Daily Market Update for 3/16
Trend lines drawn from the 3/5 low (8d), 3/10 (5d) and today 3/16 (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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Tuesday, March 16, 2021
Facts: +0.09%, Volume lower, Closing range: 33%, Body: 23%
Good: Higher high, higher low, successful test of 50d MA
Bad: Low closing range, longer upper wick, could not hold morning rally
Highs/Lows: Higher high, higher low
Candle: Thin red body underneath a long upper wick
Advance/Decline: Over three declining stocks for every advancing stocks
Indexes: SPX (-0.16%), DJI (-0.39%), RUT (-1.72%), VIX (-1.20%)
Sectors: Communications (XLC +1.05%) and Technology (XLK +0.75%) were top. Industrials (XLI -1.42%) and Energy (XLE -2.85%) were bottom.
Expectation: Sideways or Lower
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Market Overview
An attempted rally in the morning sold off as investors reacted to disappointing economic data, both for February retails sales and industrial and manufacturing production. Gains were limited to fewer stocks and dominated by mega-caps.
The Nasdaq closed with a +0.09% gain, but that was down from a 1.19% gain earlier in the day. After testing the 50d MA, the index bounced back up to close a bit below where it opened and leaving behind a 23% red body. The 33% closing range is not great, but the volume was lower than the previous day and lower than average. There were over three declining stocks for every advancing stock.
The other major indexes all lost. The S&P 500 (SPX) lost -0.16%. The Dow Jones Industrial Average (DJI) lost -0.39%. The Russell 2000 (RUT) was the worst performer with a -1.72% decline.
The VIX volatility index declined -1.20%.
Communications (XLC +1.05%) and Technology (XLK +0.75%) were top. Industrials (XLI -1.42%) and Energy (XLE -2.85%) were bottom. All of the cyclicals (Energy, Financials, Industrials and Materials) lost as well as Consumer Discretionary. These sectors were impacted by the disappointing economic data in the morning.
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Economic Indicators
The US Dollar (DXY) gained +0.09%.
The US 30y and 10y treasury bond yields rose slightly, but seem to be leveling off. US 2y bond yields remained flat.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both declined today. The spread between corporate and treasury bonds remain about the same.
Silver (SILVER) declined while Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) declined.
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Investor Sentiment
The put/call ratio is at 0.644. 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 neutral.
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Market Leaders
Keeping this update brief during vacation, but keep an eye on the mega-caps as they influence the indexes. The mega-caps overall did well today with the majority ending the day with gains.
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Looking ahead
On Wednesday, we'll get news on Building Permits and Housing Starts before the market opens. After the opening bell, Crude Oil Inventories will be released.
The FOMC will meeting tomorrow. In the afternoon, their economic projections and interest rate projections will be released. This will be the biggest economic news of the day and set the stage for the next moves in both bonds and equity markets. Will the Fed make investors more or less confident in the stability of yields and the US dollar.
Wednesday's earnings reports will include Pinduoduo (PDD), BMW ADR (BMWYY), Cintas (CTAS), Five Below (FIVE).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index was able to stay above the 50d MA showing some support at that level. The support only really matters, if news from the FOMC meeting remains positive and confident.
The trend line from the 3/5 bottom points to a +1.51% gain while the five-day points to a +0.93% advance.
The trend from today is downward and if it continues, the one-day trends line points to a -1.23% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
This morning's economic news was a bit of a shock for investors who were expecting better numbers pointing to the economic recovery. Instead it showed the recovery slowing in speed and raising some alarms. The reaction was negative but also showed some caution from overreacting as there is more to come this week with the FOMC meeting.
Despite the economic data, yields did not move much. One might have expected them to come down a bit more given the perception the economic recovery is not overheating and inflation may not accelerate. But all eyes really are going to be on the Fed. What adjustments will they make to the outlook for economic growth this year? Will they even hint at changes in monetary policy? Will this be the start of the next "Taper Tantrum"?
