Trend lines drawn from the 3/5 low (17d), 3/24 (5d) and today 3/30 (1d).
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Tuesday, March 30, 2021
Facts: -0.11%, Volume lower, Closing range: 80%, Body: +24%
Good: Closing range of 80%, recovered from morning dip below 13,000
Bad: Lower high, lower low, trending down
Highs/Lows: Lower high, lower low
Candle: Thin green body in the upper half of the candle, longer lower wick
Advance/Decline: A bit more than one advancing stock for every declining stock
Indexes: SPX (-0.32%), DJI (-0.31%), RUT (+1.72%), VIX (-5.45%)
Sectors: Consumer Discretionary (XLY +0.98%) and Financials (XLF +0.70%) were top. Technology (XLK -0.95%) and Consumer Staples (XLP -1.07%).
Expectation: Sideways or Higher
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Market Overview
The bond market continued to show its influence on equities today, seemingly in a battle with strong consumer confidence numbers. A pre-market spike in long-term bond yields drove the Financials sector to a gap up at open. However, the yields began to taper off even before stronger than expected consumer confidence numbers were released after market open. The strong numbers sent the Consumer Discretionary sector to the top to finish the day.
The Nasdaq never quite recovered from the morning yield scare, but did end the day in the upper range of the candle. The index closed with a -0.11% loss for the day on lower volume. The closing range of 80% is good indicator for intraday bullishness, but the 24% body and lower high means the index still has much to prove. There were 1.2 advancing stocks for every declining stock.
The Russell 2000 (RUT) finally had a day to shine with a +1.72% gain. The S&P 500 (SPX) and Dow Jones Industrial average (DJI) had nearly similar declines with -0.32% and -0.32% respectively.
The VIX volatility index declined -5.45%.
Consumer Discretionary (XLY +0.98%) topped the sector list, despite starting the day in the negative. The Consumer Confidence numbers were way better than expected and is a leading indicator of consumer spending. Whereas spending on staples typically remains steady during economic downturns, discretionary spending dips and then picks up once the outlook becomes better. Financials (XLF +0.70%) was the second best sector of the day, helped by the morning spike in long term treasury yields that drive interest rates, and revenues for banks. The strength in Industrials (XLI +0.44%) should also be noted as the infrastructure plans from Biden are expected to boost the sector.
All other sectors declined for the day (XLC was even). Technology (XLK -0.95%) and Consumer Staples (-1.07%) were the bottom two sectors.
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Economic Indicators
The US Dollar (DXY) climbed +0.38%, likely impacting big tech valuations.
The US 30y treasury bond and 10y note declined for the day, after a pre-market spike that sent investors scrambling. The 2y note was flat for the day.
High Yield Corporate Bonds (HYG) prices declined while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined for a second day. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) declined.
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Investor Sentiment
The put/call ratio dropped to 0.616. 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.
The CNN Fear & Greed index is moved back toward Neutral, but still on the Fear side.
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Market Leaders
Alphabet (GOOGL) was the only big four mega-cap to escape losses, but it only had a +0.03% gain. Microsoft (MSFT) had a -1.44% loss as it's 21d EMA moves under the 50d MA, signaling a bearish outlook for the chart. Apple (AAPL) and Amazon (AMZN) had losses of -1.23% and -0.66% and both continue to trade underneath both key moving average lines. Alphabet is the only of the big four that has the 21d EMA above the 50d MA.
Baidu (BIDU), Tesla (TSLA), Bank of America (BAC) and JP Morgan (JPM) were the top four mega-caps and only mega-caps to gain more than 1% for the day. Abbot Laboratories (ABT) and Proctor & Gamble (PG) were at the bottom of the list.
Growth stocks generally had a good day. Ehang Holdings (EH), Lemonade (LMND), GrowGeneration (GRWG) and RH (RH) topped the daily update list with greater than 6% gains.
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Looking ahead
There will be a few key updates on Wednesday morning. Employment data for March will be updated. Purchasing Managers Index data will indicate how much purchasing activity is happening in order to meet manufacturing demands. Pending Home Sales and Crude Oil Inventories will be released after market open.
President Biden is expected to reveal the details of his infrastructure plan which is expected to be $3 trillion. That could be great for economic recovery, but will have mixed impacts on the market. We could see yields spike again as inflation fears creep back into investors' minds. On the other hand, we are also likely to see some sectors such as Materials and Industrials benefit.
Walgreens (WBA) and Riot Blockchain (RIOT) report on Wednesday.
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Trends, Support and Resistance
The index dipped below 13,000 support again, but was able to regain the line.
The trend line from the 3/5 low points to a +1.06% gain for Wednesday, which is back above the 21d EMA.
The one-day trend line does point upward and would result in a +0.60% gain.
The five-day trend line points to a -0.46% loss.
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Wrap-up
The Nasdaq continues to creep along without any high volume big moves in either direction the last few days. The index did touch the lower line of a channel drawn from the March 2020 bottom. I noted that level in the weekly update. It was tested, but closed inside the channel.
