Summary: Disappointing earnings from Apple and Amazon caused markets to dip in the morning, but it did not squash investor optimism. Three of the major indexes rebounded from the dip to end the day with record closes.
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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Friday, October 29, 2021
Facts: +0.33%, Volume lower, Closing Range: 97%, Body: 97% Green
Good: Higher high, higher low, close above 15,400 support
Bad: Dip below support, lower volume on gain, A/D ratio
Highs/Lows: Higher high, Higher low
Candle: Marubozu green, Thick green body, tiny wicks
Advance/Decline: 0.73, more declining stocks than advancing
Indexes: SPX (+0.19%), DJI (+0.25%), RUT (-0.03%), VIX (-1.63%)
Sector List: Health (XLV +0.97%) and Technology (XLK +0.43%) at the top. Energy (XLE -0.66%) and Real Estate (XLRE -1.20%) at the bottom.
Expectation: Higher
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Market Overview
Disappointing earnings from Apple and Amazon caused markets to dip in the morning, but it did not squash investor optimism. Three of the major indexes rebounded from the dip to end the day with record closes.
The Nasdaq closed with a +0.33% gain. The dip below 15,400 support didn't last long as the index rallied in the later morning and moved back above the support area. The green candle has a 97% body and no lower wick. The upper wick is small enough to count as a Marubozu candle (no upper and lower wick), representing bullish sentiment. However, volume was lower than the previous day, and there were more declining stocks than advancing stocks.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) gained +0.19% and +0.25% for the day. The Russell 2000 (RUT) declined -0.03% for the day. It traded opposite the other indexes, rising in the morning but then fading throughout the day. The VIX Volatility Index fell -1.51%.
Only five of the eleven S&P 500 sectors gained for the day. Health (XLV +0.97%) and Technology (XLK +0.43%) were the top gaining sectors. Energy (XLE -0.66%) and Real Estate (XLRE -1.20%) were the biggest losing sectors.
Year-over-year PCE Price Index data for September came in lower than expected, while the quarterly Employment Costs Index was higher than forecast. Personal Spending for September was up 0.6% compared to the forecast of 0.5%. Consumer Expectations and Consumer Sentiment for October were both higher than expected.
The US Dollar strengthened, the dollar index (DXY) rising +0.83% US 30y and 10y Treasury yields declined while the 2y yield rose. Both High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices slipped. Silver and Gold prices dropped as the US dollar strengthened. Timber, Copper, and Aluminum also declined.
The put/call ratio (PCCE) rose to 0.698. The CNN Fear & Greed index is nearing the Extreme Greed area. The NAAIM money manager exposure index climbed above 100 for the first time since April. It rose to 103.35 this week after coming in at 98.02 last week.
Apple (AAPL) and Amazon (AMZN) opened with a gap down of around -4% but recovered to close the day with -2% losses. Microsoft (MSFT ) and Alphabet (GOOGL) gained for the day. All four largest mega-caps are trading at or above their 21d EMA and 50d MA.
AbbView (ABBV) rose to the top of the mega-cap list with a +4.56% gain after announcing earnings that beat expectations and raising guidance for the year. In second place among mega-caps, Tesla (TSLA) climbed +3.43% today as Electric Vehicle stocks continue to perform well. Alibaba (BABA) beat Amazon to land at the bottom of the mega-cap list with a -2.86% decline today.
CloudFlare (NET) was at the top of the Daily Update Growth List with a +5.80% climb. The stock rose more than 70% in the month of October. FUTU Holdings (FUTU) and UP Fintech (TIGR) were at the bottom of the growth list again, losing -8.47% and -11.85%.
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Looking ahead
Monday will kick off with Manufacturing data, including the Purchasing Manager Index and Employment.
Loews (L) and Avis (CAR) were among a few earnings reports on Monday. Earnings reports will be more frequent later in the week.
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Trends, Support, and Resistance
The Nasdaq set another all-time high and record close today. The index briefly dipped below 15,400 support but moved back above the support area in the late morning.
If the one-day trend line continues, it would mean a +0.64% gain for Monday.
The five-day trend line and the trend line from the 10/4 low point to about the same +0.22% gain.
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Wrap-up
The Nasdaq advanced +2.70% this week, the third week of gains in a row. All four major indexes rose for the week.
Consumer Discretionary was by far the best sector for the week, with the SPDR ETF (XLY) gaining +4.36%. Technology and Health also outperformed the broader S&P 500. Financials and Energy were at the bottom of the weekly sector list, declining about -1% each this week.
While Consumer Spending is outpacing expectations, the demand for materials seems to be softening. Copper and Aluminum are both sharply declining after hitting record highs a few weeks ago. Shipping costs are also on the decline while backups at US ports are slowly clearing. Analysts also see an improvement in chip makers' ability to meet demands.
Although it still may be a tough holiday shopping season in terms of supply, inflation is looking more like it may be transitory to some degree. Employee Costs will not likely decline, so some inflation is bound to stick around. However, the house does not seem to be on fire anymore. Or at least the fire is getting smaller.
