Daily Market Update for 3/12
Trend lines drawn from the 2/16 ATH (19d), 3/8 (5d) and today 3/12 (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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Friday, March 12, 2021
Facts: -0.59%, Volume lower, Closing range: 97%, Body: 58%
Good: Bulls bought back the morning lows to bring index back above 21d EMA
Bad: Lower high and lower low
Highs/Lows: Lower high, lower low
Candle: Green body above a lower wick with very small upper wick
Advance/Decline: About even advancing and declining stocks
Indexes: SPX (+0.10%), DJI (+0.90%), RUT (+0.61%), VIX (-5.57%)
Sectors: Real Estate (XLRE +1.72%) and Utilities (XLU +1.35%) were top. Communications (XLC -0.28%) and Technology (XLK -0.72%) were bottom.
Expectation: Sideways or Higher
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Market Overview
Are you dizzy yet? This rotation just won't end. Every day this week the Technology sector flipped from the bottom of the sector list to the top and then the next day to the bottom. Yesterday it was at the top. Today it's back at the bottom. As long term bond yields are reaching for pre-pandemic highs, investors are still trying to determine the impact on valuations of big tech and growth stocks.
The Nasdaq closed the week with a green candle, but ended the day with a -0.59% decline. Volume was lower but the bulls bought up a morning dip to bring the index back above the 21d EMA in the afternoon. A closing range of 97% means a very small upper wick. The longer lower wick rests underneath a 58% green body. There were about the same number of advancing and declining stocks.
The Dow Jones Industrial average (DJI) and Russell 2000 (RUT) both made new all-time highs. The big industrial stocks of the DJI and small-caps of the RUT are likely to benefit the most from the new stimulus and recovering economy. The DJI closed with a 0.90% gain while the RUT advanced +0.61%. The S&P 500 (SPX) ended the day with a 0.10% gain.
The VIX volatility index declined -5.57%.
Real Estate (XLRE +1.72%) tops the sector list despite rising yields. With consumer sentiment on the rise, it could be a boon for real estate. Utilities (XLU +1.35%) and Industrials (XLI +1.34%) are also at the top. Communications (XLC -0.28%) and Technology (XLK -0.72%) moved back to the bottom.
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Economic Indicators
The US Dollar (DXY) gained +0.27%.
Yields on the 30y and 10y treasury bonds both rose to new recent highs. The 30y yield is at its highest point since January 2020, while the 10y is at its highest point since early February 2020. The 2y yield rose modestly for the day. The yield curve is at its steepest since 2016. A steep yield curve means rising interest rates in the future.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both declined for another day.
Silver (SILVER) declined while and Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) remained about even. Timber (WOOD) continues to advance. Copper (COPPER1!) and Aluminum (ALI1!) declined.
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Investor Sentiment
The put/call ratio rose to 0.606. 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 moving back toward the greed level.
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Market Leaders
The four big mega-caps have been back and forth all week. Today they all declined. Microsoft (MSFT) and Alphabet (GOOGL) declined -0.58% and -2.41%, but remain above their key moving average lines. Apple (AAPL) and Amazon (AMZN) declined -0.76% and -0.77% and are below their 21d EMA and 50d MA lines.
New Oriental Ed (EDU) was the top mega-cap stock of the day with a +4.55% gain. Bank of America (BAC), Home Depot (HD) and Walmart (WMT) round out the top four, each with gains greater than 1.51%. Alibaba (BABA), Alphabet, and Facebook (FB) were at the bottom of the list with 2% or more declines.
Some growth stocks did well. SNAP (SNAP) had a great day with a +5.15% gain. Ehang Holdings (EH), Palantir (PLTR) and Grow Generation (GRWG) all had gains, albeit modest compared to recent history, at around 0.5% to 0.75%. DataDog (DDOG) , Okta (OKTA), Peloton (PTON) and JD.com (JD) were at the bottom of the growth list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
The short-term 3 month and 6 month bill auctions will be on Monday. Late in the after TIC Net Long-Term Transactions will show how much investors are trading in foreign securities markets (both inbound and outbound to the US). The number is directly linked to currencies since the investors first need to buy the local currency before investing.
Monday's earning reports will include a couple interesting small-caps: Vuzix (VUZI) and Desktop Metal (DM).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index dipped back below the 21d EMA and 50d MA lines, but was able to close above the 21d EMA.
The five-day trend line points to a +1.51% advance while the one-day trend line points toa a +0.63% advance. Both would be moves back above the 50d MA.
The longer trend-line from the 2/16 ATH points to a -3.72% decline, moving the index back below the 13,000 area.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It's been a wild week and I'm glad the weekend is here. The up and down of Technology and Growth stocks left investors not sure whether to be in or out of the action. If you found other plays in industrials or cyclical stocks, you might have had a great week.
I used the Nasdaq as the basis for the daily update because it represents most closely the stocks I invest in. But keep in mind that the Dow Jones Industrial average and the Russell 2000 are hitting new all-time highs. The S&P 500 index is also near new all-time highs. Once the rotation settles, we should see the Nasdaq start to move along more closely with the other indexes.
