Trend lines drawn from the 10/13 pivot day (28d), 10/30 bottom (14d), 11/12 (5d), and today 11/18 (1d).
I am making some changes to the chart presentation and renaming the series to reflect the other data points I am including. Still based out of the Nasdaq composite.
I do occasionally have some errors or typos and will correct them in my blog or in the comments on TradingView. I do not have an editor and do this in my free time.
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Wednesday, November 18, 2020
I'm only happy when it rains
Pour your misery down
Facts: -0.82% lower, Volume higher, Closing range: 1%, Body: 66%
Good: Nothing
Bad: Character change, break from trend
Highs/Lows: Lower high, lower low
Candle: No lower wick, long red body
Advance/Decline: 0.63, 3 declining stocks for every advancing stock
Sectors: Industrials (XLI -0.45%), Consumer Discretionary (XLY -0.68%) were best performing. Energy (XLE -2.91%) and Utilities (XLU -1.96%) were worst performing.
Expectation: Lower
A note on Expectation: Avoid reading expectation as a prediction. I try to have an expectation for the market based on the technical and fundamental data available. Then if the market does something different, it compels me to ask why and understand if something is fundamentally changing or if its normal action.
The last few days is a good example. My expectation was Higher after Monday close, but we had a sideways to lower result. There is an indecision candle for the Nasdaq yesterday. So I set an expectation for Sideways for today, looking for a direction. This afternoon, the market made a decisive direction change and ended down. I’ll be setting an expectation for lower tomorrow, but the market can certainly change the other direction and that will be a good expectation breaker and sign we are still in a rally.
There is no reliable way to predict what the market will do each day. The best I have done in a computer algorithm analyzing candlestick charts is 50.01% accuracy. A coin flip.
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Market Overview
The market ended today with a character change, raising questions about where it may go in the near term. The competing optimism and pessimism with the pandemic and economy led to a day and a half of indecision which finally turned to a downside move at the end of Wednesday. The character change is noted and will follow closely over the next few days. The index closed with a -0.82% loss on higher volume. The candle has a red body of 66% and a closing range of 1%, leaving no bottom wick. There were 3 declining stocks for every 2 advancing stocks on the index.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
The S&P 500 (SPX -1.16%), Dow Jones Industrial average (-1.16%) and the Russell 2000 (-1.26%) all ended with losses. The notable change is seeing the RUT with the worst performance among the indexes for today after outperforming since early last week.
There was also a change in the sector performance. After leading last week and the past two days, Energy (XLE -2.91%) dropped to the bottom of the list. It is still at the top when considering change since the vaccine was announced on 11/9, but this is a signal of sentiment change in which sector will lead. All sectors were down for the day with Industrials (XLI -0.45%) and Consumer Discretionary (XLY -0.68%) performing the best compared to the S&P 500. Financials (XLF -0.95%) led in the morning before falling back.
The VIX volatility index increased by 4.98%.
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Bonds, Greenback and Commodities
The US30Y-US10Y spread tightened for the day while the US10Y-US2Y spread increased. The spread of Corporate Bonds to Treasury Bonds increased slightly.
The US dollar (DXY -0.03%) continued to weaken over the past week.
Silver (SILVER -0.65%) and Gold (GOLD -0.38%) both decreased for the day. Timber (WOOD +0.35%) continued to grow at a slower pace than the earlier this month. Aluminum Futures (ALI1! +0.85%) continues to climb.
Crude Oil futures (CRUDEOIL1! +2.46%) gained after inventories data came back less than expected, a good sign for demand.
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Market Leaders
All the big four mega-caps lost for the day. Apple (AAPL -1.14%) and Google (GOOG -1.32%) are still trading above key moving average lines. Microsoft (MSFT -1.58%) dropped below the 21d EMA and Amazon (AMZN -0.96%) remains below the 21d EMA and the 50d MA. Tesla (TSLA +10.20%) continued to rise after being added to the S&P 500. Some other mega-caps such as Taiwan Semiconductor Manufacturing (TSM +1.27%) had gains but most mega-caps lost for the day.
Target (TGT +2.34%), TJX Companies (TJX +1.86%) gained after releasing earnings before market open. Lowe’s (LOW -8.21%) was down after also releasing earnings before open. Limited Brands (LB -5.19%) completed the days retail earnings with a positive beat and is up 9.70% after hours. NVDA (+0.05%) is also down 2-3% after hours after beating earnings and revenue but warning on a decline in data center revenue.
