Trend lines drawn from the 10/13 pivot day (30d), 10/30 bottom (16d), 11/16 (5d), and today 11/20 (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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Friday, November 20, 2020
We may lose, and we may win
Though we will never be here again
Facts: -0.42% lower, Volume higher, Closing range: 3%, Body: 45%
Good: Higher high, Higher low
Bad: Sold in afternoon, close at the day’s lows
Highs/Lows: Higher high, Higher low
Candle: Body in lower half of candle
Advance/Decline: 1.10, about even advancing and declining stocks
Sectors: Utilities (XLU +0.02%) was the only gaining sector. Technology (XLK -1.03%) was the worst performing.
Expectation: Sideways or Lower
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Market Overview
The market showed signs of nervous investors today likely from a disagreement between the Treasury Department and the Fed. That nervousness turned into a sell-off in the afternoon that ended with the index at its daily lows. We did get the higher high and higher low that I hoped for in yesterday’s update. There were also bright spots among some growth stocks with just over half of stocks in the Nasdaq ending the day with gains. Otherwise, it was a disappointing end to a very sideways week which closed almost exactly where it opened. The index ended today with a -0.42% loss on slightly higher volume than yesterday. The closing range of 3% and the 45% body in the lower half of the candle show the gains in the morning were lost in the afternoon.
-=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 Russell 2000 (RUT +0.07%) was the only index to end the day and the week with gains. The S&P 500 (SPX -0.68%) and the Dow Jones Industrial (DJI -0.75%) both sold off throughout the day closing at lows.
The leading sector of the day was Utilities (XLU +0.02%) which is has recently been the sector that leads when investors get nervous. Communications (XLC -0.23%) and Technology (XLK -1.03%) were leading in the morning before pulling back in the afternoon. Technology dropped sharply in the last hour of trading to end the day as the worst performing sector.
The VIX volatility index increased by +2.55%.
-=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 Indicators
US 30-year and 10-year Treasury bond yields decreased for the day as investors moved moderately into the safe haven. The spreads tightened for an additional day.
The corporate bond to treasure bond spreads remained about the same.
The US dollar (DXY +0.11%) was up slightly for the day.
Silver (SILVER -+0.51%) was up for the day while Gold (GOLD -0.07%) was just slightly down. Timber (WOOD -0.07%) fell just slightly. Crude Oil futures (CRUDEOIL1! +1.66%) regained recent highs.
Adding the Put/Call ratio to the daily indicators. It dropped to 0.535. A contrarian indictor that shows overly bullish or overly bearish investor behavior. 0.7 is considered normal. As it approaches 0.60 (overly bullish) and below, watch for a reversal in the market.
-=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 big four mega-caps ended the day with losses. Apple (AAPL -1.1%) and Google (GOOG -1.23%) closed above their key moving average lines. Microsoft (MSFT -0.96%) closed below its 50d MA line. Amazon (AMZN -0.57%) is still trading below both indicators. All four underperformed the index for the day. Most other mega-caps closed with losses. Alibaba (BABA +4.17%), Paypal (PYPL +0.93%), Netflix (NFLX +0.74%) were a few notable outperforming mega-caps.
Foot Locker (FL -4.96%) released earnings that beat expectations before market open. It opened with gains in the morning but sold off to end the day with a loss.
It was a pretty good day for growth stocks, especially stocks that have done well during the pandemic. Fiverr (FVRR +6.99%), Zoom Video (ZM +6.11%) and Peloton (PTON +5.36%) are a few examples of stocks with big gains today. Workday (WDAY -9.27%) sold off after releasing earnings that beat expectations, but warning about impact from the pandemic on future business.
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Looking ahead
Purchasing Managers Index data will be released on Monday, signaling expansion or contraction for Manufacturing and Services sectors.
Daqo New Energy (DQ +4.07%), Twist Bioscience (TWST +0.93%), NIU Tech (NIU -0.45%) will kick off a light earnings week with release before market open on Monday. Agilent (A +2.03%) and Arrowhead Pharmaceuticals (ARWR -0.17%) will report after 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=-
Trends, Support and Resistance
The index still could not pass the 10/12 pivot high that has been resistance for most of the past two weeks. The trend line from the 10/30 bottom is pointing to a +2.52% gain. The five-day and one-day trend lines point to a +0.32%.
The trend line from the 10/12 pivot day is pointing to a -0.99%. If the index can close above the 10/12 pivot day high, then I’d remove this trend line moving forward.
-=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 Nasdaq closed the week right where it opened with the trading range contained to 1.6% and an inside week relative to the previous week. With mixed signals coming from economic news as well as a disagreement between the Treasury and the Fed, it’s no surprise investors protected portfolios heading into the weekend. Time to get some rest before the not-so-restful holidays next week.
