short-term notes narrowing. Yields move opposite to prices, signaling bond investors are selling treasuries ahead of bond tapering. The US Dollar strengthened for the day, with the DXY index rising +0.42%. Silver and Gold dropped sharply, declining -3.92% and -2.26%, respectively. Crude Oil futures continue to rise.
The put/call ratio declined to 0.621 for the day. The CNN Fear & Greed index remained in the Fear Zone. The NAAIM money manager exposure index rose to 87.02 from 84.68 the previous week.
Amazon (AMZN) helped push the consumer discretionary sector higher with a +0.36$ advance today. Microsoft (MSFT) also ended the day with gains while Apple (AAPL) and Alphabet (GOOGL) declined.
Salesforce.com (CRM) was the top mega-cap for today, advancing +1.64%. Ely Lilly (LLY) was at the bottom of the list, losing -1.15%. There were plenty of winners in the daily update growth list. Palantir (PLTR) and DoorDash (DASH) topped the list with over 5.5% gains. FUTU Holdings (FUTU) and UP Fintech (TIGR) were at the bottom of the list.
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Looking ahead
Initial Consumer Sentiment data for September, released on Friday, will hopefully improve over the previous month.
Friday is a quadruple witching day when stock futures, index futures, stock options, and index options all expire on the same day, causing a higher than average volume.
There are no relevant earnings reports for Friday.
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Trends, Support, and Resistance
The Nasdaq dipped below the 21d EMA before rallying into the afternoon and closing higher.
If the one-day trend line continues, it shows a +0.85% gain for tomorrow.
The five-day trend line points to a -0.92% decline.
The trend line from the 9/7 high ends with a -1.25% decline for Friday.
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Wrap-up
Bond investors saw today's positive Retail Sales data as more support for the Fed to begin bond tapering. Bond tapering will mean lower prices and higher yields, and higher yields could put some downward pressure on growth sectors.
The expectation for tomorrow is Sideways.
Stay healthy and trade safe!
