Trend lines drawn from the 10/30 bottom (66d), 1/29 (5d) and today 2/4 (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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Thursday, February 4, 2021
Facts: +1.23%, Volume lower, Closing range: 100%, Body: 71%
Good: Constant gain after morning dip, new all-time high
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: Mostly green body with short lower wick, no upper wick
Advance/Decline: 2.70, More than two advancing stocks for every declining stock
Indexes: SPX (+1.09%), DJI (+1.08%), RUT (+1.98%), VIX (-4.98%)
Sectors: Financials (XLF +2.22%) and Technology (XLK +1.60%) were top. Materials (XLB -0.36%) was the only sector to lose for the day.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
A positive expectation breaker is always welcome in the Daily Market Update. Despite yesterday's candle showing some bearish indication, today the Nasdaq proved it wasn't ready to move back down. A new all-time high adds to the string of higher highs and higher lows we've had all week.
The index closed with a +1.23% gain. Volume was lower than the previous day but continues to be higher than the 50d moving average volume. The candle has a closing range of 100% created by a spike in prices in the last 10 minutes of trading. The short lower wick was created in a 30 minute window of volatility in the morning. There were more than two advancing stocks for every declining stock.
The S&P 500 (SPX) and Dow Jones Industrial (DJI) advanced +1.09% and +1.08%. The Russell 2000 (RUT) outperformed the other indexes with a +1.98% gain and a Marubozu White candle, represented by no lower or upper wick. It's 100% green body from open to close.
The VIX continued to retreat with a -4.98% decline as volatility returns to lower levels.
Financials (XLF +2.22%) and Technology (XLK +1.60%) were top sectors for the day. Energy (XLE +1.10%) also outperformed the S&P 500. That's significant since usually when Energy performs well, the rest of the market also performs well. Materials (XLB -0.36%) was the only sector to lose for the day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) advanced +0.39% for the day and continues to trend upward from the January 5 low. The US 30y treasury bond yield rose slightly while the US 10y and US 2y declined. High Yield Corporate Bond (HYG) prices rose for another day.
Silver (SILVER) and Gold (GOLD) both declined about 2% for the day. Crude Oil (CRUDEOIL1!) futures continued to climb. Timber (WOOD) remained even. Copper (COPPER1!) declined while Aluminum (ALI1!) advanced.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio declined to 0.587. 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 and the NAAIM exposure index both remain at reasonably cautious levels.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Apple (AAPL) and Amazon (AMZN) advanced for the day while Microsoft (MSFT) and Alphabet (GOOGL) declined. These big four mega-caps are all trading above key moving average lines.
PayPal (PYPL) led the mega-caps with a +7.36% gain after beating earnings and revenue expectations in their earnings report. Visa (V), Bank of America (BAC) and Mastercard (M) were also at the top of the mega-cap list, leading the Financials sector for the day.
Among growth stocks, Digital Turbine (APPS) led with a +19.79% gain after crushing their earnings expectations. Chinese fintech company UP Fintech (TIGR) added another day of huge gains with a 15.25% advance.
After hours Pinterest (PINS) was up 9.73% upon beating earnings expectations. SNAP (SNAP) did not fare as well and was down -7.44%. Peloton (PTON) was down -8.14% despite beating expectations. They warned off continued delays in delivery due to a growing backlog.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
More employment data will be released before market open on Friday. In the afternoon, commodities trading data will be released. Speculative positions on Silver futures might be interesting.
The end of the busy earnings week will bring some reports before market open, but none that are followed by this Daily Market Update. However, check the stocks in your portfolio to make sure you aren't surprised by earnings.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The five-day trend line points to a +1.45% gain on Friday. The one-day trend is a bit under that line and points to a +0.73% gain.
The long-term trend line from the 10/30 bottom points to a small -0.32% pullback.
If there is further downside, the 21d EMA line offers an area of support and is -3.37% below Thursday'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
The positive expectation breaker was another sign that this market has room to grow. Liquidity is high in the market with above average volume. Investors continue to lack other places to move money, with Treasury Bond yields remaining low and gaining strength against other currencies.
Expectation is for higher tomorrow, but never take that as a prediction. Always manage risk and protect the value you've worked so hard to build.
