Daily Market Update for 12/14
Trend lines drawn from the 10/30 bottom (31d), 12/8 (5d), the 12/9 pivot (4d) and today 12/11 (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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Monday, December 14, 2020
Once upon a time you dressed so fine
Facts: +0.50%, Volume higher, Closing range: 7%, Body: 7%
Good: HH/HL, gain on higher volume
Bad: Long upper wick, low closing range
Highs/Lows: Higher high, Higher low
Candle: Long upper shadow, very slim body
Advance/Decline: 0.99, about even on advancing and declining stocks
Sectors: Technology (XLK +0.36%), Consumer Discretionary (XLY +0.15%).
Expectation: Lower
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Market Overview
The Nasdaq opened the week with a gap up as first doses of the vaccine for COVID19 were being delivered to frontline health workers. The index climbed from there to a morning high, but then sold off the rest of the day to close near the open. The long upper wick of the candle indicates the buyer momentum in the morning turning to selling in the afternoon. The Nasdaq closed the day with a +0.50% gain on higher volume. The closing range of 7% with a 7% body and no lower wick shows the bears took over in the afternoon. There were about an even amount of advancing stocks and declining stocks.
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Indexes and Sectors
The Russell 2000 (RUT +0.11%) was the only other index to end the day positive. The S&P 500 (SPX -0.44%) and the Dow Jones Industrial average (DJI -0.62%) both had losses on the day. All of the indexes have low closing ranges with little to no lower wicks.
Technology (XLK +0.36%) and Consumer Discretionary (XLY +0.15%) were the top sectors. All other sectors were down for the day with Energy (XLE -3.50%) performing the worst. Utilities (XLU -0.51%) briefly led in the morning, indicating some defensive moves for investors, but sold off later in the day even as the major indexes fell back from morning highs.
The VIX volatility index rose +6.05%.
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Market Indicators
Yields on the US 30y, 10y and 2y treasury bonds all dropped for the day with the spreads between long term and short term remaining about the same.
Corporate bond yields rose slightly for the day while short term (3-7y) treasury bond yields remained about the same. The move away from corporate bonds (causing yields to rise) is something to watch but not yet significant.
The US dollar (DXY -0.06%) declined for the day.
Silver (SILVER -0.46%) and Gold (GOLD -0.63%) both dropped for the day. Crude Oil (CRUDEOIL1! -0.12%) was also down slightly. Timber (WOOD +0.27%) gained for the day. Copper (COPPER1! +0.00%) was even while Aluminum (ALI1! +1.59%) gained for the day.
The put/call ratio rose to 0.566, back to the overly bullish side. 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 had mixed days. Microsoft (MSFT +0.44%) closed back above its 21d EMA and 50d MA. Amazon (AMZN +1.3%) was able to close above its 21d EMA but could not stay above the 50d MA after crossing it mid-day. Alphabet (GOOGL -1.27%) closed below its 21d EMA. Apple (AAPL -0.51%) had a loss for the day but continues to trade above its 21d EMA and 50d MA. The moving averages are key lines of support and resistance and show how these large companies are performing in the market and influencing the indexes.
Other mega-caps also had a mix of results. The biggest gainers were Tesla (TSLA +4.89%), Netflix (NFLX +3.82%), PayPal (PYPL +3.14%) and Nvidia (NVDA +2.27%). Walt Disney (DIS -3.65%) and Pfizer (PFE -4.64%) dropped back from recent gains.
Growth stocks that did well include Peloton (PTON +4.11%), Datadog (DDOG +3.32%) and Fiverr (FVRR +2.58%). An older favorite, Qualys (QLYS +7.51%) had a big gain after news of a security breach in the US Treasury department. Social Media stocks Pinterest (PINS -1.88%) and SNAP (SNAP -3.24%) did not fare so well for the day. DOMO (DOMO +20.84%) broke out on huge volume today.
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Looking ahead
Economic news tomorrow will include Import/Export price indexes. Industrial Production data for November will also be released and is expected to be lower than the previous month.
There are no notable earnings announcements on Monday for the daily market update.
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Trends, Support and Resistance
The trend line from the 10/30 bottom points to a +1.92% which would bring the index back to new all-time highs.
The one-day and five-day trend lines, as well as the trend line from the 12/9 pivot are pointing to a -0.5% to -0.67% loss for tomorrow.
So far the 12,250 area has held-up well as support and is just above the 21d EMA. If the index passes through the 12,250 support area and the 21d EMA, then the next support area is the November support around 12,000. A drop tomorrow beyond that point should raise the alarm.
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Wrap-up
It was a bit of a rocky start to the week. The market opened up with positive news that vaccines were being delivered to frontline healthcare workers. There was optimism on stimulus talks in congress as well as a positive outlook for Brexit negotiations overseas.
However, as the day went on, concerns around new COVID lockdowns and what would come of the Fed meetings this week began weighing on investor confidence. The morning surge in Utilities and the dropping treasury bond yields are both signs of that nervousness, while the jitters were confirmed in the afternoon sell-off.
This is likely how the week will progress. More back and forth as the market mixes positive and negative news, mixed expectations on global outlook, and measuring when the pandemic will finally come to an end. But overall, the index is starting the week with a higher low than the previous week and a higher high than the previous day. Many growth stocks are continuing to do what they are supposed to do, grow. Keep an eye out for indications of change, but the trend is your friend.
