Summary: Investors rotated back to cyclical stocks after they underperformed yesterday. Mega-caps also did well on a day with no huge surprises in economic news. Jobs data was a bit lower than expected, but not bad, and there were no unexpected statements in the Fed minutes.
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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Wednesday, July 7, 2021
Facts: +0.01%, Volume higher, Closing range: 28%, Body: 51%
Good: Higher high, higher low
Bad: Couldn't hold morning high, low A/D ratio
Highs/Lows: Higher high, higher low
Candle: Large red body with no upper wick, lower wick created from a morning dip
Advanced/Decline: 0.33, three declining stocks for every advancing stock
Indexes: SPX (+0.34%), DJI (+0.30%), RUT (-0.95%), VIX (-1.46%)
Sectors: Materials (XLB +1.04%) and Industrials (XLI +1.00%) at the top. Communications (XLC -0.15%) and Energy (XLE -1.63%) were at the bottom.
Expectation: Sideways or Lower
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Market Overview
Investors rotated back to cyclical stocks after they underperformed yesterday. Mega-caps also did well on a day with no huge surprises in economic news. Jobs data was a bit lower than expected, but not bad, and there were no unexpected statements in the Fed minutes.
The Nasdaq ended the day with a +0.01% gain, carried mainly by mega-caps. There continues to be a much higher number of declining stocks than advancing stocks, with a ratio of 3 to 1 today. The closing range of 28% follows a morning gap-up that quickly sold off to create a long lower wick. The index recovered some of the loss, leaving a 51% red body over the long lower wick.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) fared better with +0.34% and +0.30% gains today. The Russell 2000 (RUT) declined -0.95%.
The VIX volatility index declined -1.46%.
Cyclical sectors moved back to the top of the sector list, with Materials (XLB +1.04%) and Industrials (XLI +1.00%) leading the day. Communications (XLC -0.15%) and Energy (XLE -1.63%) were at the bottom of today's list.
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Economic Indicators
The US Dollar (DXY) advanced +0.17% for the day.
The US 30y, 10y, and 2y Treasury yields continue to decline as the gap between long-term and short-term yields tighten.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) remained flat while Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) continues to decline off recent highs.
Timber (Wood) advanced.
Copper (COPPER1!) advanced and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) declined -0.53%. Ethereum (ETHUSD) advanced +0.04%. (Time of writing)
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Investor Sentiment
The put/call ratio rose to 0.629. 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. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, moving further from neutral.
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Market Leaders
The four largest mega-caps continue to advance with gains today, but the charts start to look overly extended from moving averages.
Apple (AAPL) gained another +1.80% today, setting a record close. Microsoft (MSFT) gained +0.82%. Amazon (AMZN) and Alphabet (GOOGL) had advances but could not hold onto intraday gains, ending the day with +0.57% and +0.23% gains.
Oracle (ORCL) topped the mega-cap list today, with Apple (AAPL), PayPal (PYPL), and Adobe (ADBE) filling out the top four. At the bottom of the list are Exxon Mobile (XOM), Nvidia (NVDA), Alibaba (BABA), and Tesla (TSLA).
The majority of the daily update growth list lost for the day. However, there were several gainers with SUMO Digital (SUMO), Snowflake (SNOW), RH (RH), and D.R. Horton (DHI) topping the list. At the bottom of the list are Lemonade (LMND), GrowGeneration (GRWG), NIO (NIO), and Ehang Holdings (EH).
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Looking ahead
Initial Jobless Claims and weekly Crude Oil Inventories data will be available on Thursday.
There are no relevant earnings reports for the daily update on Thursday.
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Trends, Support, and Resistance
Just as yesterday, the Nasdaq set a new all-time high after opening but then sold off quickly.
The five-day trend line points to a +0.49% gain for Thursday.
The trend line from the 5/12 low leads to a +0.16% gain.
The one-day trend line is downward sloping and points to a -0.04% decline.
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Wrap-up
As rotations go, yesterday's sell-off of cyclical sectors became today's buying opportunity. Big tech mega-caps are mainly driving the gains in the Nasdaq. The advance/decline ratio hasn't been over 1.0 since 6/24.
With increasing volatility in the intraday chart and the advance/decline ratio remaining low, it’s a good time for caution. However, the index continues to ride the mid-point of an upward regression trend channel from 5/12, so more gains could be ahead.
