Daily Market Update for 2/24
Summary: Investors sold winners and bought losers in a pivot after tanks started to roll into Ukraine. Risk appetite grew as many of the unknowns got answers in the form of sanctions by Western countries.
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, February 24, 2022
Facts: +3.34%, Volume higher, Closing Range: 99%, Body: 99% Green
Good: Gain on higher volume, closing range, advance/decline ratio
Bad: Lower high, lower low
Highs/Lows: Lower high, Lower low
Candle: Thick green body with a small upper wick
Advance/Decline: 1.45, three advancing for every two declining stocks
Indexes: SPX (+1.50%), DJI (+0.28%), RUT (+2.67%), VIX (-2.26%)
Sector List: Technology (XLK +3.42%) and Communications (XLC +2.80%) at the top. Financials (XLF -1.20%) and Consumer Staples (XLP -1.72%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
Investors sold winners and bought losers in a pivot after tanks started to roll into Ukraine. Risk appetite grew as many of the unknowns got answers in the form of sanctions by Western countries.
The Nasdaq gained +3.34% after swinging more than 7% from the intraday low to the close. Volume was significantly higher than the previous day. The powerful move resulted in a 99% green body and a 99% closing range. There is no lower wick and only a short upper wick. Nearly three stocks advanced for every two stocks that declined.
The Russell 2000 (RUT) was the next best index with small-caps gaining +2.67% today. The S&P 500 (SPX) climbed by +1.50%. The Dow Jones Industrial Average (DJI) managed a +0.28% but was weighed down by investors rotating out of Financials and Energy stocks. The VIX Volatility Index soared over 20% intraday but closed the day with a -2.26% decline.
The sector list flipped over mid-morning, sending growth sectors to the top and defensive sectors to the bottom. Seven of the eleven sectors ended the day with gains. Technology (XLK +3.42%) and Communications (XLC +2.80%) were at the top of the list. Financials (XLF -1.20%) and Consumer Staples (XLP -1.72%) were at the bottom.
Crude Oil Inventories came in higher than expected, easing some worries about shortages and helping bring prices back down. Initial Jobless Claims was lower than the forecast, showing a strong labor market. GDP Price Index data for Q4 was adjusted up to 7.2% compared to an expectation of 6.9%. New Home Sales for January was less than expected.
The US Dollar Index (DXY) soared +1.60% intraday but ended the day with a +0.89% gain and lower than its previous high close in January. The US 30y Treasury Yield rose while the 10y and 2y Treasury Yields declined. High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices rose. Silver and Gold declined. Brent Oil rose by +8.44%, reaching above 100, before pairing gains and closing below 100 with a +1.18% gain. Timber closed lower. Aluminum futures rose sharply.
The put/call ratio rose to 0.893. The CNN Fear & Greed index is just above Extreme Fear in the Fear range. The NAAIM money manager exposure index dropped to 44.41.
All big six mega-caps gained for the day, all with spectacular intraday swings on high volume. Nvidia (NVDA) had the biggest gain, jumping by +6.08%. Tesla (TSLA) swung almost 15% from intraday low to high, closing the day with a +4.81% gain.
Adobe (ADBE) was the top mega-cap for the day with a +8.00% gain. The top of the list is dominated by big tech, all gaining over 4%. At the bottom of the list is Taiwan Semiconductor (TSM) with a -3.47% loss. The loss is in contrast to other semiconductor stocks.
All but one stock in the Daily Update Growth List gained for the day. Eleven of the stocks gained over 10%. Cloudflare (NET) climbed by +18.66% to top the list. Security stocks did well on anticipation that new cyber-attacks would be launched by Russia-affiliated groups. Only Alibaba (BABA) declined for the day, falling by -0.72% as investors continue to expect the impact from China's new regulatory actions.
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Looking ahead
Tomorrow's economic data includes PCE Price Index data for January which will give another read on inflation. Michigan Consumer Expectations and Consumer Sentiment data for February will be available after the market opens. Pending Home Sales for January will also be released mid-morning.
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Trends, Support, and Resistance
The Nasdaq broke below the critical 13,000 support area, but then rallied back above the area. The index then sat above 13,000 support for a few hours before getting a fresh rally in the afternoon.
The intraday move created a one-day trend line that points at a +3.83% gain for Friday.
If the index pulls back to the trend line from the 2/10 high, it would mean a -3.37% decline. The five-day trend line points to a -4.92% decline.
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Wrap-up
The trend lines are showing some extremes from a +3.83% gain to a -4.92% decline. That's a lot of volatility (positive or negative) and certainly is possible given the environment. More likely will be some indecision and up and down around the current level as investors continue to watch the situation play out in Ukraine.
