Trend lines drawn from the 3/5 low (25d), 4/5 (5d) and today 4/9 (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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Tuesday, April 13, 2021
Facts: +1.05%, Volume lower, Closing range: 86%, Body: 89% (w/gap)
Good: Higher high, higher low, large green body and high closing range
Bad: Small dip at end of day
Highs/Lows: Higher high, higher low
Candle: Large green body under a small upper wick, no lower wick
Advance/Decline: Three declining stocks for every two advancing stocks
Indexes: SPX (+0.33%), DJI (-0.20%), RUT (-0.22%), VIX (-1.54%)
Sectors: Utilities (+1.19%) and Consumer Discretionary (+1.06%) were top. Consumer Staples (-0.53%) and Finance (-0.33%) were bottom.
Expectation: Sideways or Higher
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Market Overview
Bigger than expected inflation didn't hold back the markets from setting new records today. The S&P 500 set another new record close while the Nasdaq inches toward key support levels. The gains were driven mostly by large mega-caps and not shared broadly across the indexes.
The Nasdaq advanced +1.05% for the day and closed just below the 14,000 resistance line. The candle has no lower wick as the intraday low was set at the opening bell. The thick green 86% body led the index to a 89% closing range (including the gap) with the intraday high being set late in the afternoon. The advance was driven by larger cap stocks, as there were more declining stocks than advancing stocks.
The S&P 500 (SPX) gained +0.33%, closing just below a new all-time high set intraday. The Dow Jones Industrial average (DJI) declined -0.20%, weighed down by cyclical sectors. The Russell 2000 (RUT) continues to underperform the other indexes with a -0.22% decline today.
The VIX volatility index declined -1.54%.
Utilities (XLU +1.19%) was the top sector, signaling caution among investors despite the gains in the Nasdaq and S&P 500. Consumer Discretionary (XLY +1.06%) and Technology (XLK +0.94%) were the second and third best sectors. Consumer Staples (XLP -0.53%) and Finance (XLF -0.33%) were bottom.
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Economic Indicators
The US Dollar (DXY) declined -0.28%.
The US 30y treasury bond yield declined after a strong auction of the bond today. US 10y and 2y note yields also declined for the day.
Prices on both High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) advanced for the day.
Silver (SILVER) and Gold (GOLD) both advanced. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) remained flat near its highs. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
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Investor Sentiment
The put/call ratio ended the day at 0.521. 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 in the neutral area.
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Market Leaders
All four big mega-caps gained for the day. Apple (AAPL) had a +2.43% and nearly got the 21d EMA line above the 50d MA. Microsoft (MSFT) continues setting new all-time highs with a +1.01% advance. Amazon (AMZN) held onto a +0.61% gain after advancing more than 1.5% intraday. Alphabet (GOOGL) closed the day with a +0.56% advance.
Tesla (TSLA) was the big mega-cap winner of the day with a big +8.60% gain. Nvidia (NVDA) and PayPal (PYPL) join Apple to fill out the top four. At the bottom of the list are consumer staples Procter & Gamble (PG) and Johnson & Johnson (JNJ) along with big finance JP Morgan (JPM) and Bank of America (BAC). Nike was the worst performing mega-cap with over a 2% decline.
The growth stock list had a decent day with CloudFlare (NET) topping the list, closing the day with a 11.30% gain. Palantir (PLTR), SUMO Logic (SUMO) and Moderna (MRNA) had gains of over 7%. FUTU Holdings (FUTU) and UP Fintech (TIGR) were at the bottom of the list with over 2% declines.
Zoom Video (ZM) also had a big gain for the day perhaps on fears of the vaccine concerns (now including Johnson & Johnson) slowing down the return to work.
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Looking ahead
Economic news for Wednesday includes Export/Import Price index data before markets open. Crude Oil Inventory data will be released after the market opens.
JP Morgan (JPM), Wells Fargo (WFC), Goldman Sachs (GS) will get earnings season going for big finance with reports on Wednesday. In addition, retail stocks Bed, Bath and Beyond (BBBY) and Lovesac (LOVE) will release earnings.
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Trends, Support and Resistance
The index is just under the 14,000 support/resistance area. A breakthrough of that line will be a confidence booster on the way to new all-time highs for the Nasdaq. With big tech stocks extended above bases, we may need one more pull back before this breakthrough.
The one-day trend line points to a +0.39% gain for Wednesday. The five-day trend line points to a sideways move.
The trend line from the 3/5 low points to a -1.73% loss.
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Wrap-up
It may seem that inflation data was ignored in the equities markets, with the Nasdaq having a gain and the S&P 500 hitting a record high. However, the gains in the market were driven by large mega-caps and not broadly shared across the indexes.
After the inflation data was released the US dollar weakened further. The weakening of the US dollar will positively impact valuations of large multinational companies. Exports become cheaper, boosting revenues in foreign subsidiaries. When those revenues are repatriated for reporting, they are also worth more translated back into the USD.
On the other hand, domestic companies are more likely to be impacted by inflation and the weakening dollar as imports become more expensive. Not all the expense can be passed onto the consumer, so margins will be reduced while the companies balance higher prices with the impact to demand.
