Summary: The S&P 500 and Dow Jones closed at new record highs while the Nasdaq pulled back in a rotation from growth to cyclical sectors. Positive employment data in the morning added to the possibility of agreement on a $1 trillion infrastructure bill that pushed investors towards the cyclical sectors.
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, August 6, 2021
Facts: -0.4%, Volume higher, Closing range: 46%, Body: 28%
Good: Higher low, support after morning rotation dip
Bad: Higher volume pullback from all time high
Highs/Lows: Lower high, higher low
Candle: Inside day with small red body in upper half of candle
Advanced/Decline: 0.84, more declining stocks than advancing stocks
Indexes: SPX (+0.17%), DJI (+0.41%), RUT (+0.53%), VIX (-6.54%)
Sectors: Financials (XLF +2.02%) and Materials (XLE +1.45%) at the top. Real Estate (XLRE -0.17%) and Consumer Discretionary (XLY -0.68%) at the bottom.
Expectation: Sideways or Higher
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Market Overview
The S&P 500 and Dow Jones closed at new record highs while the Nasdaq pulled back in a rotation from growth to cyclical sectors. Positive employment data in the morning added to the possibility of agreement on a $1 trillion infrastructure bill that pushed investors towards the cyclical sectors.
The Nasdaq declined -0.4% for the day on higher volume than the previous day. The 28% red body is high in the candle, with a longer lower wick than the upper wick, creating a 46% closing range. The lower high and higher low make an inside day. There were more declining stocks than advancing stocks on the Nasdaq, but more broadly, gaining stocks outnumbered losing stocks in the NYSE.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) set new record closes with +0.17% and +0.41% gains. Small caps in the Russell 2000 (RUT) outperformed again, adding +0.53% to the index.
The VIX volatility index declined -6.54%.
Only the four cyclical sectors gained today, with Financials (XLF +2.02%) and Materials (XLE +1.45%) at the top of the list. Real Estate (XLRE -0.17%) and Consumer Discretionary (XLY -0.68%) were at the bottom.
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Economic Indicators
Employment data was positive today, with Hourly Earnings, Nonfarm Payrolls, and the Unemployment rate coming in better than expected. Consumer Credit was also higher than expected for June, signaling consumer confidence and spending by the public.
The US Dollar (DXY) advanced to +0.57% on the solid economic data.
The US 30y, 10y, and 2y Treasury yields advanced for the day while the gap between long-term and short-term yields widened.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices declined.
Timber (Wood) declined.
Copper (COPPER1!) advanced, and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) advanced +4.80%. Ethereum (ETHUSD) advanced +2.21%.
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Investor Sentiment
The put/call ratio rose to 0.714. The put/call ratio (PCCE) is a contrarian indicator of 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 in the middle of the Fear range.
The NAAIM money manager exposure index rose to 97.72.
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Market Leaders
All four largest mega-caps declined today. Microsoft (MSFT) declined -0.02% but shows a bullish inside day candle. Alphabet (GOOGL) lost -0.38%. Apple (AAPL) fell -0.63%. Amazon (AMZN) lost -0.92% and is the only of the four to be trading below the 21d exponential and 50d simply moving average lines.
Financial companies dominated the top of the mega-cap list, with Wells Fargo (WFC), Bank of America (BAC), JP Morgan (JPM), and Berkshire Hathaway (BRK.A) leading the day with gains. At the bottom of the list are ASML Holding (ASML), Alibaba (BABA), Tesla (TSLA), and Novo Nordisk (NVO).
Robinhood (HOOD) ended a volatile first week with an 8% gain to top the daily update growth list today. Fastly (FSLY), Solar Edge (SEDG), and UP Fintech (TIGR) were the other top growth stocks on the list. NIO (NIO), Okta (OKTA), Peloton (PTON), and Zynga (ZNGA) were at the bottom of the list, with Zynga losing almost 20% on a disappointing outlook after beating earnings.
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Looking ahead
Next week will open with the JOLTs Jon Openings data on Monday morning.
BioNTech (BNTX), Trade Desk (TTD), Tyson Foods (TSN), AMC Entertainment (AMC), Chegg (CHGG), Cable One (CABO), Curaleaf (CURLF), Tilray (TLRY), Xpel (XPEL), Rocket Pharma (RCKT), and Vuzix (VUZI) are some of the companies opening up another busy earnings week with reports on Monday.
There are many earnings reports next week. Keep an eye out for reports from companies in your portfolio.
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Trends, Support, and Resistance
The Nasdaq set a new record today and closed near the high.
The five-day trend line and the trend-line from the 7/19 low point to a +0.52% gain for Monday.
The one-day trend line leads to a -0.24% loss.
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Wrap-up
This morning's positive employment data seems to have kicked off another mini-cycle, with the cyclical sectors gaining while growth stocks either paused or pulled back. The rotation could get a further catalyst if the infrastructure bill moves forward over the weekend.
