Trend lines drawn from the 3/5 low (17d), 3/23 (5d) and today 3/29 (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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Monday, March 29, 2021
Facts: -0.6%, Volume lower, Closing range: 52%, Body: -25%
Good: Inside day on lower volume with a slightly longer lower wick
Bad: Lower high with two intraday dips
Highs/Lows: Lower high, higher low
Candle: Red body in the middle of candle with a longer lower wick
Advance/Decline: 5 declining stocks for every advancing stock
Indexes: SPX (-0.09%), DJI (+0.30%), RUT (-2.83%), VIX (+9.97%)
Sectors: Utilities (XLU +1.07%) and Communications (XLC +1.02%) were top. Financials (XLF -0.32%) and Energy (XLE -1.19%) were bottom.
Expectation: Sideways or Higher
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Market Overview
It was a choppy day to start the week. The intraday movement has the look of a spiral that indicates indecision in the market. That's not unexpected considering that investors had a few things to be nervous about including the re-opening of the Suez Canal and the large forced fire-sale from Archegos continuing into this week. It's also no surprise seeing the impact to the Energy and Financials sectors.
The Nasdaq closed with a -0.6% loss on lower volume for the day. The inside day has a lower high and higher low. The closing range is 0.52% which is above the 0.40% that we want to see, and the longer lower wick indicates an upward trend intraday. So despite the red body and decline for the day, there are some positives to the candle. On the other hand, there were five declining stocks for every advancing stock on the Nasdaq.
The Dow Jones Industrial average (DJI) rose +0.30% to end the day with a record setting close. The S&P 500 (SPX) lost -0.09% after closing at a record high last week. The Russell 2000 (RUT) took another beating with a -2.83% loss for the day.
The VIX volatility index rose +9.97%.
Utilities (XLU +1.07%) was the top sector as investors remained defensive throughout the day. Communications (XLC +1.02%) was the second best sector, likely a rebound from last weeks losses. Financials (XLF -0.32%) and Energy (XLE -1.19%) were at the bottom. Big banks are expected to get hit with losses as well as possible regulatory scrutiny on the Archegos situation. The Suez Canal crisis ending is good for shipping but eliminates the potential for crude oil price hikes that would have benefited Energy.
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Economic Indicators
The US Dollar (DXY) advanced +0.19% as it continues to strengthen.
The US Treasury yield curve steepened again. US 30y treasury bond and 10y note yields rose for the day while 2y note yields declined.
High Yield Corporate Bonds (HYG) prices rose while Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) declined. Copper (COPPER1!) and Aluminum (ALI1!) declined.
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Investor Sentiment
The put/call ratio dropped slightly to 0.711. 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 moved back to fear.
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Market Leaders
Microsoft (MSFT) was the only big four mega-cap to decline for the day, but remains above the important 21d EMA and 50d MA lines. Alphabet (GOOGL) advanced +1.04% and closed back above both lines after trading below the 21d EMA all of last week. It's also important to note the intraday dip and support at the 50d MA for Alphabet. Amazon (AMZN) and Apple (AAPL) advanced, but met resistance at their 21d EMA lines.
Facebook (FB), Proctor & Gamble (PG), Coca-Cola (KO) and Oracle (ORCL) were the top four mega-caps for the day. About 50% of mega-caps ended the day with gains. Tesla (TSLA), JP Morgan (JPM), Taiwan Semiconductor (TSM) and PayPal (PYPL) were at the bottom of the list with more than -1% declines.
Among Growth stocks, FUTU Holdings (FUTU) had a big day with a +14.67% gain. Twitter (TWTR) joined Facebook (FB) with about the same gain of +2.7%. Most of the growth stocks in the daily update list declined for the day. Gaming stocks Penn National Gaming (PENN) and DraftKings (DKNG) were at the bottom of the list with -7.85% and --8.49% losses.
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Looking ahead
On Tuesday, the CB Consumer Confidence numbers will be released just after market open. The API Weekly Crude Oil Stock will be updated after market close.
Lululemon (LULU), Chewy (CHWY), Carnival Corp (CCL), and HyreCar (HYRE) will report earnings on Tuesday.
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Trends, Support and Resistance
The index dipped below 13,000 support briefly, but was able to regain the line.
The trend line from the 3/5 low points to a +1.3% gain for Monday, which is back above the 21d EMA.
The one-day trend line does point upward and would result in a +0.30% gain.
The five-day trend line points to a -1.67% loss.
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Wrap-up
While the opening of the Suez Canal is a relief, the ongoing impact on big banks of the forced Archegos fire sale has investors nervous. In addition, we have the end of a quarter, a continued rotation from growth to value, and overall an environment of mixed economic data. If you are waiting for the Nasdaq to breakout of its funk, it perhaps could happen in the next few days, but more likely will happen in April.
