Daily Market Update for 3/25
Trend lines drawn from the 3/5 low (14d), 3/19 (5d) and today 3/25 (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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Thursday, March 25, 2021
Facts: +0.19%, Volume lower, Closing range: 85%, Body: +60%
Good: Closed near to intraday highs
Bad: Lower low hit in the morning, resistance at 13,000 near close
Highs/Lows: Lower high, lower low
Candle: Mostly green body with a slightly longer lower wick from morning dip
Advance/Decline: Three advancing stocks for every two declining stocks
Indexes: SPX (+0.52%), DJI (+0.62%), RUT (+2.29%), VIX (-6.56%)
Sectors: Financials (XLF +1.68%) and Industrials (XLI +1.60%) were top. Technology (XLK -0.06%) and Communications (XLC -0.49%) were bottom.
Expectation: Lower
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Market Overview
Economic news seemed to weigh on the market after open, but investors shook off the weight later in the day to find gains across the major indexes. A short pullback to absorb the reaction from a weak 7y note auction was overcome to close near market intraday highs.
The Nasdaq closed with a +0.19% gain. The 0% closing range comes after an all-day bearish move that formed a 99% red body candle. The tiny upper wick is barely visible and there is no lower wick. There were five declining stocks for every advancing stock.
The Russell 2000 (RUT) rebounded to the top of the index list with a +2.29% gain for the day. The S&P 500 (SPX) gained +0.52% and the Dow Jones Industrial average (DJI) gained +0.62%.
The VIX volatility index declined -6.56%.
The top three sectors were Financials (XLF +1.68%), Industrials (XLI +1.60%) and Materials (XLB +1.45%). The bottom two sectors were Technology (XLK -0.06%) and Communications (XLC -0.49%) which were the only two to end the day with losses.
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Economic Indicators
The US Dollar (DXY) continues to climb with a +0.35% gain. The strengthening dollar may be weighing on big tech and other multinationals.
The US 30y treasury bond and 10y note yields rose for the day while the 2y treasury note yield declined. The rising yields were triggered by a weak auction for 7y notes.
High Yield Corporate Bonds (HYG) prices rose while Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined just slightly. Crude Oil (CRUDEOIL1!) declined, despite the possibility of delays caused by the Suez Canal blockage. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) declined.
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Investor Sentiment
The put/call ratio rose to 0.755. 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 farther into the fear side.
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Market Leaders
Amazon (AMZN) and Microsoft (MSFT) declined with both trading below the 21d EMA and 50d MA. Apple (AAPL) advanced but remained below the 21d EMA and 50d MA. Alphabet (GOOGL) ended the day even with yesterday's close, bouncing in between tests of the 21d EMA and 50d MA and closing under the 21d EMA.
Bank of America (BAC), Cisco Systems (CSCO), Tesla (TSLA) and Home Depot (HD) were the top mega-caps. The top of the mega-cap list is focused on companies that are not impacted or maybe even benefit from a strengthening dollar. For example, companies relying on imports which become cheaper or companies that have most revenues sourced domestically. On the other hand, companies like Microsoft (MSFT), Nike (NKE) and Netflix (NFLX) have more dependency on foreign revenues and a stronger dollar can impact the value of repatriated revenues.
The growth stock list is mixed with winners and losers. SUMO Logic (SUMO) was at the top with a +6.22% gain. Most of the growth stocks at the top of the list are upside reversals from recent sell-offs so bases have not yet been formed. DataDog (DDOG) continues to drop with a -3.69% loss.
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Looking ahead
Watch for further impacts to the US Dollar from tomorrow's economic data. There are plenty of data points to be released. More insights into consumer sentiment and behaviors will be released tomorrow. Consumer price index data for February as well as consumer sentiment and consumer expectations for March will drive outlooks for inflation and the US dollar.
On Friday, Up Fintech (TIGER) will release their earnings update.
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Trends, Support and Resistance
The index dipped below the 13,000 area and tried to regain the support but fell short before close.
The trend line from the 3/5 low points to a +2.74% gain for Friday, which is back above the 21d EMA.
The one-day trend line points to a +0.71% gain to rise just above the 13,000 support area.
The five-day trend line points to a -0.51% loss.
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Wrap-up
The indexes absorbed mixed news coming into the open of the market today. Jobless Claims were lower than expected which is a positive for the labor market. However, Core PCE Prices and GDP Sales data was weaker than expected. The 7-year auction mid-day was a concern as yields began to rise, but the index resumed the climb when it seemed bond selling was under control.
The strengthening dollar is now getting some attention and you'll see that show up in valuations of companies that impacting positively or negatively by a stronger dollar.
