Trend lines drawn from the 10/12 pivot day (21d), 10/30 bottom (7d), 11/3 (5d), and today 11/9 (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.
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Monday, November 9, 2020
Oh life, it’s bigger
It’s bigger than you know
Facts: -1.53%% lower, Volume higher, Closing range: 3%, Body: 82%
Good: Nothing
Bad: Negative expectation breaker, not much pause on the way down
Highs/Lows: Higher high, lower low, bearish engulfing candle
Candle: Tiny top wick from morning, sell-off rest of day
Advance/Decline: 2.00, two advancing stocks for each declining stock
Sectors: Energy (+14.28%) and Financials (XLF +9.21%) were top. Technology (XLK -0.72%) and Communications (XLC -0.85%).
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 turned itself upside down again with a negative expectation breaker following the news of an effective Coronavirus vaccine from Pfizer (PFE +7.69%) and BioNTech (BNTX +13.91%). Investors quickly exited stocks that have grown during the pandemic and rushed into companies that have been weighted down such as travel and energy companies. The Nasdaq started with gains to an all-time high in the morning, but quickly turned those gains into losses that never stopped into close. The index closed down -1.53% with a closing range of 3% and a thick red body of 82%. The candle is a bearish engulfing, with a higher high and a lower low than the previous day. However, advancing stocks outnumbered declining stocks at a 2 to 1 ratio. Who benefited from the day? Small caps, lots of them.
-=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 +1.17%) gapped up and finished positive for the day, but well-off the intraday highs. The Dow Jones Industrial (DJI -1.19%) lossed on the day, also ending in the lower half of the day’s trading range. The Russell 2000 (RUT -3.70%) had an exceptionally good day, showing much of the money rotated to small cap stocks in a volatile session. All three of these indexes made all-time highs but did not close above the previous all-time high.
Energy (XLE +14.28%) sky-rocketed in value as it will likely benefit from several sectors recovering when the vaccine becomes available and the economy gets more activity. Financials (XLF +8.21%) sector also stands to benefit from the increased economic activity. Communications (XLC -0.85%) and Technology (XLK -0.72%) were the worst performing sectors. Social platforms and several technology stocks were seen to have benefited from the pandemic lockdowns and other constraints, but tailwinds are likely to go away moving forward.
The VIX volatility index increased +3.68% for the day but is still in a reasonable range given the past several weeks.
-=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, Forex and Commodities
Treasury Bond yields increased for the day and the 10Y-2Y and 30Y-10Y spread remained about the same.
The US dollar strengthened as investors are seeing the potential for improvements to the US economy.
Commodities (especially Gold and Silver) gave up some of last week’s big gains.
-=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
Amazon (AMZN -5.06%) suffered the biggest loss of the four mega-cap stocks. Microsoft (MSFT -2.38%) and Apple (AAPL -2.00%) did a little better but both still had bigger losses than the index. Google (GOOG +0.07%) ended the day with a small gain, bucking the trend for Communication sector stocks, and outperforming the Nasdaq. Most mega-caps also had disappointing days. Notable exceptions include financial stocks such as Bank of America (BAC +14.19%) and JP Morgan Chace (JPM +13.54%). Another that got a pop from the vaccine news was Disney (DIS +11.87%). M-I-C-K-E-Y!
It is hard to find growth stocks that did well today. Many of the stocks categorized as growth stocks for this year were viewed as though their time to shine is past. On the other hand, Uber (UBER +7.38%) will get a boost from more ridership. NIO (NIO +5.74%) continued its rise as if nothing has changed.
The story today is with Energy, Leisure, Travel and Transportation stocks. Royal Caribbean (RCL +28.79%), United Airlines (UAL +19.15%) and Marriott (MAR +13.87%) got a huge boost in the Leisure and Travel. Valero Energy Corp (VLO +31.20%) led the Energy sector while Exxon Mobil (XOM +12.66%) and Chevron (CVX +11.60%) both turned in similar gains.
