Summary: Technology stocks moved higher today, helping boost the Nasdaq while the other major indexes retreated. The mix of investments in growth sectors and defensive sectors show some indecision about the new Fed policy. At the same time, there was an apparent sell-off in cyclical sectors.
Notes
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Thursday, June 17, 2021
Facts: +0.87%, Volume lower, Closing range: 82%, Body: 82%
Good: High closing range after a dip mid-day. No lower wick.
Bad: Resistance at 14,200, lower volume, A/D below 1.0
Highs/Lows: Higher high, higher low
Candle: Mostly green body with no lower wick, high closing range under small upper wick
Advanced/Decline: 0.57, Almost two declining stocks for every advancing stock
Indexes: SPX (-0.04%), DJI (-0.62%), RUT (-1.18%), VIX (-2.21%)
Sectors: Technology (XLK +1.16%) and Health (XLV +0.76%) were top. Financials (XLF -2.90%) and Energy (XLE -3.40%) were bottom.
Expectation: Higher
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Market Overview
Technology stocks moved higher today, helping boost the Nasdaq while the other major indexes retreated. The mix of investments in growth sectors and defensive sectors show some indecision about the new Fed policy. At the same time, there was an apparent sell-off in cyclical sectors.
The Nasdaq advanced +0.87% while volume was lower than the previous day. The gains were steady through the morning before a dip mid-day. However, the index recovered and closed near intraday highs. The closing range of 82% matches an 82% body that left no lower wick. There were almost two declining stocks for every advancing stock.
The other major indexes didn't fare as well. The Russell 2000 (RUT) fell -1.18%. The Dow Jones Industrial Average (DJI) declined -0.62%. The S&P 500 (SPX) declined -0.04%.
The VIX volatility index declined -2.21%.
Technology (XLK +1.16%), Health (XLV +0.76%), and Utilities (XLU +0.55%) were the top three sectors for the day. The four cyclical sectors of Industrials (XLI -1.54%), Materials (XLB -2.23%), Financials (XLF -2.90%), and Energy (XLE -3.40%) all had significant declines.
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Economic Indicators
The US Dollar (DXY) strengthened for another day, rising +0.55%.
The US 30y and 10y Treasury Yields declined. The 2y Treasury yield rose.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) declined.
Timber (Wood) continues to slide, dropping -1.96% today.
Copper (COPPER1!) and Aluminum (ALI1!) also declined significantly.
Bitcoin (BTCUSD) declined -0.67%. Ethereum (ETHUSD) advanced +0.19%
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Investor Sentiment
The put/call ratio declined to 0.609. 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. Below that level is overly bullish.
The CNN Fear & Greed index moved to the fear side of neutral.
The NAAIM money manager exposure index rose to 98.52.
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Market Leaders
The four largest mega-caps gained on higher volume today, helping boost the Technology sector and the Nasdaq. Amazon (AMZN) had the biggest move with a +2.17% advance. The stock gained nearly 10% in the last eight trading days, setting it toward new all-time highs. Microsoft (MSFT) gained +1.37%. Apple (AAPL) advanced +1.26%. Alphabet
(GOOGL) rose +0.80%. All four are showing strength, and trading above moving averages, a good sign for broader gains in the market.
Nvidia (NVDA), PayPal (PYPL), Amazon, and Tesla (TSLA) were the top mega-caps gaining 2% or better. Bank of America (BAC), Exxon Mobil (XOM), JP Morgan Chase (JPM), and Chevron (CVX) were the bottom four. Both ends of the mega-cap list closely reflect the sector list performance.
Almost all of the growth stocks in the daily update list gained today. Sumo Digital (SUMO), Enphase (ENPH), Solar Edge (SEDG), and Cloudflare (NET) were the top four with over 6% gains. GrowGeneration (GRWG), RH (RH), and Penn National Gaming (PENN) were at the bottom of the list.
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Looking ahead
There is not much significant economic news scheduled for Friday.
There are no relevant earnings reports for the daily update.
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Trends, Support, and Resistance
Hesitation before a new all-time high is causing a resistance area to form near 14,200.
The one-day trend-line points to a +0.86% advance for Thursday.
The trend-line from the 5/12 low points to a +0.49% advance.
The five-day trend-line ends with a -0.16% decline for tomorrow.
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Wrap-up
After yesterday's sudden sell-off and then recovery, following the Fed view on rate hikes in 2023, investor reactions were mixed today. The mix of investment in growth stocks and defensive stocks shows that not everyone is at the same comfort level with the Fed changing policy.
One place they were very decisive was in the sell-off of cyclical sectors, some of which may be due to a drop in commodity futures as well. There are multiple factors at play beyond the interest rates and Fed outlook. The economy is still recovering, and cyclicals will continue to play in the recovery, so expect rotation back into those sectors at some point.
