Summary: GDP growth was less than expected this morning while employment data confirmed the Fed's message that there is still more work to do in the economic recovery. That wasn't necessarily a bad thing for equities, as it means economic support will continue for some time.
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, July 29, 2021
Facts: +0.11%, Volume lower, Closing range: 23%, Body: 10%
Good: Higher high and higher low, A/D ratio
Bad: Long upper wick relative to body as early gains faded
Highs/Lows: Higher high, higher low
Candle: Thin body at the bottom of candle with long upper wick
Advanced/Decline: 1.41, more advancing stocks than declining stocks
Indexes: SPX (+0.42%), DJI (+0.44%), RUT (+0.68%), VIX (-3.22%)
Sectors: Consumer Discretionary (XLY +1.13%) and Materials (XLB +1.10%) at the top. Real Estate (XLRE -0.30%) and Communications (XLC -1.08%) at the bottom.
Expectation: Sideways
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Market Overview
GDP growth was less than expected this morning while employment data confirmed the Fed's message that there is still more work to do in the economic recovery. That wasn't necessarily a bad thing for equities, as it means economic support will continue for some time.
The Nasdaq closed the day with a +0.11% but gave back intra-day gains, creating a long upper wick over a thin green body. Volume was lower for the day. The closing range of 23% and 10% green body at the bottom of the candle represents a failed attempt to rally today, but the A/D ratio shows some broader gains under the surface.
The Russell 2000 (RUT) outperformed again today with a +0.68% gain, closing above its 21d exponential moving average line for the first time in July. The S&P 500 (SPX) gained +0.42%, while the Dow Jones Industrial Average (DJI) rose +0.44%.
The VIX volatility index declined -3.22%.
Consumer Discretionary (XLY +1.13%), Materials (XLB +1.10%), and Financials (XLF +1.10%) topped the sector list. Only two sectors declined today, Real Estate (XLRE -0.30%) and Communications (XLC -1.08%).
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Economic Indicators
Initial Jobless Claims and Continuing Jobless Claims came in higher than expected. GDP data came in lower than expected, while the GDP Price Index data was higher than expected. Pending Home Sales data was lower than expected.
The result is that the US Dollar (DXY) rally is reversing, with another -0.42% decline today.
The US 30y, 10y, and 2y Treasury yields all advanced.
High Yield Corporate Bond (HYG) advanced while Investment Grade Corporate Bond (LQD) prices declined. The continued support for the economy bodes well for businesses borrowing money to enable growth and employ more people. Outside equities, High Yield (Junk) Bonds will give some of the best returns for investors.
Silver (SILVER) and Gold (GOLD) advanced significantly.
Crude Oil (CRUDEOIL1!) prices advanced.
Timber (Wood) advanced.
Copper (COPPER1!) advanced. Aluminum (ALI1!) advanced significantly.
Bitcoin (BTCUSD) advanced +0.23%. Ethereum (ETHUSD) advanced +0.60%. (Time of writing) These are sideways to lower moves, given the drop in the USD.
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Investor Sentiment
The put/call ratio declined to 0.549. 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 moved toward Neutral but is still near Extreme Fear.
The NAAIM money manager exposure index moved up to 78.39.
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Market Leaders
Apple (AAPL) and Microsoft (MSFT) advanced while Amazon (AMZN) and Alphabet (GOOGL) declined. Apple gained +1.80% while Microsoft rose +0.10%. Alphabet declined -0.23%, and Amazon declined -0.84%. Amazon beat expectations but disappointed investors on their outlook. The stock fell more than 7% in after-hours trading.
Tesla (TSL), Danaher Corporation (DHR), Bank of America (BAC), and Mastercard (MA) topped the mega-cap list today. At the bottom of the list are PayPal (PYPL), Facebook (FB), Pfizer (PFE), and Netflix (NFLX).
Tesla (TSLA), D.R. Horton (DHI), Zoom Video (ZM), and Solar Edge (SEDG) topped the daily update growth list, with the first three gaining more than 4%. PayPal (PYPL), Pinterest (PINS), FUTU Holdings (FUTU), and UP Fintech (TIGR) were at the bottom of the list, all losing more than 5%. Pinterest lost another 18% in after-hours trading after disappointing user growth in their earnings report.
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Looking ahead
New inflation data becomes available on Friday with the updated PCE Price index data for June. Additional Employment Data and Consumer Sentiment data becomes available as well.
Berkshire Hathaway (BRK.A), Procter & Gamble (PG), Exxon Mobil (XOM), AbbVie (ABBV), Chevron (CVX),
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 attempted a rally today that reversed, but the index could hold onto a small gain.
The trend-line from the 7/19 low ends with a +1.11% gain for tomorrow.
The one-day trend line leads to a -0.09% decline.
The five-day trend line points to a -0.26% loss.
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Wrap-up
The economic data today confirmed much of what the Fed said yesterday. That there is more work to do in the recovery before they begin to taper any economic support. The reaction was muted in the indexes and more stocks advanced than declined.