After hours, Beyond Meat (BYND -4.05%) was down over 20% after disappointing investors with their quarterly earnings report.
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Looking ahead
Tomorrow will bring two monthly economic news releases. The first is the Short-Term Energy Outlook which provides forecasts for future consumption across multiple fuel types. The second is the JOLTs job opening data will give an outlook on how quickly we can get people back to work.
Earnings reports for tomorrow will include Datadog (DDOG -5.44%), Palomar (PLMR +0.74%), D.R. Horton (DHI -8.02%) our new favorite BioNTech (BNTX +13.91%).
-=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 five-day trend points to about the same location as the trend from the 9/30 bottom. Getting back to that trend line would mean a +5.18% gain, breaking past the 10/12 pivot resistance point and a new all time high. If the other indexes reverse off today’s afternoon sell-off and find their way back to all-time highs, then it is possible to carry the Nasdaq in that momentum to new highs. But unless investors have a change of perspective, it does not appear the Nasdaq would arrive there on its own.
Further movement of money from 2020 growth stocks to Energy, Travel, Leisure stocks would continue today’s one-day trend and result in a -0.66% loss. A further breakdown of the market does not seem likely (looking at Bond yields and Commodities) but could find the index back near the trend line from the 10/12 pivot. That would be a -2.91% loss and put the index back below the 21d EMA.
Every time I think we are clear from worrying about the July Support area, something changes. Breaking through that support area would be dangerous as there is not much trading activity in the second half of the year in between that line and the June support area of 10,000. That area is back within sight at 9% below today’s close.
-=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
Today was positive news that had some negative consequences for many growth investors in the market. Tomorrow could see another change as investors digest the news of the vaccine and begin to more accurately price-in the impact to these companies. Some companies clearly benefited from the constraints brought on by the pandemic and could find weakness once those constraints are lifted. Others have product offerings and business models that will endure and simply got some tailwind in growth from the pandemic.
As these directional changes occur, keep building your watchlist, and continue following your investment rules. Measure your position size against your stop loss and keep your risks under control.
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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Monday, November 9, 2020
Oh life, it’s bigger
It’s bigger than you know
Facts: -1.53%% lower, Volume higher, Closing range: 3%, Body: 82%
Good: Nothing
Bad: Negative expectation breaker, not much pause on the way down
Highs/Lows: Higher high, lower low, bearish engulfing candle
Candle: Tiny top wick from morning, sell-off rest of day
Advance/Decline: 2.00, two advancing stocks for each declining stock
Sectors: Energy (+14.28%) and Financials (XLF +9.21%) were top. Technology (XLK -0.72%) and Communications (XLC -0.85%).
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 turned itself upside down again with a negative expectation breaker following the news of an effective Coronavirus vaccine from Pfizer (PFE +7.69%) and BioNTech (BNTX +13.91%). Investors quickly exited stocks that have grown during the pandemic and rushed into companies that have been weighted down such as travel and energy companies. The Nasdaq started with gains to an all-time high in the morning, but quickly turned those gains into losses that never stopped into close. The index closed down -1.53% with a closing range of 3% and a thick red body of 82%. The candle is a bearish engulfing, with a higher high and a lower low than the previous day. However, advancing stocks outnumbered declining stocks at a 2 to 1 ratio. Who benefited from the day? Small caps, lots of them.
-=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 +1.17%) gapped up and finished positive for the day, but well-off the intraday highs. The Dow Jones Industrial (DJI -1.19%) lossed on the day, also ending in the lower half of the day’s trading range. The Russell 2000 (RUT -3.70%) had an exceptionally good day, showing much of the money rotated to small cap stocks in a volatile session. All three of these indexes made all-time highs but did not close above the previous all-time high.
Energy (XLE +14.28%) sky-rocketed in value as it will likely benefit from several sectors recovering when the vaccine becomes available and the economy gets more activity. Financials (XLF +8.21%) sector also stands to benefit from the increased economic activity. Communications (XLC -0.85%) and Technology (XLK -0.72%) were the worst performing sectors. Social platforms and several technology stocks were seen to have benefited from the pandemic lockdowns and other constraints, but tailwinds are likely to go away moving forward.
