Daily Market Update for 2/12
Trend lines drawn from the 10/30 bottom (72d), 2/8 (5d) and today 2/12 (1d).
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.
I'm working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.
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Friday, February 12, 2021
Facts: +0.50%, Volume lower, Closing range: 96%, Body: 71%
Good: Good gains in the morning, higher prices into close
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: Mostly green body with tiny upper wick as index closed near the high
Advance/Decline: 0.89, slightly more declining stocks than advancing stocks
Indexes: SPX (+0.47%), DJI (+0.09%), RUT (+0.18%), VIX (-6.02%)
Sectors: Energy (XLE +1.48%) and Materials (XLB +1.03%) were top. Real Estate (XLRE -0.03%) and Utilities (XLU -0.73%) were bottom.
Expectation: Higher
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Market Overview
The market rallied into the end of the week, closing at or near all-time highs across the major indexes. Despite lower than expected consumer sentiment data, investors were optimistic about the stimulus talks and progress with vaccines to end the pandemic. As a sign of that confidence, the defensive play of Utilities remained at the bottom of the sector list heading into a three-day weekend.
The Nasdaq closed with a +0.50% gain, just below the all-time high. The volume was lower than the previous day, but the 96% closing range and 71% green body appear very bullish. Most of the gains came in the last 30 minutes of trading. However, there were more declining stocks than advancing stocks on the Nasdaq.
The S&P 500 (SPX) set a new all-time high with a +0.47% advance for the day. The Russell 2000 (RUT) gained +0.18% while the Dow Jones Industrial lagged the other indexes with a +0.09% gain. The VIX volatility index dropped -6.02% to have its lowest close since February 21, 2020.
Energy (XLE +1.48%) was the leading sector of the day with Materials (XLB +1.03%) and Financials (XLF +1.03%) putting in identical gains. Financials led in the morning before being overtaken by Energy mid-day. The surprise heading into a three-day weekend is that Real Estate (XLRE -0.03%) and Utilities (XLU -0.73%) were at the bottom of the list. These sectors are often used for defensive plays, especially before three-day weekends this past year. Having them at the bottom of the list shows how confident investors are right now.
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Economic Indicators
The US Dollar (DXY) remained steady this past week and today with a +0.07% gain. The US 30y and 10y yields climbed for a second day. US 2y treasury bond yields were slightly lower. High Yield Corporate Bond (HYG) prices also advanced while Investment Grade (LQD) corporate bond prices declined.
Silver (SILVER) advanced while Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) advanced again after yesterday's small pullback. Timber (WOOD) continued to advanced. Copper (COPPER1!) and Aluminum (ALI1!) both advanced. Bullish.
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Investor Sentiment
The put/call ratio rose to 0.585. 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 moved significantly to the greed side.
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Market Leaders
The big four mega-caps, Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) all gained for the day. Amazon closed back above the 21d EMA after closing below it yesterday.
PayPal (PYPL) and Thermo Fisher Scientific (TMO) led the mega-caps with +4.68% and +2.79% gains. Nvidia (NVDA) gave up some of yesterday's big gain with a -1.90% loss today.
Growth stocks were again dominated by Chinese companies with Ehang (EH) gaining +14.42% and UP Fintech (TIGR) gaining +7.61%. Chewy (CHWY) also had a great gain of +8.95%, while Fiverr (FVRR), Peloton (PTON), and Penn National Gaming (PENN) all closing with greater than 5% advances.
DataDog (DDOG) and CloudFlare (NET) closed with losses after disappointing investors with 2021 guidance in earnings the previous day.
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Looking ahead
Markets are closed on Monday for President's day.
Tuesday does not have a lot of economic news on the calendar. FOMC Member Daly speaks in the afternoon.
CVS Health (CVS), Palantir (PLTR), Ringcentral (RNG), SolarEdge (SEDG), Avis (CAR) are a few of the interesting earnings reports for Tuesday. Check your portfolio for earnings events to make sure you are not surprised.
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Trends, Support and Resistance
The five-day trend line points to a +0.16% for Tuesday. That would put it just above the all-time high set earlier this week.
The one-day trend is pointing to a -0.29% decline. The long-term trend line from the 10/30 bottom points to a larger decline of -0.71%.
If there is further downside, the index started to build support at the 14,000 area this week. The 21d EMA line also offers an area of support and is -3.5% below Wednesday's close. The 13,000 level also seems to be an area of support. The index held the 12,550 area recently. If it passes that area, the next support area is 12,250.
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Wrap-up
It was a nice way to end the week. I was expecting some defensive plays in late afternoon, but investors remained confident in the economic recovery and stayed invested in the stock market, heading into the three-day weekend. Defensive plays of Utilities and Real Estate were left on the sidelines and there was no exodus from equities to treasury bonds or other safe havens.