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=-
Monday, December 14, 2020
Once upon a time you dressed so fine
Facts: +0.50%, Volume higher, Closing range: 7%, Body: 7%
Good: HH/HL, gain on higher volume
Bad: Long upper wick, low closing range
Highs/Lows: Higher high, Higher low
Candle: Long upper shadow, very slim body
Advance/Decline: 0.99, about even on advancing and declining stocks
Sectors: Technology (XLK +0.36%), Consumer Discretionary (XLY +0.15%).
Expectation: Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The Nasdaq opened the week with a gap up as first doses of the vaccine for COVID19 were being delivered to frontline health workers. The index climbed from there to a morning high, but then sold off the rest of the day to close near the open. The long upper wick of the candle indicates the buyer momentum in the morning turning to selling in the afternoon. The Nasdaq closed the day with a +0.50% gain on higher volume. The closing range of 7% with a 7% body and no lower wick shows the bears took over in the afternoon. There were about an even amount of advancing stocks and declining stocks.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
The Russell 2000 (RUT +0.11%) was the only other index to end the day positive. The S&P 500 (SPX -0.44%) and the Dow Jones Industrial average (DJI -0.62%) both had losses on the day. All of the indexes have low closing ranges with little to no lower wicks.
Technology (XLK +0.36%) and Consumer Discretionary (XLY +0.15%) were the top sectors. All other sectors were down for the day with Energy (XLE -3.50%) performing the worst. Utilities (XLU -0.51%) briefly led in the morning, indicating some defensive moves for investors, but sold off later in the day even as the major indexes fell back from morning highs.
The VIX volatility index rose +6.05%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Indicators
Yields on the US 30y, 10y and 2y treasury bonds all dropped for the day with the spreads between long term and short term remaining about the same.
Corporate bond yields rose slightly for the day while short term (3-7y) treasury bond yields remained about the same. The move away from corporate bonds (causing yields to rise) is something to watch but not yet significant.
The US dollar (DXY -0.06%) declined for the day.
Silver (SILVER -0.46%) and Gold (GOLD -0.63%) both dropped for the day. Crude Oil (CRUDEOIL1! -0.12%) was also down slightly. Timber (WOOD +0.27%) gained for the day. Copper (COPPER1! +0.00%) was even while Aluminum (ALI1! +1.59%) gained for the day.
The put/call ratio rose to 0.566, back to the overly bullish side. 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 had mixed days. Microsoft (MSFT +0.44%) closed back above its 21d EMA and 50d MA. Amazon (AMZN +1.3%) was able to close above its 21d EMA but could not stay above the 50d MA after crossing it mid-day. Alphabet (GOOGL -1.27%) closed below its 21d EMA. Apple (AAPL -0.51%) had a loss for the day but continues to trade above its 21d EMA and 50d MA. The moving averages are key lines of support and resistance and show how these large companies are performing in the market and influencing the indexes.
Other mega-caps also had a mix of results. The biggest gainers were Tesla (TSLA +4.89%), Netflix (NFLX +3.82%), PayPal (PYPL +3.14%) and Nvidia (NVDA +2.27%). Walt Disney (DIS -3.65%) and Pfizer (PFE -4.64%) dropped back from recent gains.
Growth stocks that did well include Peloton (PTON +4.11%), Datadog (DDOG +3.32%) and Fiverr (FVRR +2.58%). An older favorite, Qualys (QLYS +7.51%) had a big gain after news of a security breach in the US Treasury department. Social Media stocks Pinterest (PINS -1.88%) and SNAP (SNAP -3.24%) did not fare so well for the day. DOMO (DOMO +20.84%) broke out on huge volume today.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Economic news tomorrow will include Import/Export price indexes. Industrial Production data for November will also be released and is expected to be lower than the previous month.
There are no notable earnings announcements on Monday for the daily market update.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The trend line from the 10/30 bottom points to a +1.92% which would bring the index back to new all-time highs.
The one-day and five-day trend lines, as well as the trend line from the 12/9 pivot are pointing to a -0.5% to -0.67% loss for tomorrow.
So far the 12,250 area has held-up well as support and is just above the 21d EMA. If the index passes through the 12,250 support area and the 21d EMA, then the next support area is the November support around 12,000. A drop tomorrow beyond that point should raise the alarm.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It was a bit of a rocky start to the week. The market opened up with positive news that vaccines were being delivered to frontline healthcare workers. There was optimism on stimulus talks in congress as well as a positive outlook for Brexit negotiations overseas.
However, as the day went on, concerns around new COVID lockdowns and what would come of the Fed meetings this week began weighing on investor confidence. The morning surge in Utilities and the dropping treasury bond yields are both signs of that nervousness, while the jitters were confirmed in the afternoon sell-off.
This is likely how the week will progress. More back and forth as the market mixes positive and negative news, mixed expectations on global outlook, and measuring when the pandemic will finally come to an end. But overall, the index is starting the week with a higher low than the previous week and a higher high than the previous day. Many growth stocks are continuing to do what they are supposed to do, grow. Keep an eye out for indications of change, but the trend is your friend.
Stay healthy and take care!
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