The long upper wick and thin body at the bottom of the candle present a bearish outlook for tomorrow. The expectation is for sideways or 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=-
Thursday, July 29, 2021
Facts: +0.11%, Volume lower, Closing range: 23%, Body: 10%
Good: Higher high and higher low, A/D ratio
Bad: Long upper wick relative to body as early gains faded
Highs/Lows: Higher high, higher low
Candle: Thin body at the bottom of candle with long upper wick
Advanced/Decline: 1.41, more advancing stocks than declining stocks
Indexes: SPX (+0.42%), DJI (+0.44%), RUT (+0.68%), VIX (-3.22%)
Sectors: Consumer Discretionary (XLY +1.13%) and Materials (XLB +1.10%) at the top. Real Estate (XLRE -0.30%) and Communications (XLC -1.08%) at the bottom.
Expectation: Sideways
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Market Overview
GDP growth was less than expected this morning while employment data confirmed the Fed's message that there is still more work to do in the economic recovery. That wasn't necessarily a bad thing for equities, as it means economic support will continue for some time.
The Nasdaq closed the day with a +0.11% but gave back intra-day gains, creating a long upper wick over a thin green body. Volume was lower for the day. The closing range of 23% and 10% green body at the bottom of the candle represents a failed attempt to rally today, but the A/D ratio shows some broader gains under the surface.
The Russell 2000 (RUT) outperformed again today with a +0.68% gain, closing above its 21d exponential moving average line for the first time in July. The S&P 500 (SPX) gained +0.42%, while the Dow Jones Industrial Average (DJI) rose +0.44%.
The VIX volatility index declined -3.22%.
Consumer Discretionary (XLY +1.13%), Materials (XLB +1.10%), and Financials (XLF +1.10%) topped the sector list. Only two sectors declined today, Real Estate (XLRE -0.30%) and Communications (XLC -1.08%).
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Economic Indicators
Initial Jobless Claims and Continuing Jobless Claims came in higher than expected. GDP data came in lower than expected, while the GDP Price Index data was higher than expected. Pending Home Sales data was lower than expected.
The result is that the US Dollar (DXY) rally is reversing, with another -0.42% decline today.
The US 30y, 10y, and 2y Treasury yields all advanced.
High Yield Corporate Bond (HYG) advanced while Investment Grade Corporate Bond (LQD) prices declined. The continued support for the economy bodes well for businesses borrowing money to enable growth and employ more people. Outside equities, High Yield (Junk) Bonds will give some of the best returns for investors.
Silver (SILVER) and Gold (GOLD) advanced significantly.
Crude Oil (CRUDEOIL1!) prices advanced.
Timber (Wood) advanced.
Copper (COPPER1!) advanced. Aluminum (ALI1!) advanced significantly.
Bitcoin (BTCUSD) advanced +0.23%. Ethereum (ETHUSD) advanced +0.60%. (Time of writing) These are sideways to lower moves, given the drop in the USD.
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Investor Sentiment
The put/call ratio declined to 0.549. 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 moved toward Neutral but is still near Extreme Fear.
The NAAIM money manager exposure index moved up to 78.39.
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Market Leaders
Apple (AAPL) and Microsoft (MSFT) advanced while Amazon (AMZN) and Alphabet (GOOGL) declined. Apple gained +1.80% while Microsoft rose +0.10%. Alphabet declined -0.23%, and Amazon declined -0.84%. Amazon beat expectations but disappointed investors on their outlook. The stock fell more than 7% in after-hours trading.
Tesla (TSL), Danaher Corporation (DHR), Bank of America (BAC), and Mastercard (MA) topped the mega-cap list today. At the bottom of the list are PayPal (PYPL), Facebook (FB), Pfizer (PFE), and Netflix (NFLX).
Tesla (TSLA), D.R. Horton (DHI), Zoom Video (ZM), and Solar Edge (SEDG) topped the daily update growth list, with the first three gaining more than 4%. PayPal (PYPL), Pinterest (PINS), FUTU Holdings (FUTU), and UP Fintech (TIGR) were at the bottom of the list, all losing more than 5%. Pinterest lost another 18% in after-hours trading after disappointing user growth in their earnings report.
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Looking ahead
New inflation data becomes available on Friday with the updated PCE Price index data for June. Additional Employment Data and Consumer Sentiment data becomes available as well.
Berkshire Hathaway (BRK.A), Procter & Gamble (PG), Exxon Mobil (XOM), AbbVie (ABBV), Chevron (CVX),
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 attempted a rally today that reversed, but the index could hold onto a small gain.
The trend-line from the 7/19 low ends with a +1.11% gain for tomorrow.
The one-day trend line leads to a -0.09% decline.
The five-day trend line points to a -0.26% loss.
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Wrap-up
The economic data today confirmed much of what the Fed said yesterday. That there is more work to do in the recovery before they begin to taper any economic support. The reaction was muted in the indexes and more stocks advanced than declined.
The long upper wick and thin body at the bottom of the candle present a bearish outlook for tomorrow. The expectation is for sideways or lower.
Stay healthy and trade safe!
