Daily Market Update for 2/18
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Trend lines drawn from the 10/30 bottom (75d), 2/11 (5d) and today 2/18 (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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Thursday, February 18, 2021
Facts: -0.72%, Volume lower, Closing range: 79%, Body: 26%
Good: Support at 21d EMA, turned into upside for rest of day
Bad: Another morning sell-off, and the selling into close.
Highs/Lows: Lower high, lower low
Candle: Green body in upper half of candle with a long lower wick
Advance/Decline: 0.27, almost 4 declining stocks for every advancing stock
Indexes: SPX (-0.44%), DJI (-0.38%), RUT (-1.67%), VIX (+4.60%)
Sectors: Utilities (XLU +0.60%) and Consumer Discretionary (XLY +0.04%) were top. Energy (XLE -2.26%) was bottom.
Expectation: Sideways or Lower
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Market Overview
Today produced a very similar candle to the day before, and another step back for the Nasdaq. The market opened again reacting to bad economic news, selling heavily in the morning. However, buyers came in as the index hit the 21d exponential moving average.
The Nasdaq closed the day with a -0.72% loss on lower volume. The similar candle to the day before had another high closing range over a long lower wick. The upper wick is slightly longer due to the selling just before close. The closing range was 79% and the green body in the upper half covers 26% of the candle. There were nearly four declining stocks for every advancing stock.
All of the major indexes were down for the day as losses were shared much more broadly then the previous day. The S&P 500 (SPX) declined -0.44%. The Dow Jones Industrial average (DJI) declined -0.38%. The Russell 2000 (RUT) declined the most with a -1.67% loss.
The VIX volatility index rose +4.60%.
In the biggest change from earlier in the week, Utilities (XLU +0.60%) rose to the top of the sector list. Consumer Discretionary (XLY +0.04%) was the second sector. However, the other defensive play sector Real Estate (XLRE -0.05%) was not too far behind. All other sectors declined for the day. Energy (XLE -2.26%) and Health Services (-0.63%) were the bottom two sectors.
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Economic Indicators
The US Dollar (DXY) declined -0.39%. The US 30y and 10y treasury bond yields rose while the 2y yields dropped for the day. The spread between long term and short term bonds widened slightly.
High Yield (HYG) and Investor Grade (LQD) corporate bonds prices both declined. The spread between corporate bonds and treasury bonds tightened a bit.
Silver (SILVER) and Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) declined just -0.09%. Timber (WOOD) declined. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
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Investor Sentiment
The put/call ratio declined to 0.667 as investors became much more cautious for the day. 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 NAAIM exposure index (measured on Wednesdays) is still above 100 showing money managers are still fully into leveraged positions in the market.
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Market Leaders
Amazon (AMZN) is continuing to show strength against the market with another gain today while the indexes lost. The stock advanced +0.59%. The other big four lost for the day. Microsoft (MSFT) declined -0.17% and Alphabet (GOOGL) declined -0.60% but both remain well above their key moving average lines. Apple (AAPL) continued to move farther below the 50d MA with a -0.86% decline.
Coca-Cola (KO) was the top mega-cap of the day gaining +1.28% after announcing a 2.4% increase in their annual dividend. Visa (V), Proctor & Gamble (PG) and Nike (NKE) were other top mega-cap gainers. Walmart (WMT) declined -6.48% after releasing earnings before market open. They had record revenue but then missed on adjusted earnings.
It was another tough day for growth stocks. Twilio (TWL) was a highlight with a 7.73% gain after smashing expectations in their earnings release the day before. Fastly (FSLY) dropped -15.45% despite beating expectations on earnings and revenue. The company provided guidance for 2021 that disappointed investors.
RIOT Blockchain Inc pulled back -20% from meteoric climb the previous seven days.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Manufacturing and Services purchasing managers index data will be released right as the market opens on Friday. The two measures will give insight into the economic activity among these two sectors.
Existing Home Sales data will be released mid-morning.
FOMC members will make comments tomorrow morning and the Fed Monetary Policy Report will be released.
There are no earnings reports tomorrow that are relevant for the Daily Market Update.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index is in the bottom half of the long-term regression trend channel. The trend lines I draw are the mid-point of the channels.
The long-term trend line from the 10/30 bottom points to a +1.61% gain.
The one-day trend line is pointing to a +1.03% advance.
The five-day trend line points to a decline of -0.42%.
If there is further downside, the 21d EMA line offers an area of support and is -1.24% below Thursday'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
If you look at the weekly chart for the Nasdaq, it's an interesting spot that we are heading into the last day of the week. Looking back two weeks there is a long bullish green candle. Then last week started with a gap-up on Monday's open. Right now, the index sits in the middle of that gap. The bears would love to fill that gap with solid red while the bulls would like to leave the gap empty.
The biggest character change for today was the rise of Utilities to the top of the sector list. That and the rise in the put/call ratio show the nervousness in the market.