Look for my Week in Review update later this weekend for more analysis of this week and how that might play into next week's market.
Stay healthy and take care!
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.
I'm working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Friday, February 12, 2021
Facts: +0.50%, Volume lower, Closing range: 96%, Body: 71%
Good: Good gains in the morning, higher prices into close
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: Mostly green body with tiny upper wick as index closed near the high
Advance/Decline: 0.89, slightly more declining stocks than advancing stocks
Indexes: SPX (+0.47%), DJI (+0.09%), RUT (+0.18%), VIX (-6.02%)
Sectors: Energy (XLE +1.48%) and Materials (XLB +1.03%) were top. Real Estate (XLRE -0.03%) and Utilities (XLU -0.73%) were bottom.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The market rallied into the end of the week, closing at or near all-time highs across the major indexes. Despite lower than expected consumer sentiment data, investors were optimistic about the stimulus talks and progress with vaccines to end the pandemic. As a sign of that confidence, the defensive play of Utilities remained at the bottom of the sector list heading into a three-day weekend.
The Nasdaq closed with a +0.50% gain, just below the all-time high. The volume was lower than the previous day, but the 96% closing range and 71% green body appear very bullish. Most of the gains came in the last 30 minutes of trading. However, there were more declining stocks than advancing stocks on the Nasdaq.
The S&P 500 (SPX) set a new all-time high with a +0.47% advance for the day. The Russell 2000 (RUT) gained +0.18% while the Dow Jones Industrial lagged the other indexes with a +0.09% gain. The VIX volatility index dropped -6.02% to have its lowest close since February 21, 2020.
Energy (XLE +1.48%) was the leading sector of the day with Materials (XLB +1.03%) and Financials (XLF +1.03%) putting in identical gains. Financials led in the morning before being overtaken by Energy mid-day. The surprise heading into a three-day weekend is that Real Estate (XLRE -0.03%) and Utilities (XLU -0.73%) were at the bottom of the list. These sectors are often used for defensive plays, especially before three-day weekends this past year. Having them at the bottom of the list shows how confident investors are right now.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) remained steady this past week and today with a +0.07% gain. The US 30y and 10y yields climbed for a second day. US 2y treasury bond yields were slightly lower. High Yield Corporate Bond (HYG) prices also advanced while Investment Grade (LQD) corporate bond prices declined.
Silver (SILVER) advanced while Gold (GOLD) declined. Crude Oil (CRUDEOIL1!) advanced again after yesterday's small pullback. Timber (WOOD) continued to advanced. Copper (COPPER1!) and Aluminum (ALI1!) both advanced. Bullish.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose to 0.585. 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 moved significantly to the greed side.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
The big four mega-caps, Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) all gained for the day. Amazon closed back above the 21d EMA after closing below it yesterday.
PayPal (PYPL) and Thermo Fisher Scientific (TMO) led the mega-caps with +4.68% and +2.79% gains. Nvidia (NVDA) gave up some of yesterday's big gain with a -1.90% loss today.
Growth stocks were again dominated by Chinese companies with Ehang (EH) gaining +14.42% and UP Fintech (TIGR) gaining +7.61%. Chewy (CHWY) also had a great gain of +8.95%, while Fiverr (FVRR), Peloton (PTON), and Penn National Gaming (PENN) all closing with greater than 5% advances.
DataDog (DDOG) and CloudFlare (NET) closed with losses after disappointing investors with 2021 guidance in earnings the previous day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Markets are closed on Monday for President's day.
Tuesday does not have a lot of economic news on the calendar. FOMC Member Daly speaks in the afternoon.
CVS Health (CVS), Palantir (PLTR), Ringcentral (RNG), SolarEdge (SEDG), Avis (CAR) are a few of the interesting earnings reports for Tuesday. Check your portfolio for earnings events to make sure you are not surprised.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The five-day trend line points to a +0.16% for Tuesday. That would put it just above the all-time high set earlier this week.
The one-day trend is pointing to a -0.29% decline. The long-term trend line from the 10/30 bottom points to a larger decline of -0.71%.
If there is further downside, the index started to build support at the 14,000 area this week. The 21d EMA line also offers an area of support and is -3.5% below Wednesday's close. The 13,000 level also seems to be an area of support. The index held the 12,550 area recently. If it passes that area, the next support area is 12,250.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It was a nice way to end the week. I was expecting some defensive plays in late afternoon, but investors remained confident in the economic recovery and stayed invested in the stock market, heading into the three-day weekend. Defensive plays of Utilities and Real Estate were left on the sidelines and there was no exodus from equities to treasury bonds or other safe havens.
Look for my Week in Review update later this weekend for more analysis of this week and how that might play into next week's market.
Stay healthy and take care!
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