Trend lines drawn from the 10/30 bottom (70d), 2/4 (5d) and today 2/10 (1d).
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.
I'm working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.
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Wednesday, February 10, 2021
Facts: -0.25%, Volume higher, Closing range: 48%, Body: 46%
Good: New all-time high, close above yesterday's low
Bad: Morning dip below previous low, again fading into close
Highs/Lows: Higher high, lower low
Candle: Bearish outside day with hanging man candlestick
Advance/Decline: 0.88, slight more declining stocks than advancing stocks
Indexes: SPX (-0.03%), DJI (+0.20%), RUT (-0.72%), VIX (+1.66%)
Sectors: Energy (XLE +1.91%) and Communications (XLC +0.95%) were top. Consumer Discretionary (XLY -0.99%) was the bottom sector.
Expectation: Sideways
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Market Overview
Wednesday was a wild session for the markets with a big dip in the morning as investors reacted to Core Consumer Price Index data that showed inflation was lower than expected. Inflation is something economists want to see at just the right level, not too much and not too little. The market recovered as morning turned into the afternoon, but then dipped again into close after statements from Fed Chairman Jerome Powell.
The Nasdaq closed with a -0.25% loss on higher volume. The closing range of 48% is good considering the morning dip and that the close is higher than yesterday's open. However, the candle has a hanging man pattern that shows sellers are ready to take over as soon as any bad news hits the market. There were slightly more declining stocks than advancing stocks.
The Dow Jones Industrial (DJI) was the only index to close with a gain, advancing +0.20%. The S&P 500 (SPX) lost -0.03%. The Russell 2000 (RUT) gave up the most with a -0.72% loss. The volatility index (VIX) rose +1.66%.
Energy (XLE +1.91%) and Communications (XLC +0.95%) were the top performing sectors. Having Energy lead brought some strength to the market and likely helped the index close well above the morning lows. Consumer Discretionary (XLY -0.99%) was the bottom sector.
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Economic Indicators
The US Dollar (DXY) was even for the day with a slight 0.01% decline. The US 30y, 10y and 2y treasury bond yields all declined with the 2y declining the most. High Yield Corporate Bond (HYG) prices also declined for the day while Investment Grade (LQD) corporate bond prices advanced.
Silver (SILVER) declined while Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) futures continued to climb on positive inventory data signaling higher demand. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
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Investor Sentiment
The put/call ratio rose to 0.549. 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 about at the mid-point between fear and greed.
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Market Leaders
Alphabet (GOOGL) was the only mega-cap of the biggest four to advance for the day. Apple (AAPL), Amazon (AMZN) and Microsoft (MSFT) all declined. Apple (AAPL) and Amazon (AMZN) both dipped below their 21d EMA, but all four of these mega-caps closed above the key moving average.
Toyota Motor (TM +4.91%) and Nvidia (NVDA +3.51%) were the top mega-cap gainers of the day. Tesla (TSLA +5.26%) was the worst performer of the mega-caps.
Twitter (TWTR +13.20%) led growth stocks and boosted the Communications sector. FUTU holdings (FUTU) ended the day with a +7.01% gain after soaring +30% intraday. Doordash (DASH) ended the day with a +14.60% advanced.
After hours Pinterest (PINS) was up 9.73% upon beating earnings expectations. SNAP (SNAP) did not fare as well and was down -7.44%. Peloton (PTON) was down -8.14% despite beating expectations. They warned off continued delays in delivery due to a growing backlog.
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Looking ahead
Tomorrow will start with the Initial Jobless Claims report before market open. Later in the day the Fed Monetary policy and the US Federal Budget reports will be released to congress.
Walt Disney (DIS), PepsiCo (PEP), AstraZeneca (AZN), DexCom (DXCM), Datadog (DDOG) are among a long list of earnings releases tomorrow. Check the stocks in your portfolio to make sure you aren't surprised by earnings.
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Trends, Support and Resistance
The five-day trend line points to a +3.11% gain for Thursday. The index will need to break through the 14,000 round-number resistance again. The one-day trend is pointing to a sideways +0.08% move.
The long-term trend line from the 10/30 bottom points to a -0.26% pullback.
If there is further downside, the 21d EMA line offers an area of support and is -3.10% below Wednesday's close. The 13,000 level also seems to be an area of support. The index held the 12,550 area recently. If it passes that area, the next support area is 12,250.
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Wrap-up
It was a bit of a rough day if your eyes were on the market the whole time. On the positive side, the index closed well off the morning lows. However, the day's action demonstrated that sellers are ready to respond to any hint of negative news.