The last two days I wrote an expectation for Sideways or Higher based on the strong afternoon buy backs. It seems one of those weeks where the market goes the opposite of expectations each day. So today I'm writing in an expectation of Sideways or Lower. If it goes higher tomorrow, you can thank me. :)
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=-
Thursday, February 18, 2021
Facts: -0.72%, Volume lower, Closing range: 79%, Body: 26%
Good: Support at 21d EMA, turned into upside for rest of day
Bad: Another morning sell-off, and the selling into close.
Highs/Lows: Lower high, lower low
Candle: Green body in upper half of candle with a long lower wick
Advance/Decline: 0.27, almost 4 declining stocks for every advancing stock
Indexes: SPX (-0.44%), DJI (-0.38%), RUT (-1.67%), VIX (+4.60%)
Sectors: Utilities (XLU +0.60%) and Consumer Discretionary (XLY +0.04%) were top. Energy (XLE -2.26%) was bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Today produced a very similar candle to the day before, and another step back for the Nasdaq. The market opened again reacting to bad economic news, selling heavily in the morning. However, buyers came in as the index hit the 21d exponential moving average.
The Nasdaq closed the day with a -0.72% loss on lower volume. The similar candle to the day before had another high closing range over a long lower wick. The upper wick is slightly longer due to the selling just before close. The closing range was 79% and the green body in the upper half covers 26% of the candle. There were nearly four declining stocks for every advancing stock.
All of the major indexes were down for the day as losses were shared much more broadly then the previous day. The S&P 500 (SPX) declined -0.44%. The Dow Jones Industrial average (DJI) declined -0.38%. The Russell 2000 (RUT) declined the most with a -1.67% loss.
The VIX volatility index rose +4.60%.
In the biggest change from earlier in the week, Utilities (XLU +0.60%) rose to the top of the sector list. Consumer Discretionary (XLY +0.04%) was the second sector. However, the other defensive play sector Real Estate (XLRE -0.05%) was not too far behind. All other sectors declined for the day. Energy (XLE -2.26%) and Health Services (-0.63%) were the bottom two sectors.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) declined -0.39%. The US 30y and 10y treasury bond yields rose while the 2y yields dropped for the day. The spread between long term and short term bonds widened slightly.
High Yield (HYG) and Investor Grade (LQD) corporate bonds prices both declined. The spread between corporate bonds and treasury bonds tightened a bit.
Silver (SILVER) and Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) declined just -0.09%. Timber (WOOD) declined. Copper (COPPER1!) and Aluminum (ALI1!) both advanced.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio declined to 0.667 as investors became much more cautious for the day. 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 NAAIM exposure index (measured on Wednesdays) is still above 100 showing money managers are still fully into leveraged positions in the market.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Amazon (AMZN) is continuing to show strength against the market with another gain today while the indexes lost. The stock advanced +0.59%. The other big four lost for the day. Microsoft (MSFT) declined -0.17% and Alphabet (GOOGL) declined -0.60% but both remain well above their key moving average lines. Apple (AAPL) continued to move farther below the 50d MA with a -0.86% decline.
Coca-Cola (KO) was the top mega-cap of the day gaining +1.28% after announcing a 2.4% increase in their annual dividend. Visa (V), Proctor & Gamble (PG) and Nike (NKE) were other top mega-cap gainers. Walmart (WMT) declined -6.48% after releasing earnings before market open. They had record revenue but then missed on adjusted earnings.
It was another tough day for growth stocks. Twilio (TWL) was a highlight with a 7.73% gain after smashing expectations in their earnings release the day before. Fastly (FSLY) dropped -15.45% despite beating expectations on earnings and revenue. The company provided guidance for 2021 that disappointed investors.
RIOT Blockchain Inc pulled back -20% from meteoric climb the previous seven days.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Manufacturing and Services purchasing managers index data will be released right as the market opens on Friday. The two measures will give insight into the economic activity among these two sectors.
Existing Home Sales data will be released mid-morning.
FOMC members will make comments tomorrow morning and the Fed Monetary Policy Report will be released.
There are no earnings reports tomorrow that are relevant for the Daily Market Update.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index is in the bottom half of the long-term regression trend channel. The trend lines I draw are the mid-point of the channels.
The long-term trend line from the 10/30 bottom points to a +1.61% gain.
The one-day trend line is pointing to a +1.03% advance.
The five-day trend line points to a decline of -0.42%.
If there is further downside, the 21d EMA line offers an area of support and is -1.24% below Thursday'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
If you look at the weekly chart for the Nasdaq, it's an interesting spot that we are heading into the last day of the week. Looking back two weeks there is a long bullish green candle. Then last week started with a gap-up on Monday's open. Right now, the index sits in the middle of that gap. The bears would love to fill that gap with solid red while the bulls would like to leave the gap empty.
The biggest character change for today was the rise of Utilities to the top of the sector list. That and the rise in the put/call ratio show the nervousness in the market.
The last two days I wrote an expectation for Sideways or Higher based on the strong afternoon buy backs. It seems one of those weeks where the market goes the opposite of expectations each day. So today I'm writing in an expectation of Sideways or Lower. If it goes higher tomorrow, you can thank me. :)
Stay healthy and trade safe!
Ghi chú
Correction: The put/call ratio *rose* to 0.667 as investors became much more cautious for the day.
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