Daily Market Update for 12/11
Aggiornato
Trend lines drawn from the 10/30 bottom (30d), 12/7 (5d), the 12/9 pivot (3d) and today 12/11 (1d).
If you have ideas to make the daily update better, please let me know in the comments.
I do occasionally have some errors or typos and will correct them in my blog or in the comments on TradingView. I do not have an editor and do this in my free time.
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Friday, December 11, 2020
Take it till life runs out
Facts: -0.23%, Volume lower, Closing range: 96%, Body: 30%
Good: Held support near 12,250
Bad: Inside day not indicating direction
Highs/Lows: Lower high, Higher low
Candle: Inside day, small body over longer lower wick
Advance/Decline: 0.69, three declining to every two advancing
Sectors: Communications (XLC +0.60%) was top. Energy (XLE -1.15%) was bottom.
Expectation: Sideways
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Market Overview
The Nasdaq closed the week with an inside day that included an intraday bounce of the 12,250 support area. That inside day could mean a continuation of the downward bearish movement. However, balance that with a high closing range and the mid-day reversal which could be a bullish sign. The direction changes came as mixed economic news was shared. Producer Purchasing Index was lower than expected, released before market open. Consumer Confidence was higher than expected, released mid-morning. Ultimately it was a stop-gap bill in congress to prevent government shutdown that brought the index off its lows to close with a 93% closing range and a 30% body over a long lower wick. The Nasdaq finished the day with a -0.23% loss, a much smaller loss than the 1% at mid-session. There were almost three declining stocks for every two advancing stocks.
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Indexes and Sectors
The Dow Jones Industrial average (DJI +0.16%) was the only major index to finish the day with gains. The S&P 500 (SPX -0.13%) and the Russell 2000 (RUT -0.57%) had losses for the day. The S&P 500 had a lower high and lower low, while the Dow Jones Industrial finished the week with an outside day.
Communications (XLC +0.60%) was the top sector. Industrials (XLI +0.24%) and Consumer Staples (XLP +0.22%) were the next two best performing. Energy (XLE -1.15%) and Financials (XLF -1.01%) were the worst performing of the day.
The VIX volatility index gained +3.51%. At the mid-day high it was up 11.76%.
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Market Indicators
US 30y and 10y treasury bond yields rose while the 2y yield sharply dropped as investors bought up the short-term bonds. The spread between the 30y and 10y yields remained the same, while the spread between 10y and 2y yields widened.
The yield on corporate bonds rose for the day while short term treasury bond yields fell, tightening the spread between the two as investors exchange riskier corporate bonds for safe-haven treasury bonds.
The US dollar (DXY +0.18%) rose for the day.
Silver (SILVER -0.10%) and Gold (GOLD -0.08%) dropped slightly today. Crude Oil (CRUDEOIL1! -1.09%) dropped back from yesterday's gain. Timber (WOOD +0.149%) gained for the day. Copper (COPPER1! -0.73%) and Aluminum (ALI1! +-1.79%) lost ground for the day.
The put/call ratio rose to 0.737, a reversal in recent overly bullish sentiment. 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.
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Market Leaders
Three of the four biggest mega-caps had gains for the day. Microsoft (MSFT +1.30%) and Amazon (+0.48%) both gained but still closed below their 21d EMA and 50d MA key moving averages. Alphabet (GOOGL +0.4%) also rose for the day and is trading right at its 21d EMA. Apple (AAPL -0.67%) was the only of the four to have a loss. AAPL is trading above the key moving averages, but showed a bearish harami candle showing some indecision with investors.
Other mega-caps that had gains include Walt Disney (DIS +13.59%) that had huge gains after announcing new plans and price increases for its streaming service. Toyota Motor Corp (TM +5.54%) rose on news that they'll introduce an electric vehicle to their lineup. Tesla (TSLA -2.72%) was down for the day. Facebook (FB -1.29%) also continued losses after the US government announced lawsuits to break-up the company earlier in the week.