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=-
Friday, November 20, 2020
We may lose, and we may win
Though we will never be here again
Facts: -0.42% lower, Volume higher, Closing range: 3%, Body: 45%
Good: Higher high, Higher low
Bad: Sold in afternoon, close at the day’s lows
Highs/Lows: Higher high, Higher low
Candle: Body in lower half of candle
Advance/Decline: 1.10, about even advancing and declining stocks
Sectors: Utilities (XLU +0.02%) was the only gaining sector. Technology (XLK -1.03%) was the worst performing.
Expectation: Sideways or Lower
-=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 showed signs of nervous investors today likely from a disagreement between the Treasury Department and the Fed. That nervousness turned into a sell-off in the afternoon that ended with the index at its daily lows. We did get the higher high and higher low that I hoped for in yesterday’s update. There were also bright spots among some growth stocks with just over half of stocks in the Nasdaq ending the day with gains. Otherwise, it was a disappointing end to a very sideways week which closed almost exactly where it opened. The index ended today with a -0.42% loss on slightly higher volume than yesterday. The closing range of 3% and the 45% body in the lower half of the candle show the gains in the morning were lost in the afternoon.
-=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 Russell 2000 (RUT +0.07%) was the only index to end the day and the week with gains. The S&P 500 (SPX -0.68%) and the Dow Jones Industrial (DJI -0.75%) both sold off throughout the day closing at lows.
The leading sector of the day was Utilities (XLU +0.02%) which is has recently been the sector that leads when investors get nervous. Communications (XLC -0.23%) and Technology (XLK -1.03%) were leading in the morning before pulling back in the afternoon. Technology dropped sharply in the last hour of trading to end the day as the worst performing sector.
The VIX volatility index increased by +2.55%.
-=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 Indicators
US 30-year and 10-year Treasury bond yields decreased for the day as investors moved moderately into the safe haven. The spreads tightened for an additional day.
The corporate bond to treasure bond spreads remained about the same.
The US dollar (DXY +0.11%) was up slightly for the day.
Silver (SILVER -+0.51%) was up for the day while Gold (GOLD -0.07%) was just slightly down. Timber (WOOD -0.07%) fell just slightly. Crude Oil futures (CRUDEOIL1! +1.66%) regained recent highs.
Adding the Put/Call ratio to the daily indicators. It dropped to 0.535. A contrarian indictor that shows overly bullish or overly bearish investor behavior. 0.7 is considered normal. As it approaches 0.60 (overly bullish) and below, watch for a reversal in the market.
-=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 big four mega-caps ended the day with losses. Apple (AAPL -1.1%) and Google (GOOG -1.23%) closed above their key moving average lines. Microsoft (MSFT -0.96%) closed below its 50d MA line. Amazon (AMZN -0.57%) is still trading below both indicators. All four underperformed the index for the day. Most other mega-caps closed with losses. Alibaba (BABA +4.17%), Paypal (PYPL +0.93%), Netflix (NFLX +0.74%) were a few notable outperforming mega-caps.
Foot Locker (FL -4.96%) released earnings that beat expectations before market open. It opened with gains in the morning but sold off to end the day with a loss.
It was a pretty good day for growth stocks, especially stocks that have done well during the pandemic. Fiverr (FVRR +6.99%), Zoom Video (ZM +6.11%) and Peloton (PTON +5.36%) are a few examples of stocks with big gains today. Workday (WDAY -9.27%) sold off after releasing earnings that beat expectations, but warning about impact from the pandemic on future business.
-=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
Purchasing Managers Index data will be released on Monday, signaling expansion or contraction for Manufacturing and Services sectors.
Daqo New Energy (DQ +4.07%), Twist Bioscience (TWST +0.93%), NIU Tech (NIU -0.45%) will kick off a light earnings week with release before market open on Monday. Agilent (A +2.03%) and Arrowhead Pharmaceuticals (ARWR -0.17%) will report after 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=-
Trends, Support and Resistance
The index still could not pass the 10/12 pivot high that has been resistance for most of the past two weeks. The trend line from the 10/30 bottom is pointing to a +2.52% gain. The five-day and one-day trend lines point to a +0.32%.
The trend line from the 10/12 pivot day is pointing to a -0.99%. If the index can close above the 10/12 pivot day high, then I’d remove this trend line moving forward.
-=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 Nasdaq closed the week right where it opened with the trading range contained to 1.6% and an inside week relative to the previous week. With mixed signals coming from economic news as well as a disagreement between the Treasury and the Fed, it’s no surprise investors protected portfolios heading into the weekend. Time to get some rest before the not-so-restful holidays next week.
Take care!
