Summary: Gains by Microsoft and Alphabet weren't enough to lift indexes as it seems everything else sold off today. Volatility in long-term treasuries and gold erased morning gains in equity markets.
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=-
Wednesday, October 27, 2021
Facts: +0.00%, Volume lower, Closing Range: 0%, Body: 31% Red
Good: Support at 15,200
Bad: Intraday gains lost after resistance at 15,400, low advance/decline line
Highs/Lows: Lower high, Higher low
Candle: Shooting star with long upper wick, no lower wick, red body
Advance/Decline: 0.26, four declining stocks for every advancing stock
Indexes: SPX (-0.51%), DJI (-0.74%), RUT (-1.90%), VIX (+6.26%)
Sector List: Consumer Discretionary (XLY +0.22%) and Technology (XLK -0.09%) at the top. Financials (XLF -1.65%) and Energy (XLE -2.87%) at the bottom.
Expectation: Sideways
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Gains by Microsoft and Alphabet weren't enough to lift indexes as it seems everything else sold off today. Volatility in long-term treasuries and gold erased morning gains in equity markets.
The Nasdaq ended even with yesterday's closing price, and volume was lower than the previous day. The index sold off into the close resulting in a 0% closing range. The 31% red body sits at the bottom of the candle below a long upper wick. In a similar session to the previous day, resistance held at 15,400 while support held at 15,200. There were four declining stocks for every advancing stock.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) declined -0.51% and -0.74%. Small caps had the worst performance, with the Russell 2000 (RUT) dropping -1.90%. The VIX Volatility Index gained +6.26%.
Consumer Discretionary (XLY +0.22%) was the only sector to gain for the day. Technology (XLK -0.09%) was the second-best sector.
Communications (XLC -0.27%) was in third, and the three growth sectors were the only ones to outperform the broader S&P 500 index. Financials (XLF -1.65%) and Energy (XLE -2.87%) were the bottom two sectors for today.
Durable Goods Orders for September were higher than expected, coming in at a month-over-month drop of -0.4% compared to the expected -1.1%. Crude Oil Inventories were higher than forecast, signaling a slowdown in demand. Crude Oil Futures and Energy stocks both dropped after the updated data.
The US Dollar index (DXY) declined -0.11% for the day. US 30y and US 10y Treasury yields dropped sharply while the 2y yield rose. The volatility in Treasuries, which comes from worries about monetary policy and government funding, erased gains in equity markets. High Yield (HYG) Corporate Bond prices declined while Investment Grade (LQD) Corporate Bond prices advanced.
Gold rose for the day. Crude Oil Futures dropped. Copper and Aluminum prices are falling from their extreme highs set just a few weeks ago.
The put/call ratio (PCCE) climbed to 0.663. The CNN Fear & Greed index moved back to the middle of the Greed area after coming close to Extreme Greed earlier this week.
It was the largest mega-caps that carried indexes higher in the morning. Microsoft (MSFT) gained +4.21%, and Alphabet (GOOGL) advanced +4.9%. Both released quarterly results yesterday and beat expectations on revenue and earnings. Of the four largest mega-caps, only Apple (AAPL) declined for the day, losing -0.21%. All four are back above their 21d EMA and 50d MA lines.
Alphabet and Microsoft were the top two mega-caps, followed by Coca-Cola (KO) and Tesla (TSLA). Mastercard (MA) and Visa (V) were at the bottom of the list, both declining more than -6%. Visa beat expectations in an early morning earnings release but provided guidance that worried investors. On top of that, news broke that the Justice Department is probing relationships between Visa and Fintech firms such as Square, Stripe, and PayPal. Mastercard often trades in the same direction as Visa.
Solar Energy company Enphase (ENPH) smashed earnings expectations, sending the stock up +24.65% to top the Daily Update Growth List. That also helped Solar Edge (SEDG) climb +9.13%. Twitter (TWTR) tumbled -10.78% on slower than expected user growth. RobinHood (HOOD) also disappointed on weak earnings from its cryptocurrency business, declining -10.44%. The two stocks were at the bottom of the growth list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
The Bank of Japan will hold a press conference overnight. The public statements since a new administration took over in Japan could bring monetary policy changes and impact the US Dollar and US Treasuries. Inflation data in Europe will also become available before the market opens.
US economic data will include the first look at Q3 GDP. We'll also have an update for weekly Initial Jobless Claims and Pending Home Sales for September.
It will be another big day for earnings on Thursday. Apple (AAPL) and Amazon (AMZN) are the headlines. Mastercard (MA), Comcast (CMCSA), Merck (MRK), Shopify (SHOP), Starbucks (SBUX), Dexcom (DXCM), and Yum Brands (YUM) are some of the others.
Be sure to check your portfolio for earnings events. There are a lot this week.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq hit resistance at 15,400 and moved back to the 15,200 support area for the second day in a row.
The trend line from the 10/4 low points to a +1.27% gain for Thursday.
The five-day and one-day trend lines point to nearly the same place, resulting in about a +0.72% gain.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Investor fears are driving volatility in Treasury bonds which will always cause some panic in equities. The fears are over a few things. Monetary policy changes seem inevitable for Japan after the new administration declared it would move away from Abenomics that drove policy for the past decade. Investors fear the worst over inflation data for Europe that will be available overnight. Finally, the US government has its upcoming transition to bond purchase tapering while attention also turns to the new December deadline for government funding.
The expectation tomorrow is for Sideways. The chart doesn't indicate much of a direction. Any move up or down will likely come from the economic news in Europe and Asia.