There were still plenty of big gainers for the day, but also some big losers that impacted overall sentiment. Keep an eye on your winners and trim your losers if the market is making you nervous. Otherwise, there aren't any strong signals to be overly bearish right now.
Stay healthy and take care!
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.
I'm working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wednesday, February 10, 2021
Facts: -0.25%, Volume higher, Closing range: 48%, Body: 46%
Good: New all-time high, close above yesterday's low
Bad: Morning dip below previous low, again fading into close
Highs/Lows: Higher high, lower low
Candle: Bearish outside day with hanging man candlestick
Advance/Decline: 0.88, slight more declining stocks than advancing stocks
Indexes: SPX (-0.03%), DJI (+0.20%), RUT (-0.72%), VIX (+1.66%)
Sectors: Energy (XLE +1.91%) and Communications (XLC +0.95%) were top. Consumer Discretionary (XLY -0.99%) was the bottom sector.
Expectation: Sideways
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Wednesday was a wild session for the markets with a big dip in the morning as investors reacted to Core Consumer Price Index data that showed inflation was lower than expected. Inflation is something economists want to see at just the right level, not too much and not too little. The market recovered as morning turned into the afternoon, but then dipped again into close after statements from Fed Chairman Jerome Powell.
The Nasdaq closed with a -0.25% loss on higher volume. The closing range of 48% is good considering the morning dip and that the close is higher than yesterday's open. However, the candle has a hanging man pattern that shows sellers are ready to take over as soon as any bad news hits the market. There were slightly more declining stocks than advancing stocks.
The Dow Jones Industrial (DJI) was the only index to close with a gain, advancing +0.20%. The S&P 500 (SPX) lost -0.03%. The Russell 2000 (RUT) gave up the most with a -0.72% loss. The volatility index (VIX) rose +1.66%.
Energy (XLE +1.91%) and Communications (XLC +0.95%) were the top performing sectors. Having Energy lead brought some strength to the market and likely helped the index close well above the morning lows. Consumer Discretionary (XLY -0.99%) was the bottom sector.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) was even for the day with a slight 0.01% decline. The US 30y, 10y and 2y treasury bond yields all declined with the 2y declining the most. High Yield Corporate Bond (HYG) prices also declined for the day while Investment Grade (LQD) corporate bond prices advanced.
Silver (SILVER) declined while Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) futures continued to climb on positive inventory data signaling higher demand. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose to 0.549. 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 about at the mid-point between fear and greed.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Alphabet (GOOGL) was the only mega-cap of the biggest four to advance for the day. Apple (AAPL), Amazon (AMZN) and Microsoft (MSFT) all declined. Apple (AAPL) and Amazon (AMZN) both dipped below their 21d EMA, but all four of these mega-caps closed above the key moving average.
Toyota Motor (TM +4.91%) and Nvidia (NVDA +3.51%) were the top mega-cap gainers of the day. Tesla (TSLA +5.26%) was the worst performer of the mega-caps.
Twitter (TWTR +13.20%) led growth stocks and boosted the Communications sector. FUTU holdings (FUTU) ended the day with a +7.01% gain after soaring +30% intraday. Doordash (DASH) ended the day with a +14.60% advanced.
After hours Pinterest (PINS) was up 9.73% upon beating earnings expectations. SNAP (SNAP) did not fare as well and was down -7.44%. Peloton (PTON) was down -8.14% despite beating expectations. They warned off continued delays in delivery due to a growing backlog.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Tomorrow will start with the Initial Jobless Claims report before market open. Later in the day the Fed Monetary policy and the US Federal Budget reports will be released to congress.
Walt Disney (DIS), PepsiCo (PEP), AstraZeneca (AZN), DexCom (DXCM), Datadog (DDOG) are among a long list of earnings releases tomorrow. Check the stocks in your portfolio to make sure you aren't surprised by earnings.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The five-day trend line points to a +3.11% gain for Thursday. The index will need to break through the 14,000 round-number resistance again. The one-day trend is pointing to a sideways +0.08% move.
The long-term trend line from the 10/30 bottom points to a -0.26% pullback.
If there is further downside, the 21d EMA line offers an area of support and is -3.10% below Wednesday's close. The 13,000 level also seems to be an area of support. The index held the 12,550 area recently. If it passes that area, the next support area is 12,250.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It was a bit of a rough day if your eyes were on the market the whole time. On the positive side, the index closed well off the morning lows. However, the day's action demonstrated that sellers are ready to respond to any hint of negative news.
There were still plenty of big gainers for the day, but also some big losers that impacted overall sentiment. Keep an eye on your winners and trim your losers if the market is making you nervous. Otherwise, there aren't any strong signals to be overly bearish right now.
Stay healthy and take care!
