Daily Market Update for 1/22
Trend lines drawn from the 10/30 bottom (57d), 1/15 (5d) and today 1/22 (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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Friday, January 22, 2021
Facts:+0.09%, Volume lower, Closing range: 77%, Body: 66%
Good: Higher high and higher low, tested but stayed above low
Bad: Pullback in last hour created upper wick
Highs/Lows: Higher high, higher low
Candle:Thick green body under a longer upper wick than lower wick
Advance/Decline: 1.54, about three advancing for every one declining stock
Indexes: SPX (-0.30%), DJI (-0.57%), RUT (+1.28%), VIX (+2.77%)
Sectors: Real Estate (XLRE +0.25%), Utilities (XLU +0.14%) and Communications (XLC +0.04%) were the only gaining sectors. Financials (XLF -0.72%) was the bottom sector.
Expectation: Sideways or Higher
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Market Overview
Welcome back to the game RUT! It was a mixed session for most of the major indexes. But the Russell 2000 proved there is more room for small-caps to grow. The Nasdaq was also able to end with a small gain for the day after fighting off morning bears and making a new all-time high before dropping back slightly at close.
The Nasdaq ended with a +0.09% gain on lower volume. The closing range was 77% with a thick 66% green body in the candle. The visible upper wick was created near the end of the day as investors took profits and shifted to defensive positions headed into the weekend. About three stocks advanced for every declining stock.
The Russell 2000 (RUT) had a crazy open, dropping a full one percent in its opening five minutes. That wouldn't last long and the small-cap index climbed the rest of the day, ending the session with a new all-time high and 100% closing range. The RUT gained +1.28% for the day. The S&P 500 (SPX) and Dow Jones Industrial (DJI) had very different days, dropping -0.30% and -0.57% respectively.
Real Estate (XLRE +0.25%), Utilities (XLU +0.14%) and Communications (XLC +0.04%) were the only gaining sectors. Financials (XLF -0.72%) was the bottom sector. It was clear from the beginning of the session that investors were making defensive plays on the last day of the short week.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) gained +0.12% for the day. US 30y and US 20y treasury bond yields dropped slightly while 2y yields remained flat. Corporate Bonds (HYG) prices decreased for a second day.
Silver (SILVER) advanced while Gold (GOLD) declined for the day. Crude Oil (CRUDEOIL1!) futures declined. Timber (WOOD) advanced to a new multi-year high. Copper (COPPER1!) declined while Aluminum (ALI1!) advanced. The +3.67% increase in Aluminum futures comes after several weeks of declines. The commodity prices have pivoted today from recent trends. This will be something to watch for a continuation and new trend.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio 0.517. 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) led the largest mega-caps with a +1.61% gain. Microsoft (MSFT) and Alphabet (GOOGL) both gained about +0.45%. Amazon (AMZN) dropped back from recent gains to lose -0.45% for the day. All are healthy moves.
Home Depot (HD) led the mega-caps with a 1.77% gain, likely driven by surprisingly good real estate data this week, including Housing Starts and Existing Home Sales. Intel (INTC) sold off sharply for a -9.29% loss after a big gain yesterday. The late day gains yesterday were caused by an early release of earnings after some of the details leaked.
Several growth stocks had big advances for the day. Sumo Logic (SUMO) advanced 12.10%. Digital Turbine (APPS) gained +25.40%. But the big winner of the day was Palantir (PLTR) with a 25.40% gain.
Gamestop (GME) continued its short squeeze with a +51.08% gain. I may have to add GME as another contrarian indicator of investor sentiment. :)
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
There is not much economic news schedule for Monday.
There are also no "Daily Market Update" notable earnings releases for Monday. That's the quiet before the storm as many of the big mega-caps will report earnings starting Tuesday.
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Trends, Support and Resistance
The five-day trend line points to a +1.95% gain. The one-day trend line points to a +0.49%.
The recent gains for the index still put it above the long-term trend line from the 10/30 bottom, but it is closing in on the middle of that channel. The line is pointing to a -0.67% loss for Monday.
If there is a further downside move, 13,000 support seems to be holding up well for the index and that's just below the 21d EMA now. The 21d EMA is around 3.6% below the index. The index also 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
It wasn't a bad way to end a solid week of gains. After climbing over 4% it's good to have the Nasdaq pause and let the moving averages catch up. A higher high and higher low for the week, continues a 12 week rally since early November. Keeping the gains at a steady pace can help the rally continue its move upward.