Many of the Growth stocks that had gains during the pandemic, ended the day positive, showing the market is expecting more impact from new lockdowns. Zoom Video (ZM +3.34%), Peloton (PTON +1.95%) and Fastly (FSLY +3.49%) are a few of the stocks that outperformed the market. RIOT (RIOT -13.72%) gave back some of the massive gains on the previous day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Existing Home Sales data will be released tomorrow, a bullish/bearish indicator for the USD and will add some more detail to the mixed results of today’s Building Permits (below expectation) and Housing Starts (above expectation) data. Initial Jobless Claims and more manufacturing data will also be released.
Macy’s (M +2.16%), ROSS Stores (ROST +0.76%), BJ’s Wholesale Club Holdings (BJ +2.09%) will add to this weeks Retail earnings releases. Intuit (INTU -1.12%) and Workday (WDAY -1.40%) are notable growth stocks to release earnings tomorrow.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The trend line from the 10/30 bottom is still pointing to a new all-time high if the index can gain +3.01%. A return to the five-day trend line would result in a +1.55% gain and be a healthy reversal from today’s afternoon action. An alternative would be a sideways to positive move of +0.41% which would follow the one-day regression trend line. That one-day line seems compromised however with the late sell-off today.
The trend line from the 10/12 pivot day is pointing to a -1.12% loss which would be just above the 21d EMA. Landing at this area would confirm the character change from today, but not be disastrous. The index in the past has held support here before dropping below it, giving a chance to assess what the next move might be.
The 50d MA could also be a point that the index drops to and that is -3.77% below today’s close.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
The character change in the market this afternoon is a signal of investor nervousness around the pandemic and new lockdowns overtaking optimism of a vaccine. Keep in mind though that this sentiment can also change back the other direction, especially if the situation puts more pressure on congress to pass stimulus.
You can be ready for a worsening market by putting stop loss orders in place, getting off margin and selling riskier assets. But do not overreact to the change signal until it is confirmed. Pay more attention to the price of the market and your investments instead of the news.
Take care!
I am making some changes to the chart presentation and renaming the series to reflect the other data points I am including. Still based out of the Nasdaq composite.
I do occasionally have some errors or typos and will correct them in my blog or in the comments on TradingView. I do not have an editor and do this in my free time.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wednesday, November 18, 2020
I'm only happy when it rains
Pour your misery down
Facts: -0.82% lower, Volume higher, Closing range: 1%, Body: 66%
Good: Nothing
Bad: Character change, break from trend
Highs/Lows: Lower high, lower low
Candle: No lower wick, long red body
Advance/Decline: 0.63, 3 declining stocks for every advancing stock
Sectors: Industrials (XLI -0.45%), Consumer Discretionary (XLY -0.68%) were best performing. Energy (XLE -2.91%) and Utilities (XLU -1.96%) were worst performing.
Expectation: Lower
A note on Expectation: Avoid reading expectation as a prediction. I try to have an expectation for the market based on the technical and fundamental data available. Then if the market does something different, it compels me to ask why and understand if something is fundamentally changing or if its normal action.
The last few days is a good example. My expectation was Higher after Monday close, but we had a sideways to lower result. There is an indecision candle for the Nasdaq yesterday. So I set an expectation for Sideways for today, looking for a direction. This afternoon, the market made a decisive direction change and ended down. I’ll be setting an expectation for lower tomorrow, but the market can certainly change the other direction and that will be a good expectation breaker and sign we are still in a rally.
There is no reliable way to predict what the market will do each day. The best I have done in a computer algorithm analyzing candlestick charts is 50.01% accuracy. A coin flip.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The market ended today with a character change, raising questions about where it may go in the near term. The competing optimism and pessimism with the pandemic and economy led to a day and a half of indecision which finally turned to a downside move at the end of Wednesday. The character change is noted and will follow closely over the next few days. The index closed with a -0.82% loss on higher volume. The candle has a red body of 66% and a closing range of 1%, leaving no bottom wick. There were 3 declining stocks for every 2 advancing stocks on the index.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
The S&P 500 (SPX -1.16%), Dow Jones Industrial average (-1.16%) and the Russell 2000 (-1.26%) all ended with losses. The notable change is seeing the RUT with the worst performance among the indexes for today after outperforming since early last week.