After a big powerful move, a pullback is also common. The expectation for tomorrow is Sideways or Lower.
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, February 24, 2022
Facts: +3.34%, Volume higher, Closing Range: 99%, Body: 99% Green
Good: Gain on higher volume, closing range, advance/decline ratio
Bad: Lower high, lower low
Highs/Lows: Lower high, Lower low
Candle: Thick green body with a small upper wick
Advance/Decline: 1.45, three advancing for every two declining stocks
Indexes: SPX (+1.50%), DJI (+0.28%), RUT (+2.67%), VIX (-2.26%)
Sector List: Technology (XLK +3.42%) and Communications (XLC +2.80%) at the top. Financials (XLF -1.20%) and Consumer Staples (XLP -1.72%) at the bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Investors sold winners and bought losers in a pivot after tanks started to roll into Ukraine. Risk appetite grew as many of the unknowns got answers in the form of sanctions by Western countries.
The Nasdaq gained +3.34% after swinging more than 7% from the intraday low to the close. Volume was significantly higher than the previous day. The powerful move resulted in a 99% green body and a 99% closing range. There is no lower wick and only a short upper wick. Nearly three stocks advanced for every two stocks that declined.
The Russell 2000 (RUT) was the next best index with small-caps gaining +2.67% today. The S&P 500 (SPX) climbed by +1.50%. The Dow Jones Industrial Average (DJI) managed a +0.28% but was weighed down by investors rotating out of Financials and Energy stocks. The VIX Volatility Index soared over 20% intraday but closed the day with a -2.26% decline.
The sector list flipped over mid-morning, sending growth sectors to the top and defensive sectors to the bottom. Seven of the eleven sectors ended the day with gains. Technology (XLK +3.42%) and Communications (XLC +2.80%) were at the top of the list. Financials (XLF -1.20%) and Consumer Staples (XLP -1.72%) were at the bottom.
Crude Oil Inventories came in higher than expected, easing some worries about shortages and helping bring prices back down. Initial Jobless Claims was lower than the forecast, showing a strong labor market. GDP Price Index data for Q4 was adjusted up to 7.2% compared to an expectation of 6.9%. New Home Sales for January was less than expected.
The US Dollar Index (DXY) soared +1.60% intraday but ended the day with a +0.89% gain and lower than its previous high close in January. The US 30y Treasury Yield rose while the 10y and 2y Treasury Yields declined. High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices rose. Silver and Gold declined. Brent Oil rose by +8.44%, reaching above 100, before pairing gains and closing below 100 with a +1.18% gain. Timber closed lower. Aluminum futures rose sharply.
The put/call ratio rose to 0.893. The CNN Fear & Greed index is just above Extreme Fear in the Fear range. The NAAIM money manager exposure index dropped to 44.41.
All big six mega-caps gained for the day, all with spectacular intraday swings on high volume. Nvidia (NVDA) had the biggest gain, jumping by +6.08%. Tesla (TSLA) swung almost 15% from intraday low to high, closing the day with a +4.81% gain.
Adobe (ADBE) was the top mega-cap for the day with a +8.00% gain. The top of the list is dominated by big tech, all gaining over 4%. At the bottom of the list is Taiwan Semiconductor (TSM) with a -3.47% loss. The loss is in contrast to other semiconductor stocks.
All but one stock in the Daily Update Growth List gained for the day. Eleven of the stocks gained over 10%. Cloudflare (NET) climbed by +18.66% to top the list. Security stocks did well on anticipation that new cyber-attacks would be launched by Russia-affiliated groups. Only Alibaba (BABA) declined for the day, falling by -0.72% as investors continue to expect the impact from China's new regulatory actions.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Tomorrow's economic data includes PCE Price Index data for January which will give another read on inflation. Michigan Consumer Expectations and Consumer Sentiment data for February will be available after the market opens. Pending Home Sales for January will also be released mid-morning.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq broke below the critical 13,000 support area, but then rallied back above the area. The index then sat above 13,000 support for a few hours before getting a fresh rally in the afternoon.
The intraday move created a one-day trend line that points at a +3.83% gain for Friday.
If the index pulls back to the trend line from the 2/10 high, it would mean a -3.37% decline. The five-day trend line points to a -4.92% decline.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
The trend lines are showing some extremes from a +3.83% gain to a -4.92% decline. That's a lot of volatility (positive or negative) and certainly is possible given the environment. More likely will be some indecision and up and down around the current level as investors continue to watch the situation play out in Ukraine.
After a big powerful move, a pullback is also common. The expectation for tomorrow is Sideways or Lower.
Stay healthy and trade safe!
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