I have the expectation set for Sideways or Lower tomorrow. The Nasdaq did have a green day, but it's still a down trend with the lower high and lower low. Volume also needs to be higher on green days for more confidence.
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=-
Thursday, March 25, 2021
Facts: +0.19%, Volume lower, Closing range: 85%, Body: +60%
Good: Closed near to intraday highs
Bad: Lower low hit in the morning, resistance at 13,000 near close
Highs/Lows: Lower high, lower low
Candle: Mostly green body with a slightly longer lower wick from morning dip
Advance/Decline: Three advancing stocks for every two declining stocks
Indexes: SPX (+0.52%), DJI (+0.62%), RUT (+2.29%), VIX (-6.56%)
Sectors: Financials (XLF +1.68%) and Industrials (XLI +1.60%) were top. Technology (XLK -0.06%) and Communications (XLC -0.49%) were bottom.
Expectation: Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Economic news seemed to weigh on the market after open, but investors shook off the weight later in the day to find gains across the major indexes. A short pullback to absorb the reaction from a weak 7y note auction was overcome to close near market intraday highs.
The Nasdaq closed with a +0.19% gain. The 0% closing range comes after an all-day bearish move that formed a 99% red body candle. The tiny upper wick is barely visible and there is no lower wick. There were five declining stocks for every advancing stock.
The Russell 2000 (RUT) rebounded to the top of the index list with a +2.29% gain for the day. The S&P 500 (SPX) gained +0.52% and the Dow Jones Industrial average (DJI) gained +0.62%.
The VIX volatility index declined -6.56%.
The top three sectors were Financials (XLF +1.68%), Industrials (XLI +1.60%) and Materials (XLB +1.45%). The bottom two sectors were Technology (XLK -0.06%) and Communications (XLC -0.49%) which were the only two to end the day with losses.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) continues to climb with a +0.35% gain. The strengthening dollar may be weighing on big tech and other multinationals.
The US 30y treasury bond and 10y note yields rose for the day while the 2y treasury note yield declined. The rising yields were triggered by a weak auction for 7y notes.
High Yield Corporate Bonds (HYG) prices rose while Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined just slightly. Crude Oil (CRUDEOIL1!) declined, despite the possibility of delays caused by the Suez Canal blockage. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) declined.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose to 0.755. 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 farther into the fear side.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Amazon (AMZN) and Microsoft (MSFT) declined with both trading below the 21d EMA and 50d MA. Apple (AAPL) advanced but remained below the 21d EMA and 50d MA. Alphabet (GOOGL) ended the day even with yesterday's close, bouncing in between tests of the 21d EMA and 50d MA and closing under the 21d EMA.
Bank of America (BAC), Cisco Systems (CSCO), Tesla (TSLA) and Home Depot (HD) were the top mega-caps. The top of the mega-cap list is focused on companies that are not impacted or maybe even benefit from a strengthening dollar. For example, companies relying on imports which become cheaper or companies that have most revenues sourced domestically. On the other hand, companies like Microsoft (MSFT), Nike (NKE) and Netflix (NFLX) have more dependency on foreign revenues and a stronger dollar can impact the value of repatriated revenues.
The growth stock list is mixed with winners and losers. SUMO Logic (SUMO) was at the top with a +6.22% gain. Most of the growth stocks at the top of the list are upside reversals from recent sell-offs so bases have not yet been formed. DataDog (DDOG) continues to drop with a -3.69% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Watch for further impacts to the US Dollar from tomorrow's economic data. There are plenty of data points to be released. More insights into consumer sentiment and behaviors will be released tomorrow. Consumer price index data for February as well as consumer sentiment and consumer expectations for March will drive outlooks for inflation and the US dollar.
On Friday, Up Fintech (TIGER) will release their earnings update.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index dipped below the 13,000 area and tried to regain the support but fell short before close.
The trend line from the 3/5 low points to a +2.74% gain for Friday, which is back above the 21d EMA.
The one-day trend line points to a +0.71% gain to rise just above the 13,000 support area.
The five-day trend line points to a -0.51% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
The indexes absorbed mixed news coming into the open of the market today. Jobless Claims were lower than expected which is a positive for the labor market. However, Core PCE Prices and GDP Sales data was weaker than expected. The 7-year auction mid-day was a concern as yields began to rise, but the index resumed the climb when it seemed bond selling was under control.
The strengthening dollar is now getting some attention and you'll see that show up in valuations of companies that impacting positively or negatively by a stronger dollar.
I have the expectation set for Sideways or Lower tomorrow. The Nasdaq did have a green day, but it's still a down trend with the lower high and lower low. Volume also needs to be higher on green days for more confidence.
Stay healthy and trade safe!
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