Trend lines drawn from the 10/12 pivot day (24d), 10/30 bottom (10d), 11/6 (5d), and today 11/12 (1d).
I am making some changes to the chart presentation and renaming the series to reflect the other data points I'm including. Still based out of the Nasdaq composite.
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=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Thursday, November 12, 2020
You'll never find your gold on a sandy beach
Facts: -0.65% lower, Volume higher, Closing range: 24%, Body: 51%
Good: Higher high, Higher low
Bad: Could not hold days high, closed near the low on higher volume
Highs/Lows: Higher high, higher low
Candle: Larger upper wick, thick body.
Advance/Decline: 0.48, 2 declining stocks for every advancing stock
Sectors: Consumer Staples (XLP -0.27%) and Health (XLV -0.37%). Energy (XLE -3.23%) and Materials (XLB -2.11%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
The market started the day with some energy when Initial Jobless Claims came in less than expected showing some positive news against continued economic worries surrounded by the pandemic. However, quickly sold off led by the Energy sector after Crude Oil Inventories showed a surprise increase when a decrease was expected. Core CPI came in less than expected and could be a sign of continued economic weakness. The Nasdaq fell -0.65% on slightly higher volume than the previous day. Volume is still below average for recent weeks. The candle has a closing range of 24% with a 51% red body. The upper wick is slightly higher showing the bears won the day. The Nasdaq had two declining stocks for every advancing stock, a better result than the broader market.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
The S&P 500 (SPX -1.00%), Dow Jones Industrial average (DHI -1.08%) and Russell 2000 (RUT -1.64%) also had losses on the day with the RUT seeing the biggest decline. The RUT confirms a hanging man candlestick the previous day, signaling a reversal for the index.
All sectors ended the day with losses. Communications (XLC -0.57%), Technology (XLK -0.89%) and Health (XLV -0.37%) led the morning gains before losing ground. Consumer Staples (XLP -0.27%) ended the day with the least damage. Energy (XLE -3.23%) and Materials (XLB -2.11%) were the worst two sectors for the second day in a row.
The VIX volatility index increased +8.10% reversing a recent downtrend.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Bonds, Greenback and Commodities
Treasury Bond yields declined for the day. The 10Y-2Y spread also decreased. The spread was is near its highest point since February of 2018.
The US dollar (DXY -0.09%) weakened slightly after several days of gains.
A decrease in the value of Gold (GOLD +0.61%) increased slightly while Silver (SILVER +0.10%) remained about the same. Timber (WOOD -2.32%) took a reversal off a high point.
Crude Oil futures (CRUDEOIL -0.03%) remained flat despite OPEC lowering demand estimates and inventories increasing more than expected. Crude Oil is up over 15% since the start of November.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Except for Amazon (AMZN -0.86%), the big four mega-caps of Apple (AAPL -0.23%), Microsoft (MSFT -0.51%) and Google (GOOG -0.16%) outperformed the index despite having losses for the day. Amazon tested the 21d EMA but did not make it over and remains the only of the big four under the key moving average lines. Most other mega-caps had losses today.
Growth stocks saw a mix of gains and losses today. Elective Vehicle company NIO (NIO +12.12%) rose significantly. GrowGeneration (GRWG +16.05%) a provider of hydroponic and organic gardening supplies had a huge boost from earnings and election results that are viewed to be in support of the industry. WIX.com (WIX -5.45%) had a mixed reaction to earnings, selling off but staying within this past weeks trading range.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Growth stock Draftkings (DKNG -0.94%) will announce earnings tomorrow.
Producer Price Index (PPI) will be release tomorrow prior to market open. This will give another view on inflation.
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Trends, Support and Resistance
The trend from the 10/30 bottom still points to just above all time highs at a +3.12% gain from today’s close. That is the only trend line showing a positive gain for tomorrow. Add that to a bearish candlestick pattern for today and it seems unlikely without a news catalyst.
The five-day trend line is pointing to a -0.76% loss for tomorrow. The longest trend line from the 10/12 pivot day is meeting up with the one-day trend at a -1.95% loss. That would be just below the 21d EMA but above the October support area.
It is worth noting that the Nasdaq is forming an ascending triangle on the index daily chart. A pattern is just a pattern and does not necessarily predict anything. There is a lot that can disrupt expectations from the unfinalized election to the unknowns the pandemic and vaccine timing. If the pattern does play out, it is showing more consolidation before the market can move higher. If that is true, there is a good chance for the index to revisit the bottom of the ascending triangle. I added a line on the chart for the bottom of the triangle. The top is same as the all-time high line.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It has been mostly a sideways move for the market since Monday’s rotation instigated by the positive news of a vaccine for Coronavirus, possibly bringing an end to the economic stress sooner than expected.
At the same time, the signals are mixed. Investors rotated back into covid-plays the past two days. Many economic indicators that were positives on Monday and Tuesday are softening or reversing now.
On the positive side, the four mega-caps held up well compared to the market today. Although it did have some impact, Investors did not overreact to the economic news of consumer prices and oil inventories.