There was also a change in the sector performance. After leading last week and the past two days, Energy (XLE -2.91%) dropped to the bottom of the list. It is still at the top when considering change since the vaccine was announced on 11/9, but this is a signal of sentiment change in which sector will lead. All sectors were down for the day with Industrials (XLI -0.45%) and Consumer Discretionary (XLY -0.68%) performing the best compared to the S&P 500. Financials (XLF -0.95%) led in the morning before falling back.
The VIX volatility index increased by 4.98%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Bonds, Greenback and Commodities
The US30Y-US10Y spread tightened for the day while the US10Y-US2Y spread increased. The spread of Corporate Bonds to Treasury Bonds increased slightly.
The US dollar (DXY -0.03%) continued to weaken over the past week.
Silver (SILVER -0.65%) and Gold (GOLD -0.38%) both decreased for the day. Timber (WOOD +0.35%) continued to grow at a slower pace than the earlier this month. Aluminum Futures (ALI1! +0.85%) continues to climb.
Crude Oil futures (CRUDEOIL1! +2.46%) gained after inventories data came back less than expected, a good sign for demand.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All the big four mega-caps lost for the day. Apple (AAPL -1.14%) and Google (GOOG -1.32%) are still trading above key moving average lines. Microsoft (MSFT -1.58%) dropped below the 21d EMA and Amazon (AMZN -0.96%) remains below the 21d EMA and the 50d MA. Tesla (TSLA +10.20%) continued to rise after being added to the S&P 500. Some other mega-caps such as Taiwan Semiconductor Manufacturing (TSM +1.27%) had gains but most mega-caps lost for the day.
Target (TGT +2.34%), TJX Companies (TJX +1.86%) gained after releasing earnings before market open. Lowe’s (LOW -8.21%) was down after also releasing earnings before open. Limited Brands (LB -5.19%) completed the days retail earnings with a positive beat and is up 9.70% after hours. NVDA (+0.05%) is also down 2-3% after hours after beating earnings and revenue but warning on a decline in data center revenue.
Many of the Growth stocks that had gains during the pandemic, ended the day positive, showing the market is expecting more impact from new lockdowns. Zoom Video (ZM +3.34%), Peloton (PTON +1.95%) and Fastly (FSLY +3.49%) are a few of the stocks that outperformed the market. RIOT (RIOT -13.72%) gave back some of the massive gains on the previous day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Existing Home Sales data will be released tomorrow, a bullish/bearish indicator for the USD and will add some more detail to the mixed results of today’s Building Permits (below expectation) and Housing Starts (above expectation) data. Initial Jobless Claims and more manufacturing data will also be released.
Macy’s (M +2.16%), ROSS Stores (ROST +0.76%), BJ’s Wholesale Club Holdings (BJ +2.09%) will add to this weeks Retail earnings releases. Intuit (INTU -1.12%) and Workday (WDAY -1.40%) are notable growth stocks to release earnings tomorrow.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The trend line from the 10/30 bottom is still pointing to a new all-time high if the index can gain +3.01%. A return to the five-day trend line would result in a +1.55% gain and be a healthy reversal from today’s afternoon action. An alternative would be a sideways to positive move of +0.41% which would follow the one-day regression trend line. That one-day line seems compromised however with the late sell-off today.
The trend line from the 10/12 pivot day is pointing to a -1.12% loss which would be just above the 21d EMA. Landing at this area would confirm the character change from today, but not be disastrous. The index in the past has held support here before dropping below it, giving a chance to assess what the next move might be.
The 50d MA could also be a point that the index drops to and that is -3.77% below today’s close.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
The character change in the market this afternoon is a signal of investor nervousness around the pandemic and new lockdowns overtaking optimism of a vaccine. Keep in mind though that this sentiment can also change back the other direction, especially if the situation puts more pressure on congress to pass stimulus.
You can be ready for a worsening market by putting stop loss orders in place, getting off margin and selling riskier assets. But do not overreact to the change signal until it is confirmed. Pay more attention to the price of the market and your investments instead of the news.
Take care!