Even with the choppy week, the Nasdaq does close the week with gains over last week. Check your watch lists and find stocks that are acting pretty well compared to their peers and the market. I found the DELL chart recently and it seems DELL didn't get the memo for the tech correction.
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=-
Friday, March 12, 2021
Facts: -0.59%, Volume lower, Closing range: 97%, Body: 58%
Good: Bulls bought back the morning lows to bring index back above 21d EMA
Bad: Lower high and lower low
Highs/Lows: Lower high, lower low
Candle: Green body above a lower wick with very small upper wick
Advance/Decline: About even advancing and declining stocks
Indexes: SPX (+0.10%), DJI (+0.90%), RUT (+0.61%), VIX (-5.57%)
Sectors: Real Estate (XLRE +1.72%) and Utilities (XLU +1.35%) were top. Communications (XLC -0.28%) and Technology (XLK -0.72%) were bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Are you dizzy yet? This rotation just won't end. Every day this week the Technology sector flipped from the bottom of the sector list to the top and then the next day to the bottom. Yesterday it was at the top. Today it's back at the bottom. As long term bond yields are reaching for pre-pandemic highs, investors are still trying to determine the impact on valuations of big tech and growth stocks.
The Nasdaq closed the week with a green candle, but ended the day with a -0.59% decline. Volume was lower but the bulls bought up a morning dip to bring the index back above the 21d EMA in the afternoon. A closing range of 97% means a very small upper wick. The longer lower wick rests underneath a 58% green body. There were about the same number of advancing and declining stocks.
The Dow Jones Industrial average (DJI) and Russell 2000 (RUT) both made new all-time highs. The big industrial stocks of the DJI and small-caps of the RUT are likely to benefit the most from the new stimulus and recovering economy. The DJI closed with a 0.90% gain while the RUT advanced +0.61%. The S&P 500 (SPX) ended the day with a 0.10% gain.
The VIX volatility index declined -5.57%.
Real Estate (XLRE +1.72%) tops the sector list despite rising yields. With consumer sentiment on the rise, it could be a boon for real estate. Utilities (XLU +1.35%) and Industrials (XLI +1.34%) are also at the top. Communications (XLC -0.28%) and Technology (XLK -0.72%) moved back to the bottom.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) gained +0.27%.
Yields on the 30y and 10y treasury bonds both rose to new recent highs. The 30y yield is at its highest point since January 2020, while the 10y is at its highest point since early February 2020. The 2y yield rose modestly for the day. The yield curve is at its steepest since 2016. A steep yield curve means rising interest rates in the future.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both declined for another day.
Silver (SILVER) declined while and Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) remained about even. Timber (WOOD) continues to advance. Copper (COPPER1!) and Aluminum (ALI1!) declined.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose to 0.606. 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 moving back toward the greed level.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
The four big mega-caps have been back and forth all week. Today they all declined. Microsoft (MSFT) and Alphabet (GOOGL) declined -0.58% and -2.41%, but remain above their key moving average lines. Apple (AAPL) and Amazon (AMZN) declined -0.76% and -0.77% and are below their 21d EMA and 50d MA lines.
New Oriental Ed (EDU) was the top mega-cap stock of the day with a +4.55% gain. Bank of America (BAC), Home Depot (HD) and Walmart (WMT) round out the top four, each with gains greater than 1.51%. Alibaba (BABA), Alphabet, and Facebook (FB) were at the bottom of the list with 2% or more declines.
Some growth stocks did well. SNAP (SNAP) had a great day with a +5.15% gain. Ehang Holdings (EH), Palantir (PLTR) and Grow Generation (GRWG) all had gains, albeit modest compared to recent history, at around 0.5% to 0.75%. DataDog (DDOG) , Okta (OKTA), Peloton (PTON) and JD.com (JD) were at the bottom of the growth list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
The short-term 3 month and 6 month bill auctions will be on Monday. Late in the after TIC Net Long-Term Transactions will show how much investors are trading in foreign securities markets (both inbound and outbound to the US). The number is directly linked to currencies since the investors first need to buy the local currency before investing.
Monday's earning reports will include a couple interesting small-caps: Vuzix (VUZI) and Desktop Metal (DM).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index dipped back below the 21d EMA and 50d MA lines, but was able to close above the 21d EMA.
The five-day trend line points to a +1.51% advance while the one-day trend line points toa a +0.63% advance. Both would be moves back above the 50d MA.
The longer trend-line from the 2/16 ATH points to a -3.72% decline, moving the index back below the 13,000 area.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It's been a wild week and I'm glad the weekend is here. The up and down of Technology and Growth stocks left investors not sure whether to be in or out of the action. If you found other plays in industrials or cyclical stocks, you might have had a great week.
I used the Nasdaq as the basis for the daily update because it represents most closely the stocks I invest in. But keep in mind that the Dow Jones Industrial average and the Russell 2000 are hitting new all-time highs. The S&P 500 index is also near new all-time highs. Once the rotation settles, we should see the Nasdaq start to move along more closely with the other indexes.
Even with the choppy week, the Nasdaq does close the week with gains over last week. Check your watch lists and find stocks that are acting pretty well compared to their peers and the market. I found the DELL chart recently and it seems DELL didn't get the memo for the tech correction.
Stay healthy and trade safe!
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