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=-
Thursday, February 4, 2021
Facts: +1.23%, Volume lower, Closing range: 100%, Body: 71%
Good: Constant gain after morning dip, new all-time high
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: Mostly green body with short lower wick, no upper wick
Advance/Decline: 2.70, More than two advancing stocks for every declining stock
Indexes: SPX (+1.09%), DJI (+1.08%), RUT (+1.98%), VIX (-4.98%)
Sectors: Financials (XLF +2.22%) and Technology (XLK +1.60%) were top. Materials (XLB -0.36%) was the only sector to lose for the day.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
A positive expectation breaker is always welcome in the Daily Market Update. Despite yesterday's candle showing some bearish indication, today the Nasdaq proved it wasn't ready to move back down. A new all-time high adds to the string of higher highs and higher lows we've had all week.
The index closed with a +1.23% gain. Volume was lower than the previous day but continues to be higher than the 50d moving average volume. The candle has a closing range of 100% created by a spike in prices in the last 10 minutes of trading. The short lower wick was created in a 30 minute window of volatility in the morning. There were more than two advancing stocks for every declining stock.
The S&P 500 (SPX) and Dow Jones Industrial (DJI) advanced +1.09% and +1.08%. The Russell 2000 (RUT) outperformed the other indexes with a +1.98% gain and a Marubozu White candle, represented by no lower or upper wick. It's 100% green body from open to close.
The VIX continued to retreat with a -4.98% decline as volatility returns to lower levels.
Financials (XLF +2.22%) and Technology (XLK +1.60%) were top sectors for the day. Energy (XLE +1.10%) also outperformed the S&P 500. That's significant since usually when Energy performs well, the rest of the market also performs well. Materials (XLB -0.36%) was the only sector to lose for the day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) advanced +0.39% for the day and continues to trend upward from the January 5 low. The US 30y treasury bond yield rose slightly while the US 10y and US 2y declined. High Yield Corporate Bond (HYG) prices rose for another day.
Silver (SILVER) and Gold (GOLD) both declined about 2% for the day. Crude Oil (CRUDEOIL1!) futures continued to climb. Timber (WOOD) remained even. Copper (COPPER1!) declined while Aluminum (ALI1!) advanced.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio declined to 0.587. 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 and the NAAIM exposure index both remain at reasonably cautious levels.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Apple (AAPL) and Amazon (AMZN) advanced for the day while Microsoft (MSFT) and Alphabet (GOOGL) declined. These big four mega-caps are all trading above key moving average lines.
PayPal (PYPL) led the mega-caps with a +7.36% gain after beating earnings and revenue expectations in their earnings report. Visa (V), Bank of America (BAC) and Mastercard (M) were also at the top of the mega-cap list, leading the Financials sector for the day.
Among growth stocks, Digital Turbine (APPS) led with a +19.79% gain after crushing their earnings expectations. Chinese fintech company UP Fintech (TIGR) added another day of huge gains with a 15.25% advance.
After hours Pinterest (PINS) was up 9.73% upon beating earnings expectations. SNAP (SNAP) did not fare as well and was down -7.44%. Peloton (PTON) was down -8.14% despite beating expectations. They warned off continued delays in delivery due to a growing backlog.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
More employment data will be released before market open on Friday. In the afternoon, commodities trading data will be released. Speculative positions on Silver futures might be interesting.
The end of the busy earnings week will bring some reports before market open, but none that are followed by this Daily Market Update. However, check the stocks in your portfolio to make sure you aren't surprised by earnings.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The five-day trend line points to a +1.45% gain on Friday. The one-day trend is a bit under that line and points to a +0.73% gain.
The long-term trend line from the 10/30 bottom points to a small -0.32% pullback.
If there is further downside, the 21d EMA line offers an area of support and is -3.37% below Thursday'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
The positive expectation breaker was another sign that this market has room to grow. Liquidity is high in the market with above average volume. Investors continue to lack other places to move money, with Treasury Bond yields remaining low and gaining strength against other currencies.
Expectation is for higher tomorrow, but never take that as a prediction. Always manage risk and protect the value you've worked so hard to build.
Stay healthy and take care!