The inside day for the Nasdaq is within an uptrend and could result in a continuation of the trend. Expectation for Monday is sideways or higher.
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, August 6, 2021
Facts: -0.4%, Volume higher, Closing range: 46%, Body: 28%
Good: Higher low, support after morning rotation dip
Bad: Higher volume pullback from all time high
Highs/Lows: Lower high, higher low
Candle: Inside day with small red body in upper half of candle
Advanced/Decline: 0.84, more declining stocks than advancing stocks
Indexes: SPX (+0.17%), DJI (+0.41%), RUT (+0.53%), VIX (-6.54%)
Sectors: Financials (XLF +2.02%) and Materials (XLE +1.45%) at the top. Real Estate (XLRE -0.17%) and Consumer Discretionary (XLY -0.68%) at the bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The S&P 500 and Dow Jones closed at new record highs while the Nasdaq pulled back in a rotation from growth to cyclical sectors. Positive employment data in the morning added to the possibility of agreement on a $1 trillion infrastructure bill that pushed investors towards the cyclical sectors.
The Nasdaq declined -0.4% for the day on higher volume than the previous day. The 28% red body is high in the candle, with a longer lower wick than the upper wick, creating a 46% closing range. The lower high and higher low make an inside day. There were more declining stocks than advancing stocks on the Nasdaq, but more broadly, gaining stocks outnumbered losing stocks in the NYSE.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) set new record closes with +0.17% and +0.41% gains. Small caps in the Russell 2000 (RUT) outperformed again, adding +0.53% to the index.
The VIX volatility index declined -6.54%.
Only the four cyclical sectors gained today, with Financials (XLF +2.02%) and Materials (XLE +1.45%) at the top of the list. Real Estate (XLRE -0.17%) and Consumer Discretionary (XLY -0.68%) were at the bottom.
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Economic Indicators
Employment data was positive today, with Hourly Earnings, Nonfarm Payrolls, and the Unemployment rate coming in better than expected. Consumer Credit was also higher than expected for June, signaling consumer confidence and spending by the public.
The US Dollar (DXY) advanced to +0.57% on the solid economic data.
The US 30y, 10y, and 2y Treasury yields advanced for the day while the gap between long-term and short-term yields widened.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices declined.
Timber (Wood) declined.
Copper (COPPER1!) advanced, and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) advanced +4.80%. Ethereum (ETHUSD) advanced +2.21%.
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Investor Sentiment
The put/call ratio rose to 0.714. The put/call ratio (PCCE) is a contrarian indicator of 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 in the middle of the Fear range.
The NAAIM money manager exposure index rose to 97.72.
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Market Leaders
All four largest mega-caps declined today. Microsoft (MSFT) declined -0.02% but shows a bullish inside day candle. Alphabet (GOOGL) lost -0.38%. Apple (AAPL) fell -0.63%. Amazon (AMZN) lost -0.92% and is the only of the four to be trading below the 21d exponential and 50d simply moving average lines.
Financial companies dominated the top of the mega-cap list, with Wells Fargo (WFC), Bank of America (BAC), JP Morgan (JPM), and Berkshire Hathaway (BRK.A) leading the day with gains. At the bottom of the list are ASML Holding (ASML), Alibaba (BABA), Tesla (TSLA), and Novo Nordisk (NVO).
Robinhood (HOOD) ended a volatile first week with an 8% gain to top the daily update growth list today. Fastly (FSLY), Solar Edge (SEDG), and UP Fintech (TIGR) were the other top growth stocks on the list. NIO (NIO), Okta (OKTA), Peloton (PTON), and Zynga (ZNGA) were at the bottom of the list, with Zynga losing almost 20% on a disappointing outlook after beating earnings.
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Looking ahead
Next week will open with the JOLTs Jon Openings data on Monday morning.
BioNTech (BNTX), Trade Desk (TTD), Tyson Foods (TSN), AMC Entertainment (AMC), Chegg (CHGG), Cable One (CABO), Curaleaf (CURLF), Tilray (TLRY), Xpel (XPEL), Rocket Pharma (RCKT), and Vuzix (VUZI) are some of the companies opening up another busy earnings week with reports on Monday.
There are many earnings reports next week. Keep an eye out for reports from companies in your portfolio.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq set a new record today and closed near the high.
The five-day trend line and the trend-line from the 7/19 low point to a +0.52% gain for Monday.
The one-day trend line leads to a -0.24% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
This morning's positive employment data seems to have kicked off another mini-cycle, with the cyclical sectors gaining while growth stocks either paused or pulled back. The rotation could get a further catalyst if the infrastructure bill moves forward over the weekend.
The inside day for the Nasdaq is within an uptrend and could result in a continuation of the trend. Expectation for Monday is sideways or higher.
Stay healthy and trade safe!