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=-
Friday, January 22, 2021
Facts:+0.09%, Volume lower, Closing range: 77%, Body: 66%
Good: Higher high and higher low, tested but stayed above low
Bad: Pullback in last hour created upper wick
Highs/Lows: Higher high, higher low
Candle:Thick green body under a longer upper wick than lower wick
Advance/Decline: 1.54, about three advancing for every one declining stock
Indexes: SPX (-0.30%), DJI (-0.57%), RUT (+1.28%), VIX (+2.77%)
Sectors: Real Estate (XLRE +0.25%), Utilities (XLU +0.14%) and Communications (XLC +0.04%) were the only gaining sectors. Financials (XLF -0.72%) was the bottom sector.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Welcome back to the game RUT! It was a mixed session for most of the major indexes. But the Russell 2000 proved there is more room for small-caps to grow. The Nasdaq was also able to end with a small gain for the day after fighting off morning bears and making a new all-time high before dropping back slightly at close.
The Nasdaq ended with a +0.09% gain on lower volume. The closing range was 77% with a thick 66% green body in the candle. The visible upper wick was created near the end of the day as investors took profits and shifted to defensive positions headed into the weekend. About three stocks advanced for every declining stock.
The Russell 2000 (RUT) had a crazy open, dropping a full one percent in its opening five minutes. That wouldn't last long and the small-cap index climbed the rest of the day, ending the session with a new all-time high and 100% closing range. The RUT gained +1.28% for the day. The S&P 500 (SPX) and Dow Jones Industrial (DJI) had very different days, dropping -0.30% and -0.57% respectively.
Real Estate (XLRE +0.25%), Utilities (XLU +0.14%) and Communications (XLC +0.04%) were the only gaining sectors. Financials (XLF -0.72%) was the bottom sector. It was clear from the beginning of the session that investors were making defensive plays on the last day of the short week.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) gained +0.12% for the day. US 30y and US 20y treasury bond yields dropped slightly while 2y yields remained flat. Corporate Bonds (HYG) prices decreased for a second day.
Silver (SILVER) advanced while Gold (GOLD) declined for the day. Crude Oil (CRUDEOIL1!) futures declined. Timber (WOOD) advanced to a new multi-year high. Copper (COPPER1!) declined while Aluminum (ALI1!) advanced. The +3.67% increase in Aluminum futures comes after several weeks of declines. The commodity prices have pivoted today from recent trends. This will be something to watch for a continuation and new trend.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio 0.517. 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) led the largest mega-caps with a +1.61% gain. Microsoft (MSFT) and Alphabet (GOOGL) both gained about +0.45%. Amazon (AMZN) dropped back from recent gains to lose -0.45% for the day. All are healthy moves.
Home Depot (HD) led the mega-caps with a 1.77% gain, likely driven by surprisingly good real estate data this week, including Housing Starts and Existing Home Sales. Intel (INTC) sold off sharply for a -9.29% loss after a big gain yesterday. The late day gains yesterday were caused by an early release of earnings after some of the details leaked.
Several growth stocks had big advances for the day. Sumo Logic (SUMO) advanced 12.10%. Digital Turbine (APPS) gained +25.40%. But the big winner of the day was Palantir (PLTR) with a 25.40% gain.
Gamestop (GME) continued its short squeeze with a +51.08% gain. I may have to add GME as another contrarian indicator of investor sentiment. :)
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
There is not much economic news schedule for Monday.
There are also no "Daily Market Update" notable earnings releases for Monday. That's the quiet before the storm as many of the big mega-caps will report earnings starting Tuesday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The five-day trend line points to a +1.95% gain. The one-day trend line points to a +0.49%.
The recent gains for the index still put it above the long-term trend line from the 10/30 bottom, but it is closing in on the middle of that channel. The line is pointing to a -0.67% loss for Monday.
If there is a further downside move, 13,000 support seems to be holding up well for the index and that's just below the 21d EMA now. The 21d EMA is around 3.6% below the index. The index also 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
It wasn't a bad way to end a solid week of gains. After climbing over 4% it's good to have the Nasdaq pause and let the moving averages catch up. A higher high and higher low for the week, continues a 12 week rally since early November. Keeping the gains at a steady pace can help the rally continue its move upward.
Stay healthy and take care!
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