Growth stocks were at the extremes on Friday. Solar Edge (SEDG +6.59%), CHWY (CHWY +9.02%), MongoDB (MDB +6.56%), and ETSY (ETSY +2.86%) were among the big gainers. Lululemon (LULU -6.71%) was down, despite a great earnings release the night before. Restoration Hardware (RH -5.29%), Snowflake (SNOW -5.18%) and RIOT (RIOT -7.28%) were among other losers. This week's big IPOs AirBnb (ABNB -3.77%) and DoorDash (DASH -5.91%) also lost on the day.
Moderna (MRNA +0.80%) is up another 3% after hours on an announcement that the US government will double its purchase of the company's vaccine doses.
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Looking ahead
OPEC will release its monthly report on Monday. Otherwise, there is not much economic news coming for Monday.
There are no notable earnings announcements on Monday for the daily market update.
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Trends, Support and Resistance
The trend line from the 10/30 bottom points to a +2.16% which would bring the index back to new all-time highs.
The one-day trend line is pointing to a sideways move that would result in a -0.08% loss.
The five-day trend and the trend from the 12/9 pivot are pointing to a -1.04% which would retest the 12,250 support area. So far that area has held-up well and is just above the 21d EMA. The QQQ ETF successfully tested its own 21d EMA the last two days.
If the index passes through the 12,250 support area and the 21d EMA, then the next support area is the November support around 12,000. A drop tomorrow beyond that point should raise the alarm.
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Wrap-up
The last several days have all offered a very different character to the market. Tuesday seemed everything was going well, another new all-time high with a very bullish candle. However, the rally day wasn't shared by the other major indexes. Wednesday brought a bearish drop of almost 2% and it seemed that would continue into Thursday. Thursday turned out to be very bullish for growth stocks, but the rally attempt wasn't shared broadly.
We end the week on Friday with a back-and-forth session that left the Nasdaq with an indecisive inside day. Some signals show bullish and some show bearish. It is finally time to get some rest this weekend from a long week, refresh mentally and be ready to respond to whatever comes on Monday.
Stay healthy and take care!
If you have ideas to make the daily update better, please let me know in the comments.
I do occasionally have some errors or typos and will correct them in my blog or in the comments on TradingView. I do not have an editor and do this in my free time.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Friday, December 11, 2020
Take it till life runs out
Facts: -0.23%, Volume lower, Closing range: 96%, Body: 30%
Good: Held support near 12,250
Bad: Inside day not indicating direction
Highs/Lows: Lower high, Higher low
Candle: Inside day, small body over longer lower wick
Advance/Decline: 0.69, three declining to every two advancing
Sectors: Communications (XLC +0.60%) was top. Energy (XLE -1.15%) was bottom.
Expectation: Sideways
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The Nasdaq closed the week with an inside day that included an intraday bounce of the 12,250 support area. That inside day could mean a continuation of the downward bearish movement. However, balance that with a high closing range and the mid-day reversal which could be a bullish sign. The direction changes came as mixed economic news was shared. Producer Purchasing Index was lower than expected, released before market open. Consumer Confidence was higher than expected, released mid-morning. Ultimately it was a stop-gap bill in congress to prevent government shutdown that brought the index off its lows to close with a 93% closing range and a 30% body over a long lower wick. The Nasdaq finished the day with a -0.23% loss, a much smaller loss than the 1% at mid-session. There were almost three declining stocks for every two advancing stocks.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
The Dow Jones Industrial average (DJI +0.16%) was the only major index to finish the day with gains. The S&P 500 (SPX -0.13%) and the Russell 2000 (RUT -0.57%) had losses for the day. The S&P 500 had a lower high and lower low, while the Dow Jones Industrial finished the week with an outside day.
Communications (XLC +0.60%) was the top sector. Industrials (XLI +0.24%) and Consumer Staples (XLP +0.22%) were the next two best performing. Energy (XLE -1.15%) and Financials (XLF -1.01%) were the worst performing of the day.
The VIX volatility index gained +3.51%. At the mid-day high it was up 11.76%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Indicators
US 30y and 10y treasury bond yields rose while the 2y yield sharply dropped as investors bought up the short-term bonds. The spread between the 30y and 10y yields remained the same, while the spread between 10y and 2y yields widened.
