Trend lines drawn from the 10/30 bottom (62d), 1/25 (5d) and today 1/29 (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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Friday, January 29, 2021
Facts: -2.00%, Volume lower, Closing range: 25%, Body: 64%
Good: Closed above 13,000
Bad: Everything else, below 21d EMA, thick red body
Highs/Lows: Lower high, lower low
Candle: Thick red body with visible, but not long, upper and lower wicks.
Advance/Decline: 0.46, two declining for every advancing stock
Indexes: SPX (-1.93%%), DJI (-2.03%), RUT (-1.56%), VIX (+9.53%)
Sectors: Utilities (XLU -0.54%) and Health Services (XLV -0.84%) were top. Energy (XLE -3.32%) and Technology (-2.36%) were bottom.
Expectation: Lower
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Market Overview
It was not a great way to end January, which until this week was a rather bullish month for investors. The onslaught of retail traders on hedge funds proved to be too much for the market to handle. Not all of the downside is due to the crazy trading, but some of it is from large hedge investors covering lost short bets by selling long positions. And some of it is likely the added uncertainty that the actions brought to the market. Add to that some mixed vaccine news which has been impacting markets lately.
The index closed with a -2.00% loss to end one of the worst weeks since October. The volume was lower than the previous day, but still above the 50d moving average volume. The closing range of 25% and 64% body shows a decidedly bearish day which brought the index to its first close below the 21d EMA line since early November.
The S&P 500 (SPX) declined -1.93% while the Dow Jones Industrial (DJI) lost -2.03%. The Russell 2000 (RUT) did a little better with a -1.56% loss.
All sectors lost for the day with Utilities (XLU -0.54%), Health Services (XLV -0.84%) and Real Estate (XLRE -1.05%) having the smallest declines. Technology (XLK -2.36%) and Energy (XLE -3.32%) declined the most.
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Economic Indicators
The US Dollar (DXY) gained +0.14% for the day. US 30y and 10y treasury bond yields gained for the day while the 2y treasury bond yields declined. High Yields Corporate bond (HYG) prices declined.
Silver (SILVER) continued its rapid gain. Gold (GOLD) also advanced for the day. Crude Oil (CRUDEOIL1!) futures declined. Timber (WOOD) declined. Copper (COPPER1!) and Aluminum (ALI1!) bot declined.
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Investor Sentiment
The put/call ratio declined to 0.782. 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.
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Market Leaders
All four of the biggest mega-caps declined for the day. Amazon (AMZN) and Apple (AAPL) closed below their 21d EMA. Amazon tested the 50d MA but bounced and closed higher. Alphabet (GOOGL) dipped below the 21d EMA but closed above the line. Microsoft (MSFT) is still trading well above the moving average lines, despite a -2.29% pullback from yesterday's all-time high. Only Microsoft ended the week with a weekly gain.
Thermo Fisher Scientific (TMO) and Abbot Laboratories (ABT) were among only a handful of mega-cap stocks with gains. Tesla (TSLA) had its third day of losses as it dropped another -5.02%
Not many growth stocks found gains for the day. Moderna (MRNA) seemed to benefit from news that the vaccine from Johnson & Johnson (JNJ) is only 66% effective. Moderna gained +8.53% for the day. DataDog (DDOG) and CrowdStrike (CRWD) both held up nicely with good gains.
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Looking ahead
An update on Manufacturing activity for January will be released as the market opens on Monday. The last update showed Manufacturing activity at a record high level.
Thermo Fisher Scientific (TMO) will release quarterly earnings before market opens on Monday.
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Trends, Support and Resistance
The trend lines moved significantly with this week's close. The long-term trend line from the 10/30 bottom is point at +4.19%. That does not seem possible for Monday, but shows how far we've regressed from that trend midline.
The five-day trend line points to a -0.07% loss. The one-day trend line points to a -1.59% loss.
The 21d EMA line provided support early in today's session and then became resistance in the afternoon. The 13,000 level does seem to be holding for now. The index also 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 had your trader eyes shut, its ok to open them now. It really wasn't that bad. The weekend is here and it's time to take a breather.