Tomorrow is the last day of the month and last day of the quarter. Let's hope for positive end for the month to spring the market into April.
Stay healthy and trade safe!
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Tuesday, March 30, 2021
Facts: -0.11%, Volume lower, Closing range: 80%, Body: +24%
Good: Closing range of 80%, recovered from morning dip below 13,000
Bad: Lower high, lower low, trending down
Highs/Lows: Lower high, lower low
Candle: Thin green body in the upper half of the candle, longer lower wick
Advance/Decline: A bit more than one advancing stock for every declining stock
Indexes: SPX (-0.32%), DJI (-0.31%), RUT (+1.72%), VIX (-5.45%)
Sectors: Consumer Discretionary (XLY +0.98%) and Financials (XLF +0.70%) were top. Technology (XLK -0.95%) and Consumer Staples (XLP -1.07%).
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The bond market continued to show its influence on equities today, seemingly in a battle with strong consumer confidence numbers. A pre-market spike in long-term bond yields drove the Financials sector to a gap up at open. However, the yields began to taper off even before stronger than expected consumer confidence numbers were released after market open. The strong numbers sent the Consumer Discretionary sector to the top to finish the day.
The Nasdaq never quite recovered from the morning yield scare, but did end the day in the upper range of the candle. The index closed with a -0.11% loss for the day on lower volume. The closing range of 80% is good indicator for intraday bullishness, but the 24% body and lower high means the index still has much to prove. There were 1.2 advancing stocks for every declining stock.
The Russell 2000 (RUT) finally had a day to shine with a +1.72% gain. The S&P 500 (SPX) and Dow Jones Industrial average (DJI) had nearly similar declines with -0.32% and -0.32% respectively.
The VIX volatility index declined -5.45%.
Consumer Discretionary (XLY +0.98%) topped the sector list, despite starting the day in the negative. The Consumer Confidence numbers were way better than expected and is a leading indicator of consumer spending. Whereas spending on staples typically remains steady during economic downturns, discretionary spending dips and then picks up once the outlook becomes better. Financials (XLF +0.70%) was the second best sector of the day, helped by the morning spike in long term treasury yields that drive interest rates, and revenues for banks. The strength in Industrials (XLI +0.44%) should also be noted as the infrastructure plans from Biden are expected to boost the sector.
All other sectors declined for the day (XLC was even). Technology (XLK -0.95%) and Consumer Staples (-1.07%) were the bottom two sectors.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) climbed +0.38%, likely impacting big tech valuations.
The US 30y treasury bond and 10y note declined for the day, after a pre-market spike that sent investors scrambling. The 2y note was flat for the day.
High Yield Corporate Bonds (HYG) prices declined while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined for a second day. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) declined.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio dropped to 0.616. 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.
The CNN Fear & Greed index is moved back toward Neutral, but still on the Fear side.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Alphabet (GOOGL) was the only big four mega-cap to escape losses, but it only had a +0.03% gain. Microsoft (MSFT) had a -1.44% loss as it's 21d EMA moves under the 50d MA, signaling a bearish outlook for the chart. Apple (AAPL) and Amazon (AMZN) had losses of -1.23% and -0.66% and both continue to trade underneath both key moving average lines. Alphabet is the only of the big four that has the 21d EMA above the 50d MA.
Baidu (BIDU), Tesla (TSLA), Bank of America (BAC) and JP Morgan (JPM) were the top four mega-caps and only mega-caps to gain more than 1% for the day. Abbot Laboratories (ABT) and Proctor & Gamble (PG) were at the bottom of the list.
Growth stocks generally had a good day. Ehang Holdings (EH), Lemonade (LMND), GrowGeneration (GRWG) and RH (RH) topped the daily update list with greater than 6% gains.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
There will be a few key updates on Wednesday morning. Employment data for March will be updated. Purchasing Managers Index data will indicate how much purchasing activity is happening in order to meet manufacturing demands. Pending Home Sales and Crude Oil Inventories will be released after market open.
President Biden is expected to reveal the details of his infrastructure plan which is expected to be $3 trillion. That could be great for economic recovery, but will have mixed impacts on the market. We could see yields spike again as inflation fears creep back into investors' minds. On the other hand, we are also likely to see some sectors such as Materials and Industrials benefit.
Walgreens (WBA) and Riot Blockchain (RIOT) report on Wednesday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index dipped below 13,000 support again, but was able to regain the line.
The trend line from the 3/5 low points to a +1.06% gain for Wednesday, which is back above the 21d EMA.
The one-day trend line does point upward and would result in a +0.60% gain.
The five-day trend line points to a -0.46% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
The Nasdaq continues to creep along without any high volume big moves in either direction the last few days. The index did touch the lower line of a channel drawn from the March 2020 bottom. I noted that level in the weekly update. It was tested, but closed inside the channel.
Tomorrow is the last day of the month and last day of the quarter. Let's hope for positive end for the month to spring the market into April.
Stay healthy and trade safe!