The expectation based on the candle is for sideways to higher tomorrow. Some positive news could give investors the boost they need to jump back into growth stocks. Otherwise, it will take some slow but sure gains over days to build the confidence.
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=-
Monday, March 29, 2021
Facts: -0.6%, Volume lower, Closing range: 52%, Body: -25%
Good: Inside day on lower volume with a slightly longer lower wick
Bad: Lower high with two intraday dips
Highs/Lows: Lower high, higher low
Candle: Red body in the middle of candle with a longer lower wick
Advance/Decline: 5 declining stocks for every advancing stock
Indexes: SPX (-0.09%), DJI (+0.30%), RUT (-2.83%), VIX (+9.97%)
Sectors: Utilities (XLU +1.07%) and Communications (XLC +1.02%) were top. Financials (XLF -0.32%) and Energy (XLE -1.19%) were bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
It was a choppy day to start the week. The intraday movement has the look of a spiral that indicates indecision in the market. That's not unexpected considering that investors had a few things to be nervous about including the re-opening of the Suez Canal and the large forced fire-sale from Archegos continuing into this week. It's also no surprise seeing the impact to the Energy and Financials sectors.
The Nasdaq closed with a -0.6% loss on lower volume for the day. The inside day has a lower high and higher low. The closing range is 0.52% which is above the 0.40% that we want to see, and the longer lower wick indicates an upward trend intraday. So despite the red body and decline for the day, there are some positives to the candle. On the other hand, there were five declining stocks for every advancing stock on the Nasdaq.
The Dow Jones Industrial average (DJI) rose +0.30% to end the day with a record setting close. The S&P 500 (SPX) lost -0.09% after closing at a record high last week. The Russell 2000 (RUT) took another beating with a -2.83% loss for the day.
The VIX volatility index rose +9.97%.
Utilities (XLU +1.07%) was the top sector as investors remained defensive throughout the day. Communications (XLC +1.02%) was the second best sector, likely a rebound from last weeks losses. Financials (XLF -0.32%) and Energy (XLE -1.19%) were at the bottom. Big banks are expected to get hit with losses as well as possible regulatory scrutiny on the Archegos situation. The Suez Canal crisis ending is good for shipping but eliminates the potential for crude oil price hikes that would have benefited Energy.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) advanced +0.19% as it continues to strengthen.
The US Treasury yield curve steepened again. US 30y treasury bond and 10y note yields rose for the day while 2y note yields declined.
High Yield Corporate Bonds (HYG) prices rose while Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) declined. Copper (COPPER1!) and Aluminum (ALI1!) declined.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio dropped slightly to 0.711. 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 moved back to fear.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Microsoft (MSFT) was the only big four mega-cap to decline for the day, but remains above the important 21d EMA and 50d MA lines. Alphabet (GOOGL) advanced +1.04% and closed back above both lines after trading below the 21d EMA all of last week. It's also important to note the intraday dip and support at the 50d MA for Alphabet. Amazon (AMZN) and Apple (AAPL) advanced, but met resistance at their 21d EMA lines.
Facebook (FB), Proctor & Gamble (PG), Coca-Cola (KO) and Oracle (ORCL) were the top four mega-caps for the day. About 50% of mega-caps ended the day with gains. Tesla (TSLA), JP Morgan (JPM), Taiwan Semiconductor (TSM) and PayPal (PYPL) were at the bottom of the list with more than -1% declines.
Among Growth stocks, FUTU Holdings (FUTU) had a big day with a +14.67% gain. Twitter (TWTR) joined Facebook (FB) with about the same gain of +2.7%. Most of the growth stocks in the daily update list declined for the day. Gaming stocks Penn National Gaming (PENN) and DraftKings (DKNG) were at the bottom of the list with -7.85% and --8.49% losses.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
On Tuesday, the CB Consumer Confidence numbers will be released just after market open. The API Weekly Crude Oil Stock will be updated after market close.
Lululemon (LULU), Chewy (CHWY), Carnival Corp (CCL), and HyreCar (HYRE) will report earnings on Tuesday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index dipped below 13,000 support briefly, but was able to regain the line.
The trend line from the 3/5 low points to a +1.3% gain for Monday, which is back above the 21d EMA.
The one-day trend line does point upward and would result in a +0.30% gain.
The five-day trend line points to a -1.67% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
While the opening of the Suez Canal is a relief, the ongoing impact on big banks of the forced Archegos fire sale has investors nervous. In addition, we have the end of a quarter, a continued rotation from growth to value, and overall an environment of mixed economic data. If you are waiting for the Nasdaq to breakout of its funk, it perhaps could happen in the next few days, but more likely will happen in April.
The expectation based on the candle is for sideways to higher tomorrow. Some positive news could give investors the boost they need to jump back into growth stocks. Otherwise, it will take some slow but sure gains over days to build the confidence.
Stay healthy and trade safe!