For now, we have the long lower wick yesterday that followed through into gains today. To further confirm the continued uptrend, I'd expect to see the index move higher tomorrow. Otherwise, it would appear the optimism was short-lived, and there is more fear lurking around inflation and interest rate hikes.
Stay healthy and trade safe!
Notes
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=-
Thursday, June 17, 2021
Facts: +0.87%, Volume lower, Closing range: 82%, Body: 82%
Good: High closing range after a dip mid-day. No lower wick.
Bad: Resistance at 14,200, lower volume, A/D below 1.0
Highs/Lows: Higher high, higher low
Candle: Mostly green body with no lower wick, high closing range under small upper wick
Advanced/Decline: 0.57, Almost two declining stocks for every advancing stock
Indexes: SPX (-0.04%), DJI (-0.62%), RUT (-1.18%), VIX (-2.21%)
Sectors: Technology (XLK +1.16%) and Health (XLV +0.76%) were top. Financials (XLF -2.90%) and Energy (XLE -3.40%) were bottom.
Expectation: Higher
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Market Overview
Technology stocks moved higher today, helping boost the Nasdaq while the other major indexes retreated. The mix of investments in growth sectors and defensive sectors show some indecision about the new Fed policy. At the same time, there was an apparent sell-off in cyclical sectors.
The Nasdaq advanced +0.87% while volume was lower than the previous day. The gains were steady through the morning before a dip mid-day. However, the index recovered and closed near intraday highs. The closing range of 82% matches an 82% body that left no lower wick. There were almost two declining stocks for every advancing stock.
The other major indexes didn't fare as well. The Russell 2000 (RUT) fell -1.18%. The Dow Jones Industrial Average (DJI) declined -0.62%. The S&P 500 (SPX) declined -0.04%.
The VIX volatility index declined -2.21%.
Technology (XLK +1.16%), Health (XLV +0.76%), and Utilities (XLU +0.55%) were the top three sectors for the day. The four cyclical sectors of Industrials (XLI -1.54%), Materials (XLB -2.23%), Financials (XLF -2.90%), and Energy (XLE -3.40%) all had significant declines.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) strengthened for another day, rising +0.55%.
The US 30y and 10y Treasury Yields declined. The 2y Treasury yield rose.
High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) declined.
Timber (Wood) continues to slide, dropping -1.96% today.
Copper (COPPER1!) and Aluminum (ALI1!) also declined significantly.
Bitcoin (BTCUSD) declined -0.67%. Ethereum (ETHUSD) advanced +0.19%
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Investor Sentiment
The put/call ratio declined to 0.609. 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. Below that level is overly bullish.
The CNN Fear & Greed index moved to the fear side of neutral.
The NAAIM money manager exposure index rose to 98.52.
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Market Leaders
The four largest mega-caps gained on higher volume today, helping boost the Technology sector and the Nasdaq. Amazon (AMZN) had the biggest move with a +2.17% advance. The stock gained nearly 10% in the last eight trading days, setting it toward new all-time highs. Microsoft (MSFT) gained +1.37%. Apple (AAPL) advanced +1.26%. Alphabet
(GOOGL) rose +0.80%. All four are showing strength, and trading above moving averages, a good sign for broader gains in the market.
Nvidia (NVDA), PayPal (PYPL), Amazon, and Tesla (TSLA) were the top mega-caps gaining 2% or better. Bank of America (BAC), Exxon Mobil (XOM), JP Morgan Chase (JPM), and Chevron (CVX) were the bottom four. Both ends of the mega-cap list closely reflect the sector list performance.
Almost all of the growth stocks in the daily update list gained today. Sumo Digital (SUMO), Enphase (ENPH), Solar Edge (SEDG), and Cloudflare (NET) were the top four with over 6% gains. GrowGeneration (GRWG), RH (RH), and Penn National Gaming (PENN) were at the bottom of the list.
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Looking ahead
There is not much significant economic news scheduled for Friday.
There are no relevant earnings reports for the daily update.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
Hesitation before a new all-time high is causing a resistance area to form near 14,200.
The one-day trend-line points to a +0.86% advance for Thursday.
The trend-line from the 5/12 low points to a +0.49% advance.
The five-day trend-line ends with a -0.16% decline for tomorrow.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
After yesterday's sudden sell-off and then recovery, following the Fed view on rate hikes in 2023, investor reactions were mixed today. The mix of investment in growth stocks and defensive stocks shows that not everyone is at the same comfort level with the Fed changing policy.
One place they were very decisive was in the sell-off of cyclical sectors, some of which may be due to a drop in commodity futures as well. There are multiple factors at play beyond the interest rates and Fed outlook. The economy is still recovering, and cyclicals will continue to play in the recovery, so expect rotation back into those sectors at some point.
For now, we have the long lower wick yesterday that followed through into gains today. To further confirm the continued uptrend, I'd expect to see the index move higher tomorrow. Otherwise, it would appear the optimism was short-lived, and there is more fear lurking around inflation and interest rate hikes.
Stay healthy and trade safe!
