Daily Market Update for 2/2
Trend lines drawn from the 10/30 bottom (64d), 1/27 (5d) and today 2/2 (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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Tuesday, February 2, 2021
Facts: +1.56%, Volume higher, Closing range: 82% (with gap), Body: 60%
Good: Solid gains throughout the morning and early afternoon.
Bad: Slight fade in late afternoon
Highs/Lows: Higher high, higher low
Candle: Gap up, thick green body with small upper wick from fade
Advance/Decline: 2.81, almost three advancing stocks for every declining stock
Indexes: SPX (+1.39%), DJI (+1.57%), RUT (+1.19%), VIX (-15.48%)
Sectors: Financials (XLF +2.42%) and Consumer Discretionary (XLY +2.12%) were top. Real Estate (XLRE +0.43%) and Health Services (XLV +0.29%) were bottom.
Expectation: Higher
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Market Overview
The market added to Monday's gains with another positive day on Tuesday. Volatility fell back to more stable levels while gains continued to be spread broadly across stocks. The market faded slightly going into close, possibly as investors prepared for earnings reports from Amazon (AMZN) and Alphabet (GOOGL).
The Nasdaq closed the day with a +1.56% gain on higher volume. The closing range with the gap was 82% and a 60% green body sits under a short upper wick created by the late afternoon fade. The rising window candle indicates a bullish continuation, but with some caution given the fade into close. Almost three stocks advanced for each declining stock, the second day of broad advances.
The S&P 500 (SPX) advanced +1.39%. The Dow Jones Industrial (DJI) gained +1.57%. The Russell 2000 (RUT) advanced +1.19%.
All sectors gained for the day. Financials (XLF +2.42%) and Consumer Discretionary (XLY +2.12%) were top. Real Estate (XLRE +0.43%) and Health Services (XLV +0.29%) were bottom.
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Economic Indicators
The US Dollar (DXY) gained +0.24% for the day. US 30y and 10y treasury bond yields continued gains for another day. The US 2y treasury bond yields advanced after three days of declines. High Yields Corporate bond (HYG) prices advanced.
Silver (SILVER) declined sharply after huge gains yesterday fueled by retail investors targeting the commodity. Gold (GOLD) also declined for the day. Crude Oil (CRUDEOIL1!) futures went up on positive inventory data. Timber (WOOD) advanced. Copper (COPPER1!) declined while and Aluminum (ALI1!) both advanced.
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Investor Sentiment
The put/call ratio declined again to 0.545, signaling bullish 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
Apple (AAPL), Amazon (AMZN) and Alphabet (GOOGL) all advanced for the day. Microsoft started the day with gains but closed with a light loss of -0.06%. All four are trading above key moving average lines, including Apple which had declined since earnings last week.
Mastercard (MA), Tesla (TSLA), Bank of America (BAC) and Walt Disney (DIS) led the mega-caps with over 3.5% gains each. Alibaba (BABA) declined -3.85% after a premarket earnings report that showed record revenue but forecasted uncertainty for the Ant group as China tightens controls on the company.
Chinese fintech company FUTU Holdings (FUTU) had another big gain of 11.40%. Organic plant and marijuana growing supply company, GrowGeneration (GRWG) gained 10.47% as optimism grows around a bill to legalize marijuana at the federal level. WorkDay (WDAY) and DraftKings (DKNG) also big gains, advancing +8.90% and +8.55%.
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Looking ahead
Purchasing Managers Index data will be released in the morning for Services and Non-Manufacturing sectors which provides a view the level of economic activity. Crude Oil Inventories will be released at 10:30.
Additional FOMC members will speak in the afternoon.
PayPal (PYPL) and Qualcomm (QCOM) are two significant earnings reports to be released after market close. Ebay (EBAY) will also report in the evening. Spotify (SPOT) will release earnings before market open.
There is a long list of earnings reports tomorrow that I won't attempt to include here. Check the stocks in your portfolio to make sure you aren't surprised by earnings.
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Trends, Support and Resistance
If Tuesday's one-day trend line continues into Wednesday, it points to a +0.93% gain. The long-term trend line from the 10/30 bottom points to a +0.40% gain.
The five-day trend line is pointing to a -0.92% loss which would still be well above 21d EMA.
The 21d EMA line has provided support before last Friday's close below the line. 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
The gap-up with solid gains for most of the day was very bullish for the index and broadly shared across the sectors and cap segments. The slight fade late in the day is likely due to the two significant earnings reports from mega-caps Amazon and Google which could influence the market heavily.
