Trend lines drawn from the 10/30 bottom (48d), 1/4 (5d) and today 1/8 (1d).
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.
I'm working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.
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Friday, January 8, 2021
Might even raise a little sand
Facts: +1.03%, Volume higher, Closing range: 96%, Body: 24%
Good: Bulls win the day, despite selling pressure
Bad: Mid-day sell-off
Highs/Lows: Higher high, higher low
Candle: Smallish green body in upper part of candle, long lower wick
Advance/Decline: 1.11, about even advancing and declining stocks
Indexes: SPX (+0.55%), DJI (+0.18%), RUT (-0.99%), VIX (-3.62%)
Sectors: Consumer Discretionary (XLY +2.06%) and Real Estate (XLRE +1.08%) were top. Industrials (XLI -0.24%) and Materials (XLB -0.48%) were the bottom.
Expectation: Higher
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Market Overview
It was a wild ride for traders today as a Democratic senator seemed to state he'd block new stimulus and then later say he's still considering his decision. That resulted in a mid-day sell-off and looked like the bears would win, but then the Nasdaq turned and closed at new all-time highs.
The index closed the day with a +1.03% gain on higher volume. The closing range of 96% and 24% green body over a long lower wick represent the mid-day selling pressure that was eventually overcome by the bulls. There were about the same number of advancing stocks as declining stocks. 275 new highs is less than the previous day, but still a very large number.
The S&P 500 (SPX) and Dow Jones Industrial (DJI) had smaller gains of +0.55% and +0.18% respectively. The Russell 2000 (RUT) showed a bearish candle that tops out at the same high as yesterday, and closes for a loss of -0.99%. The VIX declined by -3.62%.
Consumer Discretionary (XLY +2.06%) and Real Estate (XLRE +1.08%) were top sectors for the day. Industrials (XLI -0.24%) and Materials (XLB -0.48%) were the bottom. It's also worth noting Utilities (XLU +0.84%) near the top of the list, signaling some defensive plays in the mix. Also, the four losing sectors for the day, are the leaders for the week and it's likely those sectors just needed to cool off from their heated advances on Wednesday and Thursday.
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Economic Indicators
The US Dollar (DXY) advanced for a third day. US Treasury 30y (US30Y), 10y (US10Y) had another day of big gains while the 2y (US02Y) bond yield remained flat. The yield spread for US10Y to US2Y widened again with the US10Y yield advancing over 22% for the week. Corporate Bonds (HYG) prices increased while short term treasury bond (IEI) prices dropped.
Silver (SILVER) and Gold (GOLD) both dropped -6.26% and -3.38% respectively. Crude Oil (CRUDEOIL1!) continues to advance to levels not seen since February 2020. Timber (WOOD) moved sideways after a few days of gains. Copper (COPPER1!) and Aluminum (ALI1!) retreated around -0.80% each.
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Investor Sentiment
The put/call ratio rose slightly to 0.563 as investor optimism remains very 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.
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Market Leaders
The biggest four mega-caps all advanced for the day. Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) are trading above the key 21d EMA and 50d MA lines. Amazon (AMZN) had closed above its 50d MA, but below its 21d EMA.
Tesla (TSLA) tops the mega-cap charts with a +7.84% gain, continuing its spectacular rise. Alibaba (BABA), PayPal (PYPL) and Thermo Fisher Scientific (TMO) are other top mega-caps for the day.
Growth stocks did well. In addition to Tesla, FUTU Holdings (FUTU +12.36%) and NIO (NIO +8.55%) topped the list. Penn National Gaming (PENN +7.14%) and Draft Kings (DKNG +4.48%) also did very well. Twitter (TWTR -1.62%) continued a second day of losses.
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Looking ahead
The only scheduled big economic news for Monday is FOMC Member Bostic making remarks. However, it is expected that the House will bring new impeachment charges against the president.
No notable earnings reports are scheduled for Monday.
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Trends, Support and Resistance
The long-term trend line from the 10/30 bottom points to a gain of +0.55%.
The one-day trend points to a -0.56% loss.
The five-day line points to a smaller loss of -0.30%.
The index is well above the 21d EMA which has acted as support recently. That's -3.53% below the close. The index also held the 12,550 area this week. If it passes that area, the next support area is 12,250.
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Wrap-up
I thought the turmoil was behind us once elections were resolved and the capitol clear of rioters. Thursday was super bullish and with stimulus on the way, the market could have nothing but strength. However, investors are still very sensitive to anything popping in the news, as we saw with the comments today from a Democratic senator possibly blocking the stimulus.
