Trend lines drawn from the 2/16 ATH (16d), 3/3 (5d) and today 3/9 (1d).
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Wednesday, March 10, 2021
Facts: -0.04%, Volume lower, Closing range: 14%, Body: 69%
Good: Higher high, higher low, support above 13,000
Bad: Rejection off 21d EMA in morning led to selling and close near low
Highs/Lows: Higher high, higher low
Candle: Thick red body with small upper and lower wicks, low closing range
Advance/Decline: More advancing stocks than declining stocks
Indexes: SPX (+0.60%), DJI (+1.46%), RUT (+1.81%), VIX (-6.12%)
Sectors: Energy (XLE +2.53%) and Financials (XLF +2.04%) were back on top. Technology (XLK -0.40%) was bottom.
Expectation: Sideways or Lower
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Market Overview
The rotation settles. There was still signs of rotation in the market today, with the sector list flipping once again. But the effect is much more subdued than the past week. The passing of the stimulus has investors eyes wide open while they sent the Dow Jones Industrial to all-time highs.
The Nasdaq was not able to benefit from the enthusiasm as it declined -0.04%. A sideways move, but still a day marked by selling after a morning gap-up. The closing range of 14% is underneath a thick red body of 69% and slightly longer upper wick formed just after the market opened. There were more advancing stocks than declining stocks, however volume on declining stocks was higher.
The other three major indexes all gained for the day. The Russell 2000 (RUT) had the biggest gains with a +1.81% advance. The Dow Jones Industrial (DJI) gained +1.46% while the S&P 500 (SPX) gained +0.60%. The Dow Jones Industrial has a very bullish candle that closed at an all-time high.
The VIX volatility index declined another -6.12%.
The sector list flipped back and forth the past three days with the top and bottom trading positions. Energy (XLE +2.53%) and Financials (XLF +2.04%) were back on top. Technology (XLK -0.40%) was on the bottom and the only losing sector for the day.
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Economic Indicators
The US Dollar (DXY) declined -0.15%.
Yields on the US 30y bond rose for the day while the 10y and 2y yields declined.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both gained for another day, showing investors' confidence in US corporations as the stimulus bill is passed.
Silver (SILVER) and Gold (GOLD) both advanced for another day. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced. Copper (COPPER1!) advanced while Aluminum (ALI1!) declined.
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Investor Sentiment
The put/call ratio declined to 0.594 as investors get more bullish. 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 remains near neutral.
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Market Leaders
All four big mega-caps declined for the day. Microsoft (MSFT) declined -0.58% and moved back below its 21d EMA. Alphabet (GOOGL) declined -0.20% but closed above the key moving average lines. Apple (AAPL) and Amazon (AMZN) declined and remain below both key moving average lines.
Exxon Mobil (XOM) was the leading mega-cap of the day, gaining +3.07% on optimism over economic activity picking up in sectors that depend on oil.Comcast (CMCSA), Bank of America (BAC), and Walmart (WMT) were other winners at the top of the mega-cap list. New Oriental Ed (EDU) lost 14%. Alibaba (BABA), Taiwan Semiconductor (TSM) and ASML Holding (ASML), all mega-caps with foreign HQ.
The big winners in growth stocks were Draft Kings (DKNG) and Penn Gaming (PENN) with 11.40% and 6.65% gains. Digital Turbine (APPS) continues to reverse from recent lows with a +6.13% gain today. Still, the list of growth stocks tracked by the daily update has more losers than winners. MongoDb (MDB) , SUMO Logic (SUMO) and Peloton (PTON) all had losses of more than 4%.
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Looking ahead
Thursday will bring an update to Initial Jobless Claims and the JOLTs Job Openings report. Both are expected to improve over previous numbers.
JD.com (JD) is the big mega-cap reporting on Thursday before market opens. DocuSign (DOCU) and Celsius (CELH) will also report Thursday.
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Trends, Support and Resistance
The Nasdaq was able to stay above 13,000 today. It tested but was not able to move above the 21d EMA.
The five-day trend line points to a positive gain of +1.25% for Thursday.
The one-day trend line is pointing to a -0.90% loss that would break back below the 13,000 area.
The longer trend-line from the 2/16 ATH points to a -2.76% decline for tomorrow.
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Wrap-up
I am still waiting for a positive gain on higher volume, and ideally a move back above the 21d EMA. That will show more support in the Nasdaq and in our favorite tech and growth stocks.
It's also a good time to look out beyond the stocks that were working so well in 2020 and discover the stocks that are likely to benefit from the economic recovery.
