Daily Market Update for 1/7
Trend lines drawn from the 10/30 bottom (47d), 12/31 (5d) and today 1/7 (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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Thursday, January 7, 2021
Ain't no telling, baby
When you will see me again, but I pray
It will be tomorrow
Facts: +2.56%, Volume lower, Closing range: 90%, Body: 90%
Good: Everything, bullish candle following the inverted hammer
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: No lower wick, very small upper wick, thick green body
Advance/Decline: 2.89, Nearly three advancing stocks for every declining stock
Indexes: SPX (+1.48%), DJI (+0.69%), RUT (+1.89%), VIX (-10.77%)
Sectors: Technology (XLK +2.70%) and Consumer Discretionary (XLY +1.93%) were top. Consumer Staples (XLP -0.30%) and Utilities (XLU -1.31%) were the bottom.
Expectation: Higher
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Market Overview
Finally, everything is finalized and seems we can put the tumultuous election behind us. On top of that, jobless claims data was better than expected and economic activity represented by the Purchasing Managers Index was very positive. The markets responded with a huge gain and new all-time highs among the indexes.
The Nasdaq closed with a +2.56% on lower volume, and with a very bullish candle. The closing range of 90% was over a 90% body, resulting in zero lower wick as the index never revisited the low from open. There were nearly three advancing stocks for every declining stock. Over 300 Nasdaq stocks made new highs.
The other major indexes also set new all-time highs with very bullish candles. All lows came within the highs of the previous day, so no gap ups to worry about. The VIX declined by -10.77%.
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Economic Indicators
The US Dollar (DXY) advanced for a second day. US Treasury 30y (US30Y), 10y (US10Y) had another day of big gains while the 2y (US02Y) bond yield stayed flat. The yield spread widened again. Corporate Bonds (HYG) prices increased while short term treasury bond (IEI) prices dropped.
Silver (SILVER) and Gold (GOLD) both declined for a second day. Crude Oil (CRUDEOIL1!) futures advanced to the highest since February 2020. Timber (WOOD) continued the breakout from a recent base. Copper (COPPER1!) advanced while Aluminum (ALI1!) remained near flat.
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Investor Sentiment
The put/call ratio dropped to 0.552 as investor optimism gets very bullish. 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
The biggest four mega-caps all advanced for the day. Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) regained losses from the previous day. Amazon (AMZN) had gains early in the day, but then sold off to close below its 21d EMA and 50d MA. Microsoft closed below its 21d EMA.
Nvidia (NVDA) is near the top of the mega-caps list, gaining +5.78% after being at the bottom yesterday. Tesla (TSLA) gained +7.94% while Taiwan Semiconductor (TSM) gained +5.03%. PayPal (PYPL) also reversed losses with a +3.62% gain.
Most growth stocks did very well for the day with NIO (NIO +7.49%), Cloudflare (NET +7.85%) and Peloton (7.12%) joining Tesla at the top of the list. Twitter (TWTR -1.75%) had losses, possibly due to the turmoil around Trump's twitter account (seen as a boost to twitter's traffic in recent years).
Bed Bath & Beyond (BBY) missed quarterly revenue estimates and dropped 10%. They announced before market open. Semiconductor stock Micron Technology beating earnings and is up 1.45% in afterhours trading.
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Looking ahead
Friday will bring more updates on the labor market with Hourly Earnings, Nonfarm Payrolls and the Unemployment Rate data being released before market open. Later in the morning FOMC member Clarida will speak.
No notable earnings reports are scheduled for Friday.
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Trends, Support and Resistance
The one-day trend points to a +1.38% gain.
The long-term trend line from the 10/30 bottom points to a more modest gain of +0.41%.
The five-day line points to a -0.61% loss.
The index is well above the 21d EMA which has acted as support recently. That's -2.89% below the close. The index also held the 12,550 area this week. If it passes that area, the next support area is 12,250.