Looking at the action mid-day, you might have wanted to panic sell, thinking this was the end of a rally. But that would have been quickly proven the wrong action. It's one of those days that reminds us to have a plan and stick to the plan, and don't give too much weight to broad reactions to media.
Stay healthy and take care!
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.
I'm working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Friday, January 8, 2021
Might even raise a little sand
Facts: +1.03%, Volume higher, Closing range: 96%, Body: 24%
Good: Bulls win the day, despite selling pressure
Bad: Mid-day sell-off
Highs/Lows: Higher high, higher low
Candle: Smallish green body in upper part of candle, long lower wick
Advance/Decline: 1.11, about even advancing and declining stocks
Indexes: SPX (+0.55%), DJI (+0.18%), RUT (-0.99%), VIX (-3.62%)
Sectors: Consumer Discretionary (XLY +2.06%) and Real Estate (XLRE +1.08%) were top. Industrials (XLI -0.24%) and Materials (XLB -0.48%) were the bottom.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
It was a wild ride for traders today as a Democratic senator seemed to state he'd block new stimulus and then later say he's still considering his decision. That resulted in a mid-day sell-off and looked like the bears would win, but then the Nasdaq turned and closed at new all-time highs.
The index closed the day with a +1.03% gain on higher volume. The closing range of 96% and 24% green body over a long lower wick represent the mid-day selling pressure that was eventually overcome by the bulls. There were about the same number of advancing stocks as declining stocks. 275 new highs is less than the previous day, but still a very large number.
The S&P 500 (SPX) and Dow Jones Industrial (DJI) had smaller gains of +0.55% and +0.18% respectively. The Russell 2000 (RUT) showed a bearish candle that tops out at the same high as yesterday, and closes for a loss of -0.99%. The VIX declined by -3.62%.
Consumer Discretionary (XLY +2.06%) and Real Estate (XLRE +1.08%) were top sectors for the day. Industrials (XLI -0.24%) and Materials (XLB -0.48%) were the bottom. It's also worth noting Utilities (XLU +0.84%) near the top of the list, signaling some defensive plays in the mix. Also, the four losing sectors for the day, are the leaders for the week and it's likely those sectors just needed to cool off from their heated advances on Wednesday and Thursday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) advanced for a third day. US Treasury 30y (US30Y), 10y (US10Y) had another day of big gains while the 2y (US02Y) bond yield remained flat. The yield spread for US10Y to US2Y widened again with the US10Y yield advancing over 22% for the week. Corporate Bonds (HYG) prices increased while short term treasury bond (IEI) prices dropped.
Silver (SILVER) and Gold (GOLD) both dropped -6.26% and -3.38% respectively. Crude Oil (CRUDEOIL1!) continues to advance to levels not seen since February 2020. Timber (WOOD) moved sideways after a few days of gains. Copper (COPPER1!) and Aluminum (ALI1!) retreated around -0.80% each.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose slightly to 0.563 as investor optimism remains very 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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
The biggest four mega-caps all advanced for the day. Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) are trading above the key 21d EMA and 50d MA lines. Amazon (AMZN) had closed above its 50d MA, but below its 21d EMA.
Tesla (TSLA) tops the mega-cap charts with a +7.84% gain, continuing its spectacular rise. Alibaba (BABA), PayPal (PYPL) and Thermo Fisher Scientific (TMO) are other top mega-caps for the day.
Growth stocks did well. In addition to Tesla, FUTU Holdings (FUTU +12.36%) and NIO (NIO +8.55%) topped the list. Penn National Gaming (PENN +7.14%) and Draft Kings (DKNG +4.48%) also did very well. Twitter (TWTR -1.62%) continued a second day of losses.
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Looking ahead
The only scheduled big economic news for Monday is FOMC Member Bostic making remarks. However, it is expected that the House will bring new impeachment charges against the president.
No notable earnings reports are scheduled for Monday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The long-term trend line from the 10/30 bottom points to a gain of +0.55%.
The one-day trend points to a -0.56% loss.
The five-day line points to a smaller loss of -0.30%.
The index is well above the 21d EMA which has acted as support recently. That's -3.53% below the close. The index also held the 12,550 area this week. If it passes that area, the next support area is 12,250.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
I thought the turmoil was behind us once elections were resolved and the capitol clear of rioters. Thursday was super bullish and with stimulus on the way, the market could have nothing but strength. However, investors are still very sensitive to anything popping in the news, as we saw with the comments today from a Democratic senator possibly blocking the stimulus.
Looking at the action mid-day, you might have wanted to panic sell, thinking this was the end of a rally. But that would have been quickly proven the wrong action. It's one of those days that reminds us to have a plan and stick to the plan, and don't give too much weight to broad reactions to media.
Stay healthy and take care!
