Daily Market Update for 12/16
Trend lines drawn from the 10/30 bottom (33d), 12/10 (5d) and today 12/16 (1d).
If you have ideas to make the daily update better, please let me know in the comments.
I do occasionally have some errors or typos and will correct them in my blog or in the comments on TradingView. I do not have an editor and do this in my free time.
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Wednesday, December 16, 2020
I wasn't born to lose you
Facts: +0.50%, Volume higher, Closing range: 76%, Body: 39%
Good: HH/HL, no gap up, low just below yesterday's high
Bad: Some selling at close
Highs/Lows: Higher high, Higher low
Candle: Medium sized body in middle of the candle, smaller wicks
Advance/Decline: 0.93, less breadth than yesterday
Sectors: Technology (XLK +0.68%) and Consumer Discretionary (XLY +0.66%) were top. Utilities (XLU -1.16%) was bottom.
Expectation: Sideways or Higher
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Market Overview
The Nasdaq found another new all-time high today, putting in a series of higher lows and higher highs over the past four days. Retail Sales data came in lower than expected, but Crude Oil Inventories showed a high demand for oil. But the news the market really responded to was the Fed's continuation of a bond buying program that has brought so much liquidity to the equity markets. The index closed with a +0.50% gain on higher volume. The closing range was 76% with a body of 39% in the middle of the candle. There was less breadth than yesterday with about one advancing stock for every declining stock.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
The S&P 500 (SPX +0.18%) was the only other major index to close with gains. There was less interest in the Dow Jones Industrial (DJI -0.15%) and the small-cap Russell 2000 (RUT -0.36%) today.
There was also more focus among sectors. The open started with Utilities (XLU -1.16%) and Real Estate (XLRE +0.03%) leading but things quickly changed. Technology (XLK +0.68%) and Consumer Discretionary (XLY +0.66%) closed the day as the best performing sectors. Energy (XLE -0.49%) was bought up midday after crude oil inventories data looked positive, but sold off in the afternoon.
The VIX volatility index declined -1.70%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Indicators
Yields on the US 30y and 10y treasury bonds rose for the day while the 2y treasury bond yield remained flat. The spreads between long term and short term bonds widening slightly.
Corporate bond prices dropped for the day while 3-7 treasury bond prices also dropped. The yield spread remains about even to slightly tighter.
The US dollar (DXY -0.26%) declined for the day.
Silver (SILVER +3.27%) and Gold (GOLD +0.59%) as the GOLDSILVER ratio continues to decline from a 9/23 pivot. Crude Oil (CRUDEOIL1! +0.86%) gained for the day. Timber (WOOD +0.65%) continues to climb. Copper (COPPER1! +0.47%) gained on the day. Aluminum (ALI1! +0.95%) has been going up and down the last several days.
The put/call ratio dropped to 0.547, as bulls are growing in optimism. 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
Amazon (AMZN +2.40%) and Microsoft (MSFT +2.41%) both broke out on higher volume from recent consolidation areas and closed well above their 21d EMA and 50d MA. Those moving averages were acting as resistance for the two stocks over the past week or so. Apple (AAPL -0.05%) pulled back just slightly from yesterday's breakout. Alphabet (GOOGL -0.22%) closed below its 21d EMA for the third day.
Other mega-caps with big gains included PayPal (PYPL +3.88%) and Alibaba (BABA +2.66%). Tesla (TSLA -1.65%) continued to pullback and Pfizer (PFE -2.25%) continues to slide despite the delivery of vaccines. "Sell the news."
Penn National Gaming (PENN +6.79%) and Draft Kings (DKNG +6.53%) were among top growth stocks for the day. GrowGeneration (GRWG +11.56%) also had a big gain, breaking into new highs. The market sees tops growth opportunities are in gambling and marijuana. 2021 should be much more fun.
As with Pfizer, Moderna (MRNA -6.92%) continues to fall back to earth.
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Looking ahead
Tomorrow, Building Permits data for November will be shared before market open, giving another indication of how the recovery is going. Manufacturing data for November will also be released.
Jabil (JBL -1.01%) before market open and FedEx (FDX +1.07%) after market close will be two interesting earnings reports to watch. Jabil serves so many industries that it's outlook on demand will be a clue on broader growth sentiment heading into 2021. FedEx has benefited significantly from the uptick in online-shopping deliveries since the pandemic began. The outlook could both highlight expected post-pandemic consumer behavior, but also could hint toward holiday season retail activity.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
All trend-lines are pointing at the same location which would result in a 0.56% gain tomorrow. That has been the pace of growth for most of December, except a few days. Sentiment is that stimulus is already priced in and so would have a minimal upside on good news, but potentially a big downside on bad news.
Support level is still around 12,250, but looks like a new level could be building at around 12,400-12,450. Another test would confirm that level.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Another new high and the uptrend continues. Thanks to the Fed continuing bond buy backs, we could continue to see more growth in the market in the near future. Whereas the liquidity has provided this perpetual growth to the overall market, the worries go to rotations as investors move between industry sectors and cap-size segments. Somedays it's all about growth stocks, other days it's about value. Somedays it's about small-cap and other days it's about mega-caps.
As the rotations come and go, they do seem to always rotate back.
Stay healthy and take care!
If you have ideas to make the daily update better, please let me know in the comments.