The high inflation is expected to be transitionary and should come back down later in the year after lagging supply catches up with the accelerated demand caused by consumers getting back out shopping, spending savings, stimulus checks and credit. The high demand is seen in the huge surprise export data from China.
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=-
Tuesday, April 13, 2021
Facts: +1.05%, Volume lower, Closing range: 86%, Body: 89% (w/gap)
Good: Higher high, higher low, large green body and high closing range
Bad: Small dip at end of day
Highs/Lows: Higher high, higher low
Candle: Large green body under a small upper wick, no lower wick
Advance/Decline: Three declining stocks for every two advancing stocks
Indexes: SPX (+0.33%), DJI (-0.20%), RUT (-0.22%), VIX (-1.54%)
Sectors: Utilities (+1.19%) and Consumer Discretionary (+1.06%) were top. Consumer Staples (-0.53%) and Finance (-0.33%) were bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Bigger than expected inflation didn't hold back the markets from setting new records today. The S&P 500 set another new record close while the Nasdaq inches toward key support levels. The gains were driven mostly by large mega-caps and not shared broadly across the indexes.
The Nasdaq advanced +1.05% for the day and closed just below the 14,000 resistance line. The candle has no lower wick as the intraday low was set at the opening bell. The thick green 86% body led the index to a 89% closing range (including the gap) with the intraday high being set late in the afternoon. The advance was driven by larger cap stocks, as there were more declining stocks than advancing stocks.
The S&P 500 (SPX) gained +0.33%, closing just below a new all-time high set intraday. The Dow Jones Industrial average (DJI) declined -0.20%, weighed down by cyclical sectors. The Russell 2000 (RUT) continues to underperform the other indexes with a -0.22% decline today.
The VIX volatility index declined -1.54%.
Utilities (XLU +1.19%) was the top sector, signaling caution among investors despite the gains in the Nasdaq and S&P 500. Consumer Discretionary (XLY +1.06%) and Technology (XLK +0.94%) were the second and third best sectors. Consumer Staples (XLP -0.53%) and Finance (XLF -0.33%) were bottom.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) declined -0.28%.
The US 30y treasury bond yield declined after a strong auction of the bond today. US 10y and 2y note yields also declined for the day.
Prices on both High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) advanced for the day.
Silver (SILVER) and Gold (GOLD) both advanced. Crude Oil (CRUDEOIL1!) advanced. Timber (WOOD) remained flat near its highs. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio ended the day at 0.521. 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 in the neutral area.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four big mega-caps gained for the day. Apple (AAPL) had a +2.43% and nearly got the 21d EMA line above the 50d MA. Microsoft (MSFT) continues setting new all-time highs with a +1.01% advance. Amazon (AMZN) held onto a +0.61% gain after advancing more than 1.5% intraday. Alphabet (GOOGL) closed the day with a +0.56% advance.
Tesla (TSLA) was the big mega-cap winner of the day with a big +8.60% gain. Nvidia (NVDA) and PayPal (PYPL) join Apple to fill out the top four. At the bottom of the list are consumer staples Procter & Gamble (PG) and Johnson & Johnson (JNJ) along with big finance JP Morgan (JPM) and Bank of America (BAC). Nike was the worst performing mega-cap with over a 2% decline.
The growth stock list had a decent day with CloudFlare (NET) topping the list, closing the day with a 11.30% gain. Palantir (PLTR), SUMO Logic (SUMO) and Moderna (MRNA) had gains of over 7%. FUTU Holdings (FUTU) and UP Fintech (TIGR) were at the bottom of the list with over 2% declines.
Zoom Video (ZM) also had a big gain for the day perhaps on fears of the vaccine concerns (now including Johnson & Johnson) slowing down the return to work.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Economic news for Wednesday includes Export/Import Price index data before markets open. Crude Oil Inventory data will be released after the market opens.
JP Morgan (JPM), Wells Fargo (WFC), Goldman Sachs (GS) will get earnings season going for big finance with reports on Wednesday. In addition, retail stocks Bed, Bath and Beyond (BBBY) and Lovesac (LOVE) will release earnings.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index is just under the 14,000 support/resistance area. A breakthrough of that line will be a confidence booster on the way to new all-time highs for the Nasdaq. With big tech stocks extended above bases, we may need one more pull back before this breakthrough.
The one-day trend line points to a +0.39% gain for Wednesday. The five-day trend line points to a sideways move.
The trend line from the 3/5 low points to a -1.73% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It may seem that inflation data was ignored in the equities markets, with the Nasdaq having a gain and the S&P 500 hitting a record high. However, the gains in the market were driven by large mega-caps and not broadly shared across the indexes.
After the inflation data was released the US dollar weakened further. The weakening of the US dollar will positively impact valuations of large multinational companies. Exports become cheaper, boosting revenues in foreign subsidiaries. When those revenues are repatriated for reporting, they are also worth more translated back into the USD.
On the other hand, domestic companies are more likely to be impacted by inflation and the weakening dollar as imports become more expensive. Not all the expense can be passed onto the consumer, so margins will be reduced while the companies balance higher prices with the impact to demand.
The high inflation is expected to be transitionary and should come back down later in the year after lagging supply catches up with the accelerated demand caused by consumers getting back out shopping, spending savings, stimulus checks and credit. The high demand is seen in the huge surprise export data from China.
Stay healthy and trade safe!