The VIX volatility index increased +3.68% for the day but is still in a reasonable range given the past several weeks.
-=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, Forex and Commodities
Treasury Bond yields increased for the day and the 10Y-2Y and 30Y-10Y spread remained about the same.
The US dollar strengthened as investors are seeing the potential for improvements to the US economy.
Commodities (especially Gold and Silver) gave up some of last week’s big gains.
-=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
Amazon (AMZN -5.06%) suffered the biggest loss of the four mega-cap stocks. Microsoft (MSFT -2.38%) and Apple (AAPL -2.00%) did a little better but both still had bigger losses than the index. Google (GOOG +0.07%) ended the day with a small gain, bucking the trend for Communication sector stocks, and outperforming the Nasdaq. Most mega-caps also had disappointing days. Notable exceptions include financial stocks such as Bank of America (BAC +14.19%) and JP Morgan Chace (JPM +13.54%). Another that got a pop from the vaccine news was Disney (DIS +11.87%). M-I-C-K-E-Y!
It is hard to find growth stocks that did well today. Many of the stocks categorized as growth stocks for this year were viewed as though their time to shine is past. On the other hand, Uber (UBER +7.38%) will get a boost from more ridership. NIO (NIO +5.74%) continued its rise as if nothing has changed.
The story today is with Energy, Leisure, Travel and Transportation stocks. Royal Caribbean (RCL +28.79%), United Airlines (UAL +19.15%) and Marriott (MAR +13.87%) got a huge boost in the Leisure and Travel. Valero Energy Corp (VLO +31.20%) led the Energy sector while Exxon Mobil (XOM +12.66%) and Chevron (CVX +11.60%) both turned in similar gains.
After hours, Beyond Meat (BYND -4.05%) was down over 20% after disappointing investors with their quarterly earnings report.
-=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
Tomorrow will bring two monthly economic news releases. The first is the Short-Term Energy Outlook which provides forecasts for future consumption across multiple fuel types. The second is the JOLTs job opening data will give an outlook on how quickly we can get people back to work.
Earnings reports for tomorrow will include Datadog (DDOG -5.44%), Palomar (PLMR +0.74%), D.R. Horton (DHI -8.02%) our new favorite BioNTech (BNTX +13.91%).
-=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 five-day trend points to about the same location as the trend from the 9/30 bottom. Getting back to that trend line would mean a +5.18% gain, breaking past the 10/12 pivot resistance point and a new all time high. If the other indexes reverse off today’s afternoon sell-off and find their way back to all-time highs, then it is possible to carry the Nasdaq in that momentum to new highs. But unless investors have a change of perspective, it does not appear the Nasdaq would arrive there on its own.
Further movement of money from 2020 growth stocks to Energy, Travel, Leisure stocks would continue today’s one-day trend and result in a -0.66% loss. A further breakdown of the market does not seem likely (looking at Bond yields and Commodities) but could find the index back near the trend line from the 10/12 pivot. That would be a -2.91% loss and put the index back below the 21d EMA.
Every time I think we are clear from worrying about the July Support area, something changes. Breaking through that support area would be dangerous as there is not much trading activity in the second half of the year in between that line and the June support area of 10,000. That area is back within sight at 9% below today’s close.
-=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
Today was positive news that had some negative consequences for many growth investors in the market. Tomorrow could see another change as investors digest the news of the vaccine and begin to more accurately price-in the impact to these companies. Some companies clearly benefited from the constraints brought on by the pandemic and could find weakness once those constraints are lifted. Others have product offerings and business models that will endure and simply got some tailwind in growth from the pandemic.
As these directional changes occur, keep building your watchlist, and continue following your investment rules. Measure your position size against your stop loss and keep your risks under control.
Take care!
