Summary: Buy the dip? That seems to be what drove prices higher today on optimism after a positive jobs report. But caution is still in the market with Utilities as the leading sector, growth stocks essentially not participating, and an advance/decline ratio still below 1.0.
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, May 13, 2021
Facts: +0.72%, Volume lower, Closing range: 49%, Body: 11%
Good: Higher close, support at 13,000
Bad: Negative red body, indecisive after swings up and down intraday on lower volume
Highs/Lows: Lower high, higher low
Candle: Spinning top, inside day with a thin red body and long upper and lower wicks
Advance/Decline: More declining stocks than advancing stocks
Indexes: SPX (+1.22%), DJI (+1.29%), RUT (+1.68%), VIX (-16.17%)
Sectors: Utilities (+1.93%) and Industrial (XLI +1.87%) were top. Consumer Discretionary (XLY +0.71%) and Energy (XLE -1.22%) were bottom.
Expectation: Sideways or Lower
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Market Overview
Buy the dip? That seems to be what drove prices higher today on optimism after a positive jobs report. But caution is still in the market with Utilities as the leading sector, growth stocks essentially not participating, and an advance/decline ratio still below 1.0.
The Nasdaq closed higher but on lower volume, advancing +0.72% for the day. The indecisive candle has a thin red body nearly in the middle of the long upper and lower wicks. The closing range is 49%, with a narrow 11% red body. There were more declining stocks than advancing stocks.
The Russell 2000 (RUT) led the day among the major indices, with a +1.68% advance. The Dow Jones Industrial Average (DJI) advanced +1.29%. The S&P 500 (SPX) gained +1.22%. All four of our indices had inside days, with lower highs and higher lows.
The VIX volatility index retreated -16.17%.
Energy (XLE -1.22%) moved back to the bottom of the sector list, the only losing sector of the day. That comes after being the only gaining sector on Wednesday. Utilities (+1.93%) and Industrial (XLI +1.87%) were the top sectors for the day. The Utilities sector often tops the list when investors are taking defensive positions.
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Economic Indicators
The US Dollar (DXY) declined -0.06%.
The US 30y, 10y, and 2y Treasury yields all declined for the day.
Both High Yield Corporate Bond (HYG) prices and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) declined.
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Investor Sentiment
The put/call ratio dropped to 0.760. 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 still in the fear zone.
The NAAIM money manager exposure index dropped to 46.86 after moving above 100 two weeks ago.
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Market Leaders
All four big mega-caps advanced. Apple (AAPL) rose +1.79%. Microsoft (MSFT) gained +1.69%. Amazon (AMZN) advanced +0.30%. All three neared their 50d MA but retreated from the line before close. Alphabet (GOOGL) rose +1.31% and is the only of the four big mega-caps to remain above the 50d MA.
ASML Holding (ASML), Home Depot (HD), JP Morgan (JPM), and Oracle (ORCL) were the top mega-caps of the day. At the bottom of the list were Alibaba (BABA), Tesla (TSLA), Exxon Mobil (XOM), and Nvidia (NVDA).
Growth stocks had a tough day. The ones that had gains included Lemonade (LMND), Peloton (PTON), DR Horton (DHI), and PayCom (PAYC). Fiverr (VFR), Sumo Logic (SUMO), JD.com (JD), and NIO (NIO) were at the bottom of the list.
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Looking ahead
Friday brings an update to Core Retail Sales for April. Export/Import Price Index data will also be released. Closer to open, we will get updates on Industrial Production and Business Inventories data. Consumer Expectations and Consumer Sentiment numbers for May will come after the market open.
Another large round of Japanese earnings reports comes on Friday.
UP fintech (TIGR) will also report on Friday.
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Trends, Support and Resistance
The Nasdaq tested the 13,000 area again and found support, closing above the area.
If the one-day trend-line and the trend-line from the 4/29 high continue, the index will decline -0.83% decline tomorrow.
The five-day trend line points to a -2.41% decline.
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Wrap-up
Although the indexes ended the days with gains, the choppy ride and the low volume raise some alarms. Is this a pivot point to the upside or simply a pause on the way down? Indeed, there is good news in the jobs recovery, and we'll be likely to see increased retail sales tomorrow. But that may stoke more inflation fears and send investors further into defensive mode.
