Summary: The quadruple witching day amplified some rotations that happened yesterday and brought all the major indices lower. Value stocks sold off far more than growth stocks, while the US Dollar continued to strengthen
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, June 18, 2021
Facts: -0.92%, Volume higher, Closing range: 18%, Body: 55%
Good: Held above yesterday's low, and above 14,000.
Bad: Huge volume on move lower, low A/D
Highs/Lows: Lower high, higher low
Candle: Inside day with a thick red body, longer upper wick, low closing range
Advanced/Decline: 0.3, More than three declining stocks for every advancing stock
Indexes: SPX (-1.31%), DJI (-1.58%), RUT (-2.17%), VIX (+16.74%)
Sectors: Consumer Discretionary (XLY -0.53%) and Technology (XLK -0.91%) were top. Utilities (XLU -2.60%) and Energy (XLE -2.96%) were bottom.
Expectation: Sideways
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Market Overview
The quadruple witching day amplified some rotations that happened yesterday and brought all the major indices lower. Value stocks sold off far more than growth stocks, while the US Dollar continued to strengthen.
The Nasdaq closed the day with a -0.92% loss. Volume was much higher than the previous day due to the quadruple witching day when index futures, index options, individual stock futures, and stock options all expire on the same day. The closing range of 18% is below a red body with a visible lower wick and longer upper wick. The high is lower than the previous day, while the low is higher than the previous day, marking an inside day.
The Dow Jones Industrial Average (DJI) closed with a -1.58% decline today, finishing the worst weekly loss since October. The S&P 500 (SPX) declined -1.31%, while the Russell 2000 (RUT) fell -2.17%.
The gap down today and weekly loss on the DJI is something to keep an eye on. However, it is not a surprise that the DJI is falling rapidly among the US dollar's considerable gains. Large international companies benefit from a weaker dollar.
The VIX volatility index advanced +16.74%.
All sectors moved lower today. Consumer Discretionary (XLY -0.53%) and Technology (XLK -0.91%) topped the sector list with the smallest losses. Utilities (XLU -2.60%) and Energy (XLE -2.96%) were the bottom two sectors. Financials (XLF -2.41%) is moving lower due to the lower yields in Treasuries.
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Economic Indicators
The US Dollar (DXY) strengthened for a third day, rising +0.46%. It is up 2% for the week.
The US 30y and 10y Treasury Yields continued to decline while the 2y Treasury yield rose. The spread between long-term and short-term Treasuries is tightening rapidly.
High Yield Corporate Bond (HYG) prices declined while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) advanced.
Timber (Wood) continues to slide, dropping -1.51% today. Almost -5% for the week.
Copper (COPPER1!) and Aluminum (ALI1!) also declined.
Bitcoin (BTCUSD) declined -5.93%. Ethereum (ETHUSD) declined -6.07%
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Investor Sentiment
The put/call ratio rose to 0.716. 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. Below that level is overly bullish.
The CNN Fear & Greed index moved further to the fear side.
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Market Leaders
Amazon (AMZN) continues to show strength among the four largest mega-caps, declining only -0.07% today. Microsoft (MSFT) declined -0.56%. Apple (AAPL) fell -1.01%. Alphabet (GOOGL) lost -1.34%.
Only a handful of mega-caps gained for the day. At the top of the list are Adobe (ADBE), PayPal (PYPL), Tesla (TSLA), and Netflix (NFLX). The biggest losers today are Toyota Motor (TM ), ASML Holding (ASML), Taiwan Semiconductor (TSM), and Intel (INTC).
The daily update growth list had more gainers than losers. Fiverr (FVRR), DocuSign (DOCU), Lemonade (LMND), and Roku (ROKU) led the list. At the bottom of the list are Beyond Meat (BYND), Penn National Gaming (PENN), Digital Turbine (APPS), and Ehang Holdings (EH).
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Looking ahead
Short-term Treasury Bill auctions are on Monday. Fed John Williams speaks on Monday afternoon.
There are no relevant earnings reports for the daily update on Monday.
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Trends, Support, and Resistance
The index continues to build support in the 14,000 to 14,200 trading range.
The trend-line from the 5/12 low points to a +1.52% advance on Monday and a new all-time high.
The five-day trend-line ends with a +0.34% advance to start the week.
The one-day trend-line points to a -0.25% decline for Monday.
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Wrap-up
Quadruple witching always makes for a strange day in the markets and today was no exception. If you look at the Dow Jones Industrial Average (DJI), you'd think the market is crashing, and maybe it is. But if you look at the Nasdaq, you get a different story, closing the week with an inside day and still in an uptrend on the weekly chart.
Looking at another view of what's going on, we can again visit the growth vs. value chart. The market could quickly reverse the move, but for now, growth is getting investors' intention again.