So far it seems we are off to a bullish week after last week's selling. However, keep in mind that things can change quickly as stimulus and pandemic news occurs.
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=-
Tuesday, February 2, 2021
Facts: +1.56%, Volume higher, Closing range: 82% (with gap), Body: 60%
Good: Solid gains throughout the morning and early afternoon.
Bad: Slight fade in late afternoon
Highs/Lows: Higher high, higher low
Candle: Gap up, thick green body with small upper wick from fade
Advance/Decline: 2.81, almost three advancing stocks for every declining stock
Indexes: SPX (+1.39%), DJI (+1.57%), RUT (+1.19%), VIX (-15.48%)
Sectors: Financials (XLF +2.42%) and Consumer Discretionary (XLY +2.12%) were top. Real Estate (XLRE +0.43%) and Health Services (XLV +0.29%) were bottom.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The market added to Monday's gains with another positive day on Tuesday. Volatility fell back to more stable levels while gains continued to be spread broadly across stocks. The market faded slightly going into close, possibly as investors prepared for earnings reports from Amazon (AMZN) and Alphabet (GOOGL).
The Nasdaq closed the day with a +1.56% gain on higher volume. The closing range with the gap was 82% and a 60% green body sits under a short upper wick created by the late afternoon fade. The rising window candle indicates a bullish continuation, but with some caution given the fade into close. Almost three stocks advanced for each declining stock, the second day of broad advances.
The S&P 500 (SPX) advanced +1.39%. The Dow Jones Industrial (DJI) gained +1.57%. The Russell 2000 (RUT) advanced +1.19%.
All sectors gained for the day. Financials (XLF +2.42%) and Consumer Discretionary (XLY +2.12%) were top. Real Estate (XLRE +0.43%) and Health Services (XLV +0.29%) were bottom.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) gained +0.24% for the day. US 30y and 10y treasury bond yields continued gains for another day. The US 2y treasury bond yields advanced after three days of declines. High Yields Corporate bond (HYG) prices advanced.
Silver (SILVER) declined sharply after huge gains yesterday fueled by retail investors targeting the commodity. Gold (GOLD) also declined for the day. Crude Oil (CRUDEOIL1!) futures went up on positive inventory data. Timber (WOOD) advanced. Copper (COPPER1!) declined while and Aluminum (ALI1!) both advanced.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio declined again to 0.545, signaling bullish 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
Apple (AAPL), Amazon (AMZN) and Alphabet (GOOGL) all advanced for the day. Microsoft started the day with gains but closed with a light loss of -0.06%. All four are trading above key moving average lines, including Apple which had declined since earnings last week.
Mastercard (MA), Tesla (TSLA), Bank of America (BAC) and Walt Disney (DIS) led the mega-caps with over 3.5% gains each. Alibaba (BABA) declined -3.85% after a premarket earnings report that showed record revenue but forecasted uncertainty for the Ant group as China tightens controls on the company.
Chinese fintech company FUTU Holdings (FUTU) had another big gain of 11.40%. Organic plant and marijuana growing supply company, GrowGeneration (GRWG) gained 10.47% as optimism grows around a bill to legalize marijuana at the federal level. WorkDay (WDAY) and DraftKings (DKNG) also big gains, advancing +8.90% and +8.55%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Purchasing Managers Index data will be released in the morning for Services and Non-Manufacturing sectors which provides a view the level of economic activity. Crude Oil Inventories will be released at 10:30.
Additional FOMC members will speak in the afternoon.
PayPal (PYPL) and Qualcomm (QCOM) are two significant earnings reports to be released after market close. Ebay (EBAY) will also report in the evening. Spotify (SPOT) will release earnings before market open.
There is a long list of earnings reports tomorrow that I won't attempt to include here. Check the stocks in your portfolio to make sure you aren't surprised by earnings.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
If Tuesday's one-day trend line continues into Wednesday, it points to a +0.93% gain. The long-term trend line from the 10/30 bottom points to a +0.40% gain.
The five-day trend line is pointing to a -0.92% loss which would still be well above 21d EMA.
The 21d EMA line has provided support before last Friday's close below the line. 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
The gap-up with solid gains for most of the day was very bullish for the index and broadly shared across the sectors and cap segments. The slight fade late in the day is likely due to the two significant earnings reports from mega-caps Amazon and Google which could influence the market heavily.
So far it seems we are off to a bullish week after last week's selling. However, keep in mind that things can change quickly as stimulus and pandemic news occurs.
Stay healthy and take care!
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