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=-
Wednesday, October 27, 2021
Facts: +0.00%, Volume lower, Closing Range: 0%, Body: 31% Red
Good: Support at 15,200
Bad: Intraday gains lost after resistance at 15,400, low advance/decline line
Highs/Lows: Lower high, Higher low
Candle: Shooting star with long upper wick, no lower wick, red body
Advance/Decline: 0.26, four declining stocks for every advancing stock
Indexes: SPX (-0.51%), DJI (-0.74%), RUT (-1.90%), VIX (+6.26%)
Sector List: Consumer Discretionary (XLY +0.22%) and Technology (XLK -0.09%) at the top. Financials (XLF -1.65%) and Energy (XLE -2.87%) at the bottom.
Expectation: Sideways
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Gains by Microsoft and Alphabet weren't enough to lift indexes as it seems everything else sold off today. Volatility in long-term treasuries and gold erased morning gains in equity markets.
The Nasdaq ended even with yesterday's closing price, and volume was lower than the previous day. The index sold off into the close resulting in a 0% closing range. The 31% red body sits at the bottom of the candle below a long upper wick. In a similar session to the previous day, resistance held at 15,400 while support held at 15,200. There were four declining stocks for every advancing stock.
The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) declined -0.51% and -0.74%. Small caps had the worst performance, with the Russell 2000 (RUT) dropping -1.90%. The VIX Volatility Index gained +6.26%.
Consumer Discretionary (XLY +0.22%) was the only sector to gain for the day. Technology (XLK -0.09%) was the second-best sector.
Communications (XLC -0.27%) was in third, and the three growth sectors were the only ones to outperform the broader S&P 500 index. Financials (XLF -1.65%) and Energy (XLE -2.87%) were the bottom two sectors for today.
Durable Goods Orders for September were higher than expected, coming in at a month-over-month drop of -0.4% compared to the expected -1.1%. Crude Oil Inventories were higher than forecast, signaling a slowdown in demand. Crude Oil Futures and Energy stocks both dropped after the updated data.
The US Dollar index (DXY) declined -0.11% for the day. US 30y and US 10y Treasury yields dropped sharply while the 2y yield rose. The volatility in Treasuries, which comes from worries about monetary policy and government funding, erased gains in equity markets. High Yield (HYG) Corporate Bond prices declined while Investment Grade (LQD) Corporate Bond prices advanced.
Gold rose for the day. Crude Oil Futures dropped. Copper and Aluminum prices are falling from their extreme highs set just a few weeks ago.
The put/call ratio (PCCE) climbed to 0.663. The CNN Fear & Greed index moved back to the middle of the Greed area after coming close to Extreme Greed earlier this week.
It was the largest mega-caps that carried indexes higher in the morning. Microsoft (MSFT) gained +4.21%, and Alphabet (GOOGL) advanced +4.9%. Both released quarterly results yesterday and beat expectations on revenue and earnings. Of the four largest mega-caps, only Apple (AAPL) declined for the day, losing -0.21%. All four are back above their 21d EMA and 50d MA lines.
Alphabet and Microsoft were the top two mega-caps, followed by Coca-Cola (KO) and Tesla (TSLA). Mastercard (MA) and Visa (V) were at the bottom of the list, both declining more than -6%. Visa beat expectations in an early morning earnings release but provided guidance that worried investors. On top of that, news broke that the Justice Department is probing relationships between Visa and Fintech firms such as Square, Stripe, and PayPal. Mastercard often trades in the same direction as Visa.
Solar Energy company Enphase (ENPH) smashed earnings expectations, sending the stock up +24.65% to top the Daily Update Growth List. That also helped Solar Edge (SEDG) climb +9.13%. Twitter (TWTR) tumbled -10.78% on slower than expected user growth. RobinHood (HOOD) also disappointed on weak earnings from its cryptocurrency business, declining -10.44%. The two stocks were at the bottom of the growth list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
The Bank of Japan will hold a press conference overnight. The public statements since a new administration took over in Japan could bring monetary policy changes and impact the US Dollar and US Treasuries. Inflation data in Europe will also become available before the market opens.
US economic data will include the first look at Q3 GDP. We'll also have an update for weekly Initial Jobless Claims and Pending Home Sales for September.
It will be another big day for earnings on Thursday. Apple (AAPL) and Amazon (AMZN) are the headlines. Mastercard (MA), Comcast (CMCSA), Merck (MRK), Shopify (SHOP), Starbucks (SBUX), Dexcom (DXCM), and Yum Brands (YUM) are some of the others.
Be sure to check your portfolio for earnings events. There are a lot this week.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq hit resistance at 15,400 and moved back to the 15,200 support area for the second day in a row.
The trend line from the 10/4 low points to a +1.27% gain for Thursday.
The five-day and one-day trend lines point to nearly the same place, resulting in about a +0.72% gain.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Investor fears are driving volatility in Treasury bonds which will always cause some panic in equities. The fears are over a few things. Monetary policy changes seem inevitable for Japan after the new administration declared it would move away from Abenomics that drove policy for the past decade. Investors fear the worst over inflation data for Europe that will be available overnight. Finally, the US government has its upcoming transition to bond purchase tapering while attention also turns to the new December deadline for government funding.
The expectation tomorrow is for Sideways. The chart doesn't indicate much of a direction. Any move up or down will likely come from the economic news in Europe and Asia.
Stay healthy and trade safe!