You could say that today was a positive expectation breaker since my expectation was for Sideways or Lower. Still, the inside day, thin red body and weak volume, plus the number of declining stocks, don't feel positive. So I'm still setting an expectation for sideways or lower tomorrow and waiting for the index to prove itself.
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, May 13, 2021
Facts: +0.72%, Volume lower, Closing range: 49%, Body: 11%
Good: Higher close, support at 13,000
Bad: Negative red body, indecisive after swings up and down intraday on lower volume
Highs/Lows: Lower high, higher low
Candle: Spinning top, inside day with a thin red body and long upper and lower wicks
Advance/Decline: More declining stocks than advancing stocks
Indexes: SPX (+1.22%), DJI (+1.29%), RUT (+1.68%), VIX (-16.17%)
Sectors: Utilities (+1.93%) and Industrial (XLI +1.87%) were top. Consumer Discretionary (XLY +0.71%) and Energy (XLE -1.22%) were bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Buy the dip? That seems to be what drove prices higher today on optimism after a positive jobs report. But caution is still in the market with Utilities as the leading sector, growth stocks essentially not participating, and an advance/decline ratio still below 1.0.
The Nasdaq closed higher but on lower volume, advancing +0.72% for the day. The indecisive candle has a thin red body nearly in the middle of the long upper and lower wicks. The closing range is 49%, with a narrow 11% red body. There were more declining stocks than advancing stocks.
The Russell 2000 (RUT) led the day among the major indices, with a +1.68% advance. The Dow Jones Industrial Average (DJI) advanced +1.29%. The S&P 500 (SPX) gained +1.22%. All four of our indices had inside days, with lower highs and higher lows.
The VIX volatility index retreated -16.17%.
Energy (XLE -1.22%) moved back to the bottom of the sector list, the only losing sector of the day. That comes after being the only gaining sector on Wednesday. Utilities (+1.93%) and Industrial (XLI +1.87%) were the top sectors for the day. The Utilities sector often tops the list when investors are taking defensive positions.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) declined -0.06%.
The US 30y, 10y, and 2y Treasury yields all declined for the day.
Both High Yield Corporate Bond (HYG) prices and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced.
Copper (COPPER1!) and Aluminum (ALI1!) declined.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio dropped to 0.760. 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 still in the fear zone.
The NAAIM money manager exposure index dropped to 46.86 after moving above 100 two weeks ago.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four big mega-caps advanced. Apple (AAPL) rose +1.79%. Microsoft (MSFT) gained +1.69%. Amazon (AMZN) advanced +0.30%. All three neared their 50d MA but retreated from the line before close. Alphabet (GOOGL) rose +1.31% and is the only of the four big mega-caps to remain above the 50d MA.
ASML Holding (ASML), Home Depot (HD), JP Morgan (JPM), and Oracle (ORCL) were the top mega-caps of the day. At the bottom of the list were Alibaba (BABA), Tesla (TSLA), Exxon Mobil (XOM), and Nvidia (NVDA).
Growth stocks had a tough day. The ones that had gains included Lemonade (LMND), Peloton (PTON), DR Horton (DHI), and PayCom (PAYC). Fiverr (VFR), Sumo Logic (SUMO), JD.com (JD), and NIO (NIO) were at the bottom of the list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Friday brings an update to Core Retail Sales for April. Export/Import Price Index data will also be released. Closer to open, we will get updates on Industrial Production and Business Inventories data. Consumer Expectations and Consumer Sentiment numbers for May will come after the market open.
Another large round of Japanese earnings reports comes on Friday.
UP fintech (TIGR) will also report on Friday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The Nasdaq tested the 13,000 area again and found support, closing above the area.
If the one-day trend-line and the trend-line from the 4/29 high continue, the index will decline -0.83% decline tomorrow.
The five-day trend line points to a -2.41% decline.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Although the indexes ended the days with gains, the choppy ride and the low volume raise some alarms. Is this a pivot point to the upside or simply a pause on the way down? Indeed, there is good news in the jobs recovery, and we'll be likely to see increased retail sales tomorrow. But that may stoke more inflation fears and send investors further into defensive mode.
You could say that today was a positive expectation breaker since my expectation was for Sideways or Lower. Still, the inside day, thin red body and weak volume, plus the number of declining stocks, don't feel positive. So I'm still setting an expectation for sideways or lower tomorrow and waiting for the index to prove itself.
Stay healthy and trade safe!