The yield on corporate bonds rose for the day while short term treasury bond yields fell, tightening the spread between the two as investors exchange riskier corporate bonds for safe-haven treasury bonds.
The US dollar (DXY +0.18%) rose for the day.
Silver (SILVER -0.10%) and Gold (GOLD -0.08%) dropped slightly today. Crude Oil (CRUDEOIL1! -1.09%) dropped back from yesterday's gain. Timber (WOOD +0.149%) gained for the day. Copper (COPPER1! -0.73%) and Aluminum (ALI1! +-1.79%) lost ground for the day.
The put/call ratio rose to 0.737, a reversal in recent overly bullish sentiment. 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
Three of the four biggest mega-caps had gains for the day. Microsoft (MSFT +1.30%) and Amazon (+0.48%) both gained but still closed below their 21d EMA and 50d MA key moving averages. Alphabet (GOOGL +0.4%) also rose for the day and is trading right at its 21d EMA. Apple (AAPL -0.67%) was the only of the four to have a loss. AAPL is trading above the key moving averages, but showed a bearish harami candle showing some indecision with investors.
Other mega-caps that had gains include Walt Disney (DIS +13.59%) that had huge gains after announcing new plans and price increases for its streaming service. Toyota Motor Corp (TM +5.54%) rose on news that they'll introduce an electric vehicle to their lineup. Tesla (TSLA -2.72%) was down for the day. Facebook (FB -1.29%) also continued losses after the US government announced lawsuits to break-up the company earlier in the week.
Growth stocks were at the extremes on Friday. Solar Edge (SEDG +6.59%), CHWY (CHWY +9.02%), MongoDB (MDB +6.56%), and ETSY (ETSY +2.86%) were among the big gainers. Lululemon (LULU -6.71%) was down, despite a great earnings release the night before. Restoration Hardware (RH -5.29%), Snowflake (SNOW -5.18%) and RIOT (RIOT -7.28%) were among other losers. This week's big IPOs AirBnb (ABNB -3.77%) and DoorDash (DASH -5.91%) also lost on the day.
Moderna (MRNA +0.80%) is up another 3% after hours on an announcement that the US government will double its purchase of the company's vaccine doses.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
OPEC will release its monthly report on Monday. Otherwise, there is not much economic news coming for Monday.
There are no notable earnings announcements on Monday for the daily market update.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The trend line from the 10/30 bottom points to a +2.16% which would bring the index back to new all-time highs.
The one-day trend line is pointing to a sideways move that would result in a -0.08% loss.
The five-day trend and the trend from the 12/9 pivot are pointing to a -1.04% which would retest the 12,250 support area. So far that area has held-up well and is just above the 21d EMA. The QQQ ETF successfully tested its own 21d EMA the last two days.
If the index passes through the 12,250 support area and the 21d EMA, then the next support area is the November support around 12,000. A drop tomorrow beyond that point should raise the alarm.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
The last several days have all offered a very different character to the market. Tuesday seemed everything was going well, another new all-time high with a very bullish candle. However, the rally day wasn't shared by the other major indexes. Wednesday brought a bearish drop of almost 2% and it seemed that would continue into Thursday. Thursday turned out to be very bullish for growth stocks, but the rally attempt wasn't shared broadly.
We end the week on Friday with a back-and-forth session that left the Nasdaq with an indecisive inside day. Some signals show bullish and some show bearish. It is finally time to get some rest this weekend from a long week, refresh mentally and be ready to respond to whatever comes on Monday.
Stay healthy and take care!
Nota
Correction: In the wrap-up, it was Monday that had a positive day on Nasdaq, but the other major indexes were down. Tuesday, all indexes rallied before the Wednesday pullback.
Website: drewby.com
Twitter: twitter.com/drewrobbins
All ideas are for information purposes only. I may or may not invest in the stocks discussed. Before investing in any stock, do your research and trade using your rules.
Twitter: twitter.com/drewrobbins
All ideas are for information purposes only. I may or may not invest in the stocks discussed. Before investing in any stock, do your research and trade using your rules.
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