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Wrap-up
The market seems favorable to get past the volatility of the election drama, and that's understandable. Of course, there is probably some price discovery to happen across sectors as investors understand better the impact of a Democratic majority in Congress and a Democratic president in the White House.
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=-
Thursday, January 7, 2021
Ain't no telling, baby
When you will see me again, but I pray
It will be tomorrow
Facts: +2.56%, Volume lower, Closing range: 90%, Body: 90%
Good: Everything, bullish candle following the inverted hammer
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: No lower wick, very small upper wick, thick green body
Advance/Decline: 2.89, Nearly three advancing stocks for every declining stock
Indexes: SPX (+1.48%), DJI (+0.69%), RUT (+1.89%), VIX (-10.77%)
Sectors: Technology (XLK +2.70%) and Consumer Discretionary (XLY +1.93%) were top. Consumer Staples (XLP -0.30%) and Utilities (XLU -1.31%) were the bottom.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Finally, everything is finalized and seems we can put the tumultuous election behind us. On top of that, jobless claims data was better than expected and economic activity represented by the Purchasing Managers Index was very positive. The markets responded with a huge gain and new all-time highs among the indexes.
The Nasdaq closed with a +2.56% on lower volume, and with a very bullish candle. The closing range of 90% was over a 90% body, resulting in zero lower wick as the index never revisited the low from open. There were nearly three advancing stocks for every declining stock. Over 300 Nasdaq stocks made new highs.
The other major indexes also set new all-time highs with very bullish candles. All lows came within the highs of the previous day, so no gap ups to worry about. The VIX declined by -10.77%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) advanced for a second day. US Treasury 30y (US30Y), 10y (US10Y) had another day of big gains while the 2y (US02Y) bond yield stayed flat. The yield spread widened again. Corporate Bonds (HYG) prices increased while short term treasury bond (IEI) prices dropped.
Silver (SILVER) and Gold (GOLD) both declined for a second day. Crude Oil (CRUDEOIL1!) futures advanced to the highest since February 2020. Timber (WOOD) continued the breakout from a recent base. Copper (COPPER1!) advanced while Aluminum (ALI1!) remained near flat.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio dropped to 0.552 as investor optimism gets very bullish. 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
The biggest four mega-caps all advanced for the day. Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) regained losses from the previous day. Amazon (AMZN) had gains early in the day, but then sold off to close below its 21d EMA and 50d MA. Microsoft closed below its 21d EMA.
Nvidia (NVDA) is near the top of the mega-caps list, gaining +5.78% after being at the bottom yesterday. Tesla (TSLA) gained +7.94% while Taiwan Semiconductor (TSM) gained +5.03%. PayPal (PYPL) also reversed losses with a +3.62% gain.
Most growth stocks did very well for the day with NIO (NIO +7.49%), Cloudflare (NET +7.85%) and Peloton (7.12%) joining Tesla at the top of the list. Twitter (TWTR -1.75%) had losses, possibly due to the turmoil around Trump's twitter account (seen as a boost to twitter's traffic in recent years).
Bed Bath & Beyond (BBY) missed quarterly revenue estimates and dropped 10%. They announced before market open. Semiconductor stock Micron Technology beating earnings and is up 1.45% in afterhours trading.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Friday will bring more updates on the labor market with Hourly Earnings, Nonfarm Payrolls and the Unemployment Rate data being released before market open. Later in the morning FOMC member Clarida will speak.
No notable earnings reports are scheduled for Friday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The one-day trend points to a +1.38% gain.
The long-term trend line from the 10/30 bottom points to a more modest gain of +0.41%.
The five-day line points to a -0.61% loss.
The index is well above the 21d EMA which has acted as support recently. That's -2.89% below the close. The index also held the 12,550 area this week. If it passes that area, the next support area is 12,250.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
The market seems favorable to get past the volatility of the election drama, and that's understandable. Of course, there is probably some price discovery to happen across sectors as investors understand better the impact of a Democratic majority in Congress and a Democratic president in the White House.
Stay healthy and take care!
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