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.
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Friday, October 29, 2021
Facts: +0.33%, Volume lower, Closing Range: 97%, Body: 97% Green
Good: Higher high, higher low, close above 15,400 support
Bad: Dip below support, lower volume on gain, A/D ratio
Highs/Lows: Higher high, Higher low
Candle: Marubozu green, Thick green body, tiny wicks
Advance/Decline: 0.73, more declining stocks than advancing
Indexes: SPX (+0.19%), DJI (+0.25%), RUT (-0.03%), VIX (-1.63%)
Sector List: Health (XLV +0.97%) and Technology (XLK +0.43%) at the top. Energy (XLE -0.66%) and Real Estate (XLRE -1.20%) at the bottom.
Expectation: Higher
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Market Overview
Disappointing earnings from Apple and Amazon caused markets to dip in the morning, but it did not squash investor optimism. Three of the major indexes rebounded from the dip to end the day with record closes.
The Nasdaq closed with a +0.33% gain. The dip below 15,400 support didn't last long as the index rallied in the later morning and moved back above the support area. The green candle has a 97% body and no lower wick. The upper wick is small enough to count as a Marubozu candle (no upper and lower wick), representing bullish sentiment. However, volume was lower than the previous day, and there were more declining stocks than advancing stocks.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) gained +0.19% and +0.25% for the day. The Russell 2000 (RUT) declined -0.03% for the day. It traded opposite the other indexes, rising in the morning but then fading throughout the day. The VIX Volatility Index fell -1.51%.
Only five of the eleven S&P 500 sectors gained for the day. Health (XLV +0.97%) and Technology (XLK +0.43%) were the top gaining sectors. Energy (XLE -0.66%) and Real Estate (XLRE -1.20%) were the biggest losing sectors.
Year-over-year PCE Price Index data for September came in lower than expected, while the quarterly Employment Costs Index was higher than forecast. Personal Spending for September was up 0.6% compared to the forecast of 0.5%. Consumer Expectations and Consumer Sentiment for October were both higher than expected.
The US Dollar strengthened, the dollar index (DXY) rising +0.83% US 30y and 10y Treasury yields declined while the 2y yield rose. Both High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices slipped. Silver and Gold prices dropped as the US dollar strengthened. Timber, Copper, and Aluminum also declined.
The put/call ratio (PCCE) rose to 0.698. The CNN Fear & Greed index is nearing the Extreme Greed area. The NAAIM money manager exposure index climbed above 100 for the first time since April. It rose to 103.35 this week after coming in at 98.02 last week.
Apple (AAPL) and Amazon (AMZN) opened with a gap down of around -4% but recovered to close the day with -2% losses. Microsoft (MSFT ) and Alphabet (GOOGL) gained for the day. All four largest mega-caps are trading at or above their 21d EMA and 50d MA.
AbbView (ABBV) rose to the top of the mega-cap list with a +4.56% gain after announcing earnings that beat expectations and raising guidance for the year. In second place among mega-caps, Tesla (TSLA) climbed +3.43% today as Electric Vehicle stocks continue to perform well. Alibaba (BABA) beat Amazon to land at the bottom of the mega-cap list with a -2.86% decline today.
CloudFlare (NET) was at the top of the Daily Update Growth List with a +5.80% climb. The stock rose more than 70% in the month of October. FUTU Holdings (FUTU) and UP Fintech (TIGR) were at the bottom of the growth list again, losing -8.47% and -11.85%.
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Looking ahead
Monday will kick off with Manufacturing data, including the Purchasing Manager Index and Employment.
Loews (L) and Avis (CAR) were among a few earnings reports on Monday. Earnings reports will be more frequent later in the week.
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Trends, Support, and Resistance
The Nasdaq set another all-time high and record close today. The index briefly dipped below 15,400 support but moved back above the support area in the late morning.
If the one-day trend line continues, it would mean a +0.64% gain for Monday.
The five-day trend line and the trend line from the 10/4 low point to about the same +0.22% gain.
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Wrap-up
The Nasdaq advanced +2.70% this week, the third week of gains in a row. All four major indexes rose for the week.
Consumer Discretionary was by far the best sector for the week, with the SPDR ETF (XLY) gaining +4.36%. Technology and Health also outperformed the broader S&P 500. Financials and Energy were at the bottom of the weekly sector list, declining about -1% each this week.
While Consumer Spending is outpacing expectations, the demand for materials seems to be softening. Copper and Aluminum are both sharply declining after hitting record highs a few weeks ago. Shipping costs are also on the decline while backups at US ports are slowly clearing. Analysts also see an improvement in chip makers' ability to meet demands.
Although it still may be a tough holiday shopping season in terms of supply, inflation is looking more like it may be transitory to some degree. Employee Costs will not likely decline, so some inflation is bound to stick around. However, the house does not seem to be on fire anymore. Or at least the fire is getting smaller.
Stay healthy and trade safe!