The good news is that the swings in bond yields and fears of inflation seem to be subsiding which will bring a little more predictability to the market.
Stay healthy and trade safe!
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=-
Wednesday, March 10, 2021
Facts: -0.04%, Volume lower, Closing range: 14%, Body: 69%
Good: Higher high, higher low, support above 13,000
Bad: Rejection off 21d EMA in morning led to selling and close near low
Highs/Lows: Higher high, higher low
Candle: Thick red body with small upper and lower wicks, low closing range
Advance/Decline: More advancing stocks than declining stocks
Indexes: SPX (+0.60%), DJI (+1.46%), RUT (+1.81%), VIX (-6.12%)
Sectors: Energy (XLE +2.53%) and Financials (XLF +2.04%) were back on top. Technology (XLK -0.40%) was bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The rotation settles. There was still signs of rotation in the market today, with the sector list flipping once again. But the effect is much more subdued than the past week. The passing of the stimulus has investors eyes wide open while they sent the Dow Jones Industrial to all-time highs.
The Nasdaq was not able to benefit from the enthusiasm as it declined -0.04%. A sideways move, but still a day marked by selling after a morning gap-up. The closing range of 14% is underneath a thick red body of 69% and slightly longer upper wick formed just after the market opened. There were more advancing stocks than declining stocks, however volume on declining stocks was higher.
The other three major indexes all gained for the day. The Russell 2000 (RUT) had the biggest gains with a +1.81% advance. The Dow Jones Industrial (DJI) gained +1.46% while the S&P 500 (SPX) gained +0.60%. The Dow Jones Industrial has a very bullish candle that closed at an all-time high.
The VIX volatility index declined another -6.12%.
The sector list flipped back and forth the past three days with the top and bottom trading positions. Energy (XLE +2.53%) and Financials (XLF +2.04%) were back on top. Technology (XLK -0.40%) was on the bottom and the only losing sector for the day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) declined -0.15%.
Yields on the US 30y bond rose for the day while the 10y and 2y yields declined.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both gained for another day, showing investors' confidence in US corporations as the stimulus bill is passed.
Silver (SILVER) and Gold (GOLD) both advanced for another day. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced. Copper (COPPER1!) advanced while Aluminum (ALI1!) declined.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio declined to 0.594 as investors get more bullish. 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 remains near neutral.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four big mega-caps declined for the day. Microsoft (MSFT) declined -0.58% and moved back below its 21d EMA. Alphabet (GOOGL) declined -0.20% but closed above the key moving average lines. Apple (AAPL) and Amazon (AMZN) declined and remain below both key moving average lines.
Exxon Mobil (XOM) was the leading mega-cap of the day, gaining +3.07% on optimism over economic activity picking up in sectors that depend on oil.Comcast (CMCSA), Bank of America (BAC), and Walmart (WMT) were other winners at the top of the mega-cap list. New Oriental Ed (EDU) lost 14%. Alibaba (BABA), Taiwan Semiconductor (TSM) and ASML Holding (ASML), all mega-caps with foreign HQ.
The big winners in growth stocks were Draft Kings (DKNG) and Penn Gaming (PENN) with 11.40% and 6.65% gains. Digital Turbine (APPS) continues to reverse from recent lows with a +6.13% gain today. Still, the list of growth stocks tracked by the daily update has more losers than winners. MongoDb (MDB) , SUMO Logic (SUMO) and Peloton (PTON) all had losses of more than 4%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Thursday will bring an update to Initial Jobless Claims and the JOLTs Job Openings report. Both are expected to improve over previous numbers.
JD.com (JD) is the big mega-cap reporting on Thursday before market opens. DocuSign (DOCU) and Celsius (CELH) will also report Thursday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The Nasdaq was able to stay above 13,000 today. It tested but was not able to move above the 21d EMA.
The five-day trend line points to a positive gain of +1.25% for Thursday.
The one-day trend line is pointing to a -0.90% loss that would break back below the 13,000 area.
The longer trend-line from the 2/16 ATH points to a -2.76% decline for tomorrow.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
I am still waiting for a positive gain on higher volume, and ideally a move back above the 21d EMA. That will show more support in the Nasdaq and in our favorite tech and growth stocks.
It's also a good time to look out beyond the stocks that were working so well in 2020 and discover the stocks that are likely to benefit from the economic recovery.
The good news is that the swings in bond yields and fears of inflation seem to be subsiding which will bring a little more predictability to the market.
Stay healthy and trade safe!