Take a step back and look at the weekly progress of the stocks in your portfolio. After a few days of declines it's important to assess the bigger picture.
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=-
Friday, January 29, 2021
Facts: -2.00%, Volume lower, Closing range: 25%, Body: 64%
Good: Closed above 13,000
Bad: Everything else, below 21d EMA, thick red body
Highs/Lows: Lower high, lower low
Candle: Thick red body with visible, but not long, upper and lower wicks.
Advance/Decline: 0.46, two declining for every advancing stock
Indexes: SPX (-1.93%%), DJI (-2.03%), RUT (-1.56%), VIX (+9.53%)
Sectors: Utilities (XLU -0.54%) and Health Services (XLV -0.84%) were top. Energy (XLE -3.32%) and Technology (-2.36%) were bottom.
Expectation: Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
It was not a great way to end January, which until this week was a rather bullish month for investors. The onslaught of retail traders on hedge funds proved to be too much for the market to handle. Not all of the downside is due to the crazy trading, but some of it is from large hedge investors covering lost short bets by selling long positions. And some of it is likely the added uncertainty that the actions brought to the market. Add to that some mixed vaccine news which has been impacting markets lately.
The index closed with a -2.00% loss to end one of the worst weeks since October. The volume was lower than the previous day, but still above the 50d moving average volume. The closing range of 25% and 64% body shows a decidedly bearish day which brought the index to its first close below the 21d EMA line since early November.
The S&P 500 (SPX) declined -1.93% while the Dow Jones Industrial (DJI) lost -2.03%. The Russell 2000 (RUT) did a little better with a -1.56% loss.
All sectors lost for the day with Utilities (XLU -0.54%), Health Services (XLV -0.84%) and Real Estate (XLRE -1.05%) having the smallest declines. Technology (XLK -2.36%) and Energy (XLE -3.32%) declined the most.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) gained +0.14% for the day. US 30y and 10y treasury bond yields gained for the day while the 2y treasury bond yields declined. High Yields Corporate bond (HYG) prices declined.
Silver (SILVER) continued its rapid gain. Gold (GOLD) also advanced for the day. Crude Oil (CRUDEOIL1!) futures declined. Timber (WOOD) declined. Copper (COPPER1!) and Aluminum (ALI1!) bot declined.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio declined to 0.782. 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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four of the biggest mega-caps declined for the day. Amazon (AMZN) and Apple (AAPL) closed below their 21d EMA. Amazon tested the 50d MA but bounced and closed higher. Alphabet (GOOGL) dipped below the 21d EMA but closed above the line. Microsoft (MSFT) is still trading well above the moving average lines, despite a -2.29% pullback from yesterday's all-time high. Only Microsoft ended the week with a weekly gain.
Thermo Fisher Scientific (TMO) and Abbot Laboratories (ABT) were among only a handful of mega-cap stocks with gains. Tesla (TSLA) had its third day of losses as it dropped another -5.02%
Not many growth stocks found gains for the day. Moderna (MRNA) seemed to benefit from news that the vaccine from Johnson & Johnson (JNJ) is only 66% effective. Moderna gained +8.53% for the day. DataDog (DDOG) and CrowdStrike (CRWD) both held up nicely with good gains.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
An update on Manufacturing activity for January will be released as the market opens on Monday. The last update showed Manufacturing activity at a record high level.
Thermo Fisher Scientific (TMO) will release quarterly earnings before market opens on Monday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The trend lines moved significantly with this week's close. The long-term trend line from the 10/30 bottom is point at +4.19%. That does not seem possible for Monday, but shows how far we've regressed from that trend midline.
The five-day trend line points to a -0.07% loss. The one-day trend line points to a -1.59% loss.
The 21d EMA line provided support early in today's session and then became resistance in the afternoon. The 13,000 level does seem to be holding for now. The index also 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 had your trader eyes shut, its ok to open them now. It really wasn't that bad. The weekend is here and it's time to take a breather.
Take a step back and look at the weekly progress of the stocks in your portfolio. After a few days of declines it's important to assess the bigger picture.
Stay healthy and take care!
