Summary: Optimism from positive earnings reports sent the Nasdaq and S&P 500 to a new record close today. However, evening earnings reports from Apple and Amazon may squash some of that optimism.
Notes
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Thursday, October 28, 2021
Facts: +1.39%, Volume lower, Closing Range: 97%, Body: 89% Green
Good: Very bullish green body, high advance/decline ratio
Bad: Lower volume, although still above average
Highs/Lows: Higher high, Higher low
Candle: Mostly green body, tiny upper and lower wicks. Body above previous two days candle body.
Advance/Decline: 1.79, more than three advancing stocks for every two declining stocks
Indexes: SPX (+0.98%), DJI (+0.68%), RUT (+2.02%), VIX (-2.65%)
Sector List: Real Estate (XLRE +1.47%) and Consumer Discretionary (XLY +1.33%) at the top. Consumer Staples (XLP +0.35%) and Communications (XLC +0.33%) at the bottom.
Expectation: Sideways or Higher
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Market Overview
Optimism from positive earnings reports sent the Nasdaq and S&P 500 to a new record close today. However, evening earnings reports from Apple and Amazon may squash some of that optimism.
The Nasdaq ended a bullish day with a +1.39% gain and a new all-time high. The green body covers 89% of the candle with a tiny upper wick resulting in a 97% closing range for the day. There is a slightly longer lower wick. There were more than three advancing stocks for every two declining stocks.
The S&P 500 (SPX) also set a new record close with a +0.98% advance. Small-caps outperformed as the Russell 2000 (RUT) recovered yesterday's losses and rose +2.02% today. The Dow Jones Industrial Average (DJI) rose +0.68%. The VIX Volatility Index fell -2.65%.
All S&P 500 sectors gained for the day. Real Estate (XLRE +1.47%) and Consumer Discretionary (XLY +1.33%) were the best performing sectors. Consumer Staples (XLP +0.35%) and Communications (XLC +0.33%) were at the bottom of the list.
The Bank of Japan lowered growth estimates and signaled a delay in stimulus withdrawal. US GDP for Q3 came in lower than expected at a 2% quarter-over-quarter growth rate vs. an expected 2.7%. Initial Jobless Claims continued to come down, beating expectations with 281,000 claims vs. a forecast of 290,000. Pending Home Sales for September showed a -2.3% decline vs. an expected 0.5% increase.
The US Dollar Index (DXY) dropped sharply, declining -0.53% for the day. US 30y and 10y Treasury yields rose while the 2y Treasury Yield fell. High Yield (HYG) Corporate Bond prices rose. Investment Grade (LQD) Corporate Bonds declined slightly. Timber, Copper, and Aluminum bounced higher after days of declines.
The put/call ratio (PCCE) dropped to -0.531. The CNN Fear & Greed index moved closer to Extreme Greed. The NAAIM money manager exposure index climbed above 100 for the first time since April. It rose to 103.35 this week after coming in at 98.02 last week.
Apple (AAPL) and Amazon (AMZN) rose for the day, gaining +2.50% and +1.59%. However, both had disappointing news in their earnings and sold off after hours. Microsoft (MSFT) added to its post-earnings gain with another +0.37% advance today. Alphabet (GOOGL) declined -0.25%.
Merck & Company (MRK) was at the top of the mega-cap list with a +6.14% gain today. The company topped estimates in their earnings and revenue and upped guidance for the year. Most mega-caps gained for the day. Visa (V) was the biggest loser, declining -2.75% and adding to yesterday's heavy loss.
Chewy (CHWY) was the top gainer in the Daily Update Growth List, advancing +7.94%. At the bottom of the list were Chinese Fintech stocks FUTU Holdings (FUTU) and UP Fintech (TIGR), dropping -12.76% and -17.06%. China declared unlicensed online brokerages illegal in the country, and investors feared Beijing would target the two most popular brokerages.
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Looking ahead
Friday morning brings an update to PCE Price Index data, a key measure of inflation. We will also see Personal Spending numbers for September and Consumer Expectations, and Consumer Sentiment for October.
Exxon Mobil (XOM) and Chevron (CVX) reported earnings on Friday. In addition to the big oil companies, AbbVie (ABBV), Daimler (DDAIF), and Royal Caribbean (RCL) are among other companies to close the week with earnings reports.
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Trends, Support, and Resistance
The Nasdaq moved above the 15,400 resistance area (which now becomes support). After setting a new high, it retested the 15,400 area before moving even higher for a record close.
All three trend lines (from 10/4 low, one-day, five-day) point to about the same area, which would result in a +0.37% gain for tomorrow.
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Wrap-up
So far, the earnings season has turned investors bullish, ignoring inflation and GDP slowdown concerns which could turn to stagflation. That sentiment may change with Apple and Amazon missing expectations in today's after-hours.