The expectation is set for sideways or lower tomorrow. Surprise me.
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=-
Wednesday, July 7, 2021
Facts: +0.01%, Volume higher, Closing range: 28%, Body: 51%
Good: Higher high, higher low
Bad: Couldn't hold morning high, low A/D ratio
Highs/Lows: Higher high, higher low
Candle: Large red body with no upper wick, lower wick created from a morning dip
Advanced/Decline: 0.33, three declining stocks for every advancing stock
Indexes: SPX (+0.34%), DJI (+0.30%), RUT (-0.95%), VIX (-1.46%)
Sectors: Materials (XLB +1.04%) and Industrials (XLI +1.00%) at the top. Communications (XLC -0.15%) and Energy (XLE -1.63%) were at the bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Investors rotated back to cyclical stocks after they underperformed yesterday. Mega-caps also did well on a day with no huge surprises in economic news. Jobs data was a bit lower than expected, but not bad, and there were no unexpected statements in the Fed minutes.
The Nasdaq ended the day with a +0.01% gain, carried mainly by mega-caps. There continues to be a much higher number of declining stocks than advancing stocks, with a ratio of 3 to 1 today. The closing range of 28% follows a morning gap-up that quickly sold off to create a long lower wick. The index recovered some of the loss, leaving a 51% red body over the long lower wick.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) fared better with +0.34% and +0.30% gains today. The Russell 2000 (RUT) declined -0.95%.
The VIX volatility index declined -1.46%.
Cyclical sectors moved back to the top of the sector list, with Materials (XLB +1.04%) and Industrials (XLI +1.00%) leading the day. Communications (XLC -0.15%) and Energy (XLE -1.63%) were at the bottom of today's list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) advanced +0.17% for the day.
The US 30y, 10y, and 2y Treasury yields continue to decline as the gap between long-term and short-term yields tighten.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) remained flat while Gold (GOLD) advanced.
Crude Oil (CRUDEOIL1!) continues to decline off recent highs.
Timber (Wood) advanced.
Copper (COPPER1!) advanced and Aluminum (ALI1!) declined.
Bitcoin (BTCUSD) declined -0.53%. Ethereum (ETHUSD) advanced +0.04%. (Time of writing)
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose to 0.629. 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. Below that level is overly bullish.
The CNN Fear & Greed index is on the fear side, moving further from neutral.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
The four largest mega-caps continue to advance with gains today, but the charts start to look overly extended from moving averages.
Apple (AAPL) gained another +1.80% today, setting a record close. Microsoft (MSFT) gained +0.82%. Amazon (AMZN) and Alphabet (GOOGL) had advances but could not hold onto intraday gains, ending the day with +0.57% and +0.23% gains.
Oracle (ORCL) topped the mega-cap list today, with Apple (AAPL), PayPal (PYPL), and Adobe (ADBE) filling out the top four. At the bottom of the list are Exxon Mobile (XOM), Nvidia (NVDA), Alibaba (BABA), and Tesla (TSLA).
The majority of the daily update growth list lost for the day. However, there were several gainers with SUMO Digital (SUMO), Snowflake (SNOW), RH (RH), and D.R. Horton (DHI) topping the list. At the bottom of the list are Lemonade (LMND), GrowGeneration (GRWG), NIO (NIO), and Ehang Holdings (EH).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Initial Jobless Claims and weekly Crude Oil Inventories data will be available on Thursday.
There are no relevant earnings reports for the daily update on Thursday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
Just as yesterday, the Nasdaq set a new all-time high after opening but then sold off quickly.
The five-day trend line points to a +0.49% gain for Thursday.
The trend line from the 5/12 low leads to a +0.16% gain.
The one-day trend line is downward sloping and points to a -0.04% decline.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
As rotations go, yesterday's sell-off of cyclical sectors became today's buying opportunity. Big tech mega-caps are mainly driving the gains in the Nasdaq. The advance/decline ratio hasn't been over 1.0 since 6/24.
With increasing volatility in the intraday chart and the advance/decline ratio remaining low, it’s a good time for caution. However, the index continues to ride the mid-point of an upward regression trend channel from 5/12, so more gains could be ahead.
The expectation is set for sideways or lower tomorrow. Surprise me.
Stay healthy and trade safe!