Take care!
I am making some changes to the chart presentation and renaming the series to reflect the other data points I'm including. Still based out of the Nasdaq composite.
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=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Thursday, November 12, 2020
You'll never find your gold on a sandy beach
Facts: -0.65% lower, Volume higher, Closing range: 24%, Body: 51%
Good: Higher high, Higher low
Bad: Could not hold days high, closed near the low on higher volume
Highs/Lows: Higher high, higher low
Candle: Larger upper wick, thick body.
Advance/Decline: 0.48, 2 declining stocks for every advancing stock
Sectors: Consumer Staples (XLP -0.27%) and Health (XLV -0.37%). Energy (XLE -3.23%) and Materials (XLB -2.11%) at the bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The market started the day with some energy when Initial Jobless Claims came in less than expected showing some positive news against continued economic worries surrounded by the pandemic. However, quickly sold off led by the Energy sector after Crude Oil Inventories showed a surprise increase when a decrease was expected. Core CPI came in less than expected and could be a sign of continued economic weakness. The Nasdaq fell -0.65% on slightly higher volume than the previous day. Volume is still below average for recent weeks. The candle has a closing range of 24% with a 51% red body. The upper wick is slightly higher showing the bears won the day. The Nasdaq had two declining stocks for every advancing stock, a better result than the broader market.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
The S&P 500 (SPX -1.00%), Dow Jones Industrial average (DHI -1.08%) and Russell 2000 (RUT -1.64%) also had losses on the day with the RUT seeing the biggest decline. The RUT confirms a hanging man candlestick the previous day, signaling a reversal for the index.
All sectors ended the day with losses. Communications (XLC -0.57%), Technology (XLK -0.89%) and Health (XLV -0.37%) led the morning gains before losing ground. Consumer Staples (XLP -0.27%) ended the day with the least damage. Energy (XLE -3.23%) and Materials (XLB -2.11%) were the worst two sectors for the second day in a row.
The VIX volatility index increased +8.10% reversing a recent downtrend.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Bonds, Greenback and Commodities
Treasury Bond yields declined for the day. The 10Y-2Y spread also decreased. The spread was is near its highest point since February of 2018.
The US dollar (DXY -0.09%) weakened slightly after several days of gains.
A decrease in the value of Gold (GOLD +0.61%) increased slightly while Silver (SILVER +0.10%) remained about the same. Timber (WOOD -2.32%) took a reversal off a high point.
Crude Oil futures (CRUDEOIL -0.03%) remained flat despite OPEC lowering demand estimates and inventories increasing more than expected. Crude Oil is up over 15% since the start of November.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Except for Amazon (AMZN -0.86%), the big four mega-caps of Apple (AAPL -0.23%), Microsoft (MSFT -0.51%) and Google (GOOG -0.16%) outperformed the index despite having losses for the day. Amazon tested the 21d EMA but did not make it over and remains the only of the big four under the key moving average lines. Most other mega-caps had losses today.
Growth stocks saw a mix of gains and losses today. Elective Vehicle company NIO (NIO +12.12%) rose significantly. GrowGeneration (GRWG +16.05%) a provider of hydroponic and organic gardening supplies had a huge boost from earnings and election results that are viewed to be in support of the industry. WIX.com (WIX -5.45%) had a mixed reaction to earnings, selling off but staying within this past weeks trading range.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Growth stock Draftkings (DKNG -0.94%) will announce earnings tomorrow.
Producer Price Index (PPI) will be release tomorrow prior to market open. This will give another view on inflation.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The trend from the 10/30 bottom still points to just above all time highs at a +3.12% gain from today’s close. That is the only trend line showing a positive gain for tomorrow. Add that to a bearish candlestick pattern for today and it seems unlikely without a news catalyst.
The five-day trend line is pointing to a -0.76% loss for tomorrow. The longest trend line from the 10/12 pivot day is meeting up with the one-day trend at a -1.95% loss. That would be just below the 21d EMA but above the October support area.
It is worth noting that the Nasdaq is forming an ascending triangle on the index daily chart. A pattern is just a pattern and does not necessarily predict anything. There is a lot that can disrupt expectations from the unfinalized election to the unknowns the pandemic and vaccine timing. If the pattern does play out, it is showing more consolidation before the market can move higher. If that is true, there is a good chance for the index to revisit the bottom of the ascending triangle. I added a line on the chart for the bottom of the triangle. The top is same as the all-time high line.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It has been mostly a sideways move for the market since Monday’s rotation instigated by the positive news of a vaccine for Coronavirus, possibly bringing an end to the economic stress sooner than expected.
At the same time, the signals are mixed. Investors rotated back into covid-plays the past two days. Many economic indicators that were positives on Monday and Tuesday are softening or reversing now.
On the positive side, the four mega-caps held up well compared to the market today. Although it did have some impact, Investors did not overreact to the economic news of consumer prices and oil inventories.
Take care!