Ignoring the earnings reports from Apple and Amazon, the chart says we can expect Sideways or Higher. However, if investors react severely to the earnings disappointment, that will undoubtedly drag indexes lower.
Stay healthy and trade safe!
Notes
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=-
Thursday, October 28, 2021
Facts: +1.39%, Volume lower, Closing Range: 97%, Body: 89% Green
Good: Very bullish green body, high advance/decline ratio
Bad: Lower volume, although still above average
Highs/Lows: Higher high, Higher low
Candle: Mostly green body, tiny upper and lower wicks. Body above previous two days candle body.
Advance/Decline: 1.79, more than three advancing stocks for every two declining stocks
Indexes: SPX (+0.98%), DJI (+0.68%), RUT (+2.02%), VIX (-2.65%)
Sector List: Real Estate (XLRE +1.47%) and Consumer Discretionary (XLY +1.33%) at the top. Consumer Staples (XLP +0.35%) and Communications (XLC +0.33%) at the bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Optimism from positive earnings reports sent the Nasdaq and S&P 500 to a new record close today. However, evening earnings reports from Apple and Amazon may squash some of that optimism.
The Nasdaq ended a bullish day with a +1.39% gain and a new all-time high. The green body covers 89% of the candle with a tiny upper wick resulting in a 97% closing range for the day. There is a slightly longer lower wick. There were more than three advancing stocks for every two declining stocks.
The S&P 500 (SPX) also set a new record close with a +0.98% advance. Small-caps outperformed as the Russell 2000 (RUT) recovered yesterday's losses and rose +2.02% today. The Dow Jones Industrial Average (DJI) rose +0.68%. The VIX Volatility Index fell -2.65%.
All S&P 500 sectors gained for the day. Real Estate (XLRE +1.47%) and Consumer Discretionary (XLY +1.33%) were the best performing sectors. Consumer Staples (XLP +0.35%) and Communications (XLC +0.33%) were at the bottom of the list.
The Bank of Japan lowered growth estimates and signaled a delay in stimulus withdrawal. US GDP for Q3 came in lower than expected at a 2% quarter-over-quarter growth rate vs. an expected 2.7%. Initial Jobless Claims continued to come down, beating expectations with 281,000 claims vs. a forecast of 290,000. Pending Home Sales for September showed a -2.3% decline vs. an expected 0.5% increase.
The US Dollar Index (DXY) dropped sharply, declining -0.53% for the day. US 30y and 10y Treasury yields rose while the 2y Treasury Yield fell. High Yield (HYG) Corporate Bond prices rose. Investment Grade (LQD) Corporate Bonds declined slightly. Timber, Copper, and Aluminum bounced higher after days of declines.
The put/call ratio (PCCE) dropped to -0.531. The CNN Fear & Greed index moved closer to Extreme Greed. The NAAIM money manager exposure index climbed above 100 for the first time since April. It rose to 103.35 this week after coming in at 98.02 last week.
Apple (AAPL) and Amazon (AMZN) rose for the day, gaining +2.50% and +1.59%. However, both had disappointing news in their earnings and sold off after hours. Microsoft (MSFT) added to its post-earnings gain with another +0.37% advance today. Alphabet (GOOGL) declined -0.25%.
Merck & Company (MRK) was at the top of the mega-cap list with a +6.14% gain today. The company topped estimates in their earnings and revenue and upped guidance for the year. Most mega-caps gained for the day. Visa (V) was the biggest loser, declining -2.75% and adding to yesterday's heavy loss.
Chewy (CHWY) was the top gainer in the Daily Update Growth List, advancing +7.94%. At the bottom of the list were Chinese Fintech stocks FUTU Holdings (FUTU) and UP Fintech (TIGR), dropping -12.76% and -17.06%. China declared unlicensed online brokerages illegal in the country, and investors feared Beijing would target the two most popular brokerages.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Friday morning brings an update to PCE Price Index data, a key measure of inflation. We will also see Personal Spending numbers for September and Consumer Expectations, and Consumer Sentiment for October.
Exxon Mobil (XOM) and Chevron (CVX) reported earnings on Friday. In addition to the big oil companies, AbbVie (ABBV), Daimler (DDAIF), and Royal Caribbean (RCL) are among other companies to close the week with earnings reports.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq moved above the 15,400 resistance area (which now becomes support). After setting a new high, it retested the 15,400 area before moving even higher for a record close.
All three trend lines (from 10/4 low, one-day, five-day) point to about the same area, which would result in a +0.37% gain for tomorrow.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
So far, the earnings season has turned investors bullish, ignoring inflation and GDP slowdown concerns which could turn to stagflation. That sentiment may change with Apple and Amazon missing expectations in today's after-hours.
Ignoring the earnings reports from Apple and Amazon, the chart says we can expect Sideways or Higher. However, if investors react severely to the earnings disappointment, that will undoubtedly drag indexes lower.
Stay healthy and trade safe!