Tomorrow we will have a lot to digest.
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=-
Tuesday, March 16, 2021
Facts: +0.09%, Volume lower, Closing range: 33%, Body: 23%
Good: Higher high, higher low, successful test of 50d MA
Bad: Low closing range, longer upper wick, could not hold morning rally
Highs/Lows: Higher high, higher low
Candle: Thin red body underneath a long upper wick
Advance/Decline: Over three declining stocks for every advancing stocks
Indexes: SPX (-0.16%), DJI (-0.39%), RUT (-1.72%), VIX (-1.20%)
Sectors: Communications (XLC +1.05%) and Technology (XLK +0.75%) were top. Industrials (XLI -1.42%) and Energy (XLE -2.85%) were bottom.
Expectation: Sideways or Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
An attempted rally in the morning sold off as investors reacted to disappointing economic data, both for February retails sales and industrial and manufacturing production. Gains were limited to fewer stocks and dominated by mega-caps.
The Nasdaq closed with a +0.09% gain, but that was down from a 1.19% gain earlier in the day. After testing the 50d MA, the index bounced back up to close a bit below where it opened and leaving behind a 23% red body. The 33% closing range is not great, but the volume was lower than the previous day and lower than average. There were over three declining stocks for every advancing stock.
The other major indexes all lost. The S&P 500 (SPX) lost -0.16%. The Dow Jones Industrial Average (DJI) lost -0.39%. The Russell 2000 (RUT) was the worst performer with a -1.72% decline.
The VIX volatility index declined -1.20%.
Communications (XLC +1.05%) and Technology (XLK +0.75%) were top. Industrials (XLI -1.42%) and Energy (XLE -2.85%) were bottom. All of the cyclicals (Energy, Financials, Industrials and Materials) lost as well as Consumer Discretionary. These sectors were impacted by the disappointing economic data in the morning.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) gained +0.09%.
The US 30y and 10y treasury bond yields rose slightly, but seem to be leveling off. US 2y bond yields remained flat.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both declined today. The spread between corporate and treasury bonds remain about the same.
Silver (SILVER) declined while Gold (GOLD) advanced. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) declined.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio is at 0.644. 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 neutral.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Keeping this update brief during vacation, but keep an eye on the mega-caps as they influence the indexes. The mega-caps overall did well today with the majority ending the day with gains.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
On Wednesday, we'll get news on Building Permits and Housing Starts before the market opens. After the opening bell, Crude Oil Inventories will be released.
The FOMC will meeting tomorrow. In the afternoon, their economic projections and interest rate projections will be released. This will be the biggest economic news of the day and set the stage for the next moves in both bonds and equity markets. Will the Fed make investors more or less confident in the stability of yields and the US dollar.
Wednesday's earnings reports will include Pinduoduo (PDD), BMW ADR (BMWYY), Cintas (CTAS), Five Below (FIVE).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index was able to stay above the 50d MA showing some support at that level. The support only really matters, if news from the FOMC meeting remains positive and confident.
The trend line from the 3/5 bottom points to a +1.51% gain while the five-day points to a +0.93% advance.
The trend from today is downward and if it continues, the one-day trends line points to a -1.23% loss.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
This morning's economic news was a bit of a shock for investors who were expecting better numbers pointing to the economic recovery. Instead it showed the recovery slowing in speed and raising some alarms. The reaction was negative but also showed some caution from overreacting as there is more to come this week with the FOMC meeting.
Despite the economic data, yields did not move much. One might have expected them to come down a bit more given the perception the economic recovery is not overheating and inflation may not accelerate. But all eyes really are going to be on the Fed. What adjustments will they make to the outlook for economic growth this year? Will they even hint at changes in monetary policy? Will this be the start of the next "Taper Tantrum"?
Tomorrow we will have a lot to digest.
Stay healthy and trade safe!
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