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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Friday, June 18, 2021
Facts: -0.92%, Volume higher, Closing range: 18%, Body: 55%
Good: Held above yesterday's low, and above 14,000.
Bad: Huge volume on move lower, low A/D
Highs/Lows: Lower high, higher low
Candle: Inside day with a thick red body, longer upper wick, low closing range
Advanced/Decline: 0.3, More than three declining stocks for every advancing stock
Indexes: SPX (-1.31%), DJI (-1.58%), RUT (-2.17%), VIX (+16.74%)
Sectors: Consumer Discretionary (XLY -0.53%) and Technology (XLK -0.91%) were top. Utilities (XLU -2.60%) and Energy (XLE -2.96%) were bottom.
Expectation: Sideways
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Market Overview
The quadruple witching day amplified some rotations that happened yesterday and brought all the major indices lower. Value stocks sold off far more than growth stocks, while the US Dollar continued to strengthen.
The Nasdaq closed the day with a -0.92% loss. Volume was much higher than the previous day due to the quadruple witching day when index futures, index options, individual stock futures, and stock options all expire on the same day. The closing range of 18% is below a red body with a visible lower wick and longer upper wick. The high is lower than the previous day, while the low is higher than the previous day, marking an inside day.
The Dow Jones Industrial Average (DJI) closed with a -1.58% decline today, finishing the worst weekly loss since October. The S&P 500 (SPX) declined -1.31%, while the Russell 2000 (RUT) fell -2.17%.
The gap down today and weekly loss on the DJI is something to keep an eye on. However, it is not a surprise that the DJI is falling rapidly among the US dollar's considerable gains. Large international companies benefit from a weaker dollar.
The VIX volatility index advanced +16.74%.
All sectors moved lower today. Consumer Discretionary (XLY -0.53%) and Technology (XLK -0.91%) topped the sector list with the smallest losses. Utilities (XLU -2.60%) and Energy (XLE -2.96%) were the bottom two sectors. Financials (XLF -2.41%) is moving lower due to the lower yields in Treasuries.
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Economic Indicators
The US Dollar (DXY) strengthened for a third day, rising +0.46%. It is up 2% for the week.
The US 30y and 10y Treasury Yields continued to decline while the 2y Treasury yield rose. The spread between long-term and short-term Treasuries is tightening rapidly.
High Yield Corporate Bond (HYG) prices declined while Investment Grade Corporate Bond (LQD) prices advanced.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) advanced.
Timber (Wood) continues to slide, dropping -1.51% today. Almost -5% for the week.
Copper (COPPER1!) and Aluminum (ALI1!) also declined.
Bitcoin (BTCUSD) declined -5.93%. Ethereum (ETHUSD) declined -6.07%
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Investor Sentiment
The put/call ratio rose to 0.716. 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. Below that level is overly bullish.
The CNN Fear & Greed index moved further to the fear side.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Amazon (AMZN) continues to show strength among the four largest mega-caps, declining only -0.07% today. Microsoft (MSFT) declined -0.56%. Apple (AAPL) fell -1.01%. Alphabet (GOOGL) lost -1.34%.
Only a handful of mega-caps gained for the day. At the top of the list are Adobe (ADBE), PayPal (PYPL), Tesla (TSLA), and Netflix (NFLX). The biggest losers today are Toyota Motor (TM ), ASML Holding (ASML), Taiwan Semiconductor (TSM), and Intel (INTC).
The daily update growth list had more gainers than losers. Fiverr (FVRR), DocuSign (DOCU), Lemonade (LMND), and Roku (ROKU) led the list. At the bottom of the list are Beyond Meat (BYND), Penn National Gaming (PENN), Digital Turbine (APPS), and Ehang Holdings (EH).
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Looking ahead
Short-term Treasury Bill auctions are on Monday. Fed John Williams speaks on Monday afternoon.
There are no relevant earnings reports for the daily update on Monday.
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Trends, Support, and Resistance
The index continues to build support in the 14,000 to 14,200 trading range.
The trend-line from the 5/12 low points to a +1.52% advance on Monday and a new all-time high.
The five-day trend-line ends with a +0.34% advance to start the week.
The one-day trend-line points to a -0.25% decline for Monday.
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Wrap-up
Quadruple witching always makes for a strange day in the markets and today was no exception. If you look at the Dow Jones Industrial Average (DJI), you'd think the market is crashing, and maybe it is. But if you look at the Nasdaq, you get a different story, closing the week with an inside day and still in an uptrend on the weekly chart.
Looking at another view of what's going on, we can again visit the growth vs. value chart. The market could quickly reverse the move, but for now, growth is getting investors' intention again.
Stay healthy and trade safe!