I do occasionally have some errors or typos and will correct them in my blog or in the comments on TradingView. I do not have an editor and do this in my free time.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wednesday, December 16, 2020
I wasn't born to lose you
Facts: +0.50%, Volume higher, Closing range: 76%, Body: 39%
Good: HH/HL, no gap up, low just below yesterday's high
Bad: Some selling at close
Highs/Lows: Higher high, Higher low
Candle: Medium sized body in middle of the candle, smaller wicks
Advance/Decline: 0.93, less breadth than yesterday
Sectors: Technology (XLK +0.68%) and Consumer Discretionary (XLY +0.66%) were top. Utilities (XLU -1.16%) was bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The Nasdaq found another new all-time high today, putting in a series of higher lows and higher highs over the past four days. Retail Sales data came in lower than expected, but Crude Oil Inventories showed a high demand for oil. But the news the market really responded to was the Fed's continuation of a bond buying program that has brought so much liquidity to the equity markets. The index closed with a +0.50% gain on higher volume. The closing range was 76% with a body of 39% in the middle of the candle. There was less breadth than yesterday with about one advancing stock for every declining stock.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
The S&P 500 (SPX +0.18%) was the only other major index to close with gains. There was less interest in the Dow Jones Industrial (DJI -0.15%) and the small-cap Russell 2000 (RUT -0.36%) today.
There was also more focus among sectors. The open started with Utilities (XLU -1.16%) and Real Estate (XLRE +0.03%) leading but things quickly changed. Technology (XLK +0.68%) and Consumer Discretionary (XLY +0.66%) closed the day as the best performing sectors. Energy (XLE -0.49%) was bought up midday after crude oil inventories data looked positive, but sold off in the afternoon.
The VIX volatility index declined -1.70%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Indicators
Yields on the US 30y and 10y treasury bonds rose for the day while the 2y treasury bond yield remained flat. The spreads between long term and short term bonds widening slightly.
Corporate bond prices dropped for the day while 3-7 treasury bond prices also dropped. The yield spread remains about even to slightly tighter.
The US dollar (DXY -0.26%) declined for the day.
Silver (SILVER +3.27%) and Gold (GOLD +0.59%) as the GOLDSILVER ratio continues to decline from a 9/23 pivot. Crude Oil (CRUDEOIL1! +0.86%) gained for the day. Timber (WOOD +0.65%) continues to climb. Copper (COPPER1! +0.47%) gained on the day. Aluminum (ALI1! +0.95%) has been going up and down the last several days.
The put/call ratio dropped to 0.547, as bulls are growing in optimism. 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
Amazon (AMZN +2.40%) and Microsoft (MSFT +2.41%) both broke out on higher volume from recent consolidation areas and closed well above their 21d EMA and 50d MA. Those moving averages were acting as resistance for the two stocks over the past week or so. Apple (AAPL -0.05%) pulled back just slightly from yesterday's breakout. Alphabet (GOOGL -0.22%) closed below its 21d EMA for the third day.
Other mega-caps with big gains included PayPal (PYPL +3.88%) and Alibaba (BABA +2.66%). Tesla (TSLA -1.65%) continued to pullback and Pfizer (PFE -2.25%) continues to slide despite the delivery of vaccines. "Sell the news."
Penn National Gaming (PENN +6.79%) and Draft Kings (DKNG +6.53%) were among top growth stocks for the day. GrowGeneration (GRWG +11.56%) also had a big gain, breaking into new highs. The market sees tops growth opportunities are in gambling and marijuana. 2021 should be much more fun.
As with Pfizer, Moderna (MRNA -6.92%) continues to fall back to earth.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Tomorrow, Building Permits data for November will be shared before market open, giving another indication of how the recovery is going. Manufacturing data for November will also be released.
Jabil (JBL -1.01%) before market open and FedEx (FDX +1.07%) after market close will be two interesting earnings reports to watch. Jabil serves so many industries that it's outlook on demand will be a clue on broader growth sentiment heading into 2021. FedEx has benefited significantly from the uptick in online-shopping deliveries since the pandemic began. The outlook could both highlight expected post-pandemic consumer behavior, but also could hint toward holiday season retail activity.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
All trend-lines are pointing at the same location which would result in a 0.56% gain tomorrow. That has been the pace of growth for most of December, except a few days. Sentiment is that stimulus is already priced in and so would have a minimal upside on good news, but potentially a big downside on bad news.
Support level is still around 12,250, but looks like a new level could be building at around 12,400-12,450. Another test would confirm that level.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Another new high and the uptrend continues. Thanks to the Fed continuing bond buy backs, we could continue to see more growth in the market in the near future. Whereas the liquidity has provided this perpetual growth to the overall market, the worries go to rotations as investors move between industry sectors and cap-size segments. Somedays it's all about growth stocks, other days it's about value. Somedays it's about small-cap and other days it's about mega-caps.
As the rotations come and go, they do seem to always rotate back.
Stay healthy and take care!
Website: drewby.com
Twitter: twitter.com/drewrobbins
All ideas are for information purposes only. I may or may not invest in the stocks discussed. Before investing in any stock, do your research and trade using your rules.
Twitter: twitter.com/drewrobbins
All ideas are for information purposes only. I may or may not invest in the stocks discussed. Before investing in any stock, do your research and trade using your rules.
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