Daily Market Update for 2/9
Summary: Markets closed sharply higher on Wednesday, led by big tech and broad gains across almost all segments.
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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Wednesday, February 9, 2022
Facts: +2.08%, Volume higher, Closing Range: 100%, Body: 76% Green
Good: Closing range, high volume, advance/decline ratio
Bad: Gap may need filled
Highs/Lows: Higher high, Higher low
Candle: Gap-up at open, small lower wick, no upper wick
Advance/Decline: 2.18, more than two advancing stocks for every declining stock
Indexes: SPX (+1.45%), DJI (+0.86%), RUT (+1.86%), VIX (-6.90%)
Sector List: Communications (XLC +2.82%) and Real Estate (XLRE +2.42%) at the top. Utilities (XLU +0.44%) and Consumer Staples (XLP +0.03%) at the bottom.
Expectation: Sideways or Higher
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Market Overview
Markets closed sharply higher on Wednesday, led by big tech and broad gains across almost all segments.
The Nasdaq rose +2.08% after a gap-up at open. The strength of the move was supported by higher volume and broad gains across stocks in the index. More than two stocks advanced for every declining stock. A short dip after the open created a lower wick but did not close the gap from yesterday's high. The 76% green body and 100% closing range left behind no upper wick.
The Russell 2000 (RUT) did very well for a third day, gaining +1.86%. The S&P 500 (SPX) rose +1.45%, helped by gains from all sectors. The Dow Jones Industrial Average (DJI) rose +0.86%. The VIX Volatility Index declined by -6.90%.
All eleven S&P 500 sectors gained for the day. Communications (XLC +2.82%) and Real Estate (XLRE +2.42%) were the top sectors. Utilities (XLU +0.44%) and Consumer Staples (XLP +0.03%) were at the bottom.
Crude Oil Inventories were lower than expected. The afternoon's 10y note auction showed strong demand, contributing to a dip in yields.
The US Dollar index (DXY) declined -by 0.07%. The US 30y and 10y Treasury yields declined while the 2y Treasury yield rose. High Yield (HYG) Corporate Bond prices increased sharply. Investment Grade (LQD) Corporate Bond prices also rose. Timber, Copper, and Aluminum Futures all increased.
The put/call ratio (PCCE) declined to 0.664. The CNN Fear & Greed index moved toward Neutral but remains in the Fear range.
Of the big six mega-caps, only Amazon (AMZN) declined. The -0.14% pullback came after several days of gains and resistance at the 50d MA. Meta (FB) reversed from its post-earning losses, rising +5.37% today and helping the Communications sector outperform. Microsoft (MSFT) moved above its 21d EMA with a +2.18% advance today. Alphabet (GOOG) rose +1.57% to close back above its 50d MA.
Nvidia (NVDA) topped the mega-cap list, gaining +6.36%. The company ended its pursuit toward acquiring ARM, stating regulatory hurdles as the reason. Exxon Mobil (XOM) was at the bottom of the list, declining -by 1.57%.
All stocks in the Daily Update Growth List gained today. Enphase (ENPH) rose by +12.03% to top the list. The company beat on earnings and revenue and provided a strong outlook for this year. Zynga (ZNGA) was at the bottom of the list but still advanced by +0.33%.
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Looking ahead
The most anticipated economic news this week comes in the morning. It is the Consumer Price Index data for January which will give a read on inflation. The numbers are due at 8:30a. At the same time, we will get the weekly Initial Jobless Claims data.
The earnings season continues to outperform analyst expectations. Tomorrow will bring earnings from Coca-Cola (KO), PepsiCo (PEP), Unilever (UL), Datadog (DDOG), DexCom (DXCM), Cloudflare (NET), Twitter (TWTR), Zillow (Z), InMode (INMD), and UpWork (UPWK) among others. Check your portfolio for earnings events as the list is long.
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Trends, Support, and Resistance
The gap-up for the Nasdaq started above the 21d EMA and the index continued to rise before hitting the 14,500 support/resistance area.
If the one-day trend continues, expect a +0.72% advance for Thursday.
The five-day trend line and trend line from the 1/24 low point to a -0.32% decline.
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Wrap-up
We are getting the types of signal that we like to see before a strong uptrend, but much will depend on what the inflation data tells the market tomorrow morning.
Today's broad gains on higher volume are constructive and represent investors' reactions over a stronger-than-expected earnings season.
We may see a lateral move tomorrow or a dip to fill the gap created this morning. A more severe decline would come if inflation data surprises high. The expectation based on the chart is Sideways or Higher.
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.
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Wednesday, February 9, 2022
Facts: +2.08%, Volume higher, Closing Range: 100%, Body: 76% Green
Good: Closing range, high volume, advance/decline ratio
Bad: Gap may need filled
Highs/Lows: Higher high, Higher low
Candle: Gap-up at open, small lower wick, no upper wick
Advance/Decline: 2.18, more than two advancing stocks for every declining stock
Indexes: SPX (+1.45%), DJI (+0.86%), RUT (+1.86%), VIX (-6.90%)
Sector List: Communications (XLC +2.82%) and Real Estate (XLRE +2.42%) at the top. Utilities (XLU +0.44%) and Consumer Staples (XLP +0.03%) at the bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Markets closed sharply higher on Wednesday, led by big tech and broad gains across almost all segments.
The Nasdaq rose +2.08% after a gap-up at open. The strength of the move was supported by higher volume and broad gains across stocks in the index. More than two stocks advanced for every declining stock. A short dip after the open created a lower wick but did not close the gap from yesterday's high. The 76% green body and 100% closing range left behind no upper wick.
The Russell 2000 (RUT) did very well for a third day, gaining +1.86%. The S&P 500 (SPX) rose +1.45%, helped by gains from all sectors. The Dow Jones Industrial Average (DJI) rose +0.86%. The VIX Volatility Index declined by -6.90%.
All eleven S&P 500 sectors gained for the day. Communications (XLC +2.82%) and Real Estate (XLRE +2.42%) were the top sectors. Utilities (XLU +0.44%) and Consumer Staples (XLP +0.03%) were at the bottom.
Crude Oil Inventories were lower than expected. The afternoon's 10y note auction showed strong demand, contributing to a dip in yields.
The US Dollar index (DXY) declined -by 0.07%. The US 30y and 10y Treasury yields declined while the 2y Treasury yield rose. High Yield (HYG) Corporate Bond prices increased sharply. Investment Grade (LQD) Corporate Bond prices also rose. Timber, Copper, and Aluminum Futures all increased.
The put/call ratio (PCCE) declined to 0.664. The CNN Fear & Greed index moved toward Neutral but remains in the Fear range.
Of the big six mega-caps, only Amazon (AMZN) declined. The -0.14% pullback came after several days of gains and resistance at the 50d MA. Meta (FB) reversed from its post-earning losses, rising +5.37% today and helping the Communications sector outperform. Microsoft (MSFT) moved above its 21d EMA with a +2.18% advance today. Alphabet (GOOG) rose +1.57% to close back above its 50d MA.
Nvidia (NVDA) topped the mega-cap list, gaining +6.36%. The company ended its pursuit toward acquiring ARM, stating regulatory hurdles as the reason. Exxon Mobil (XOM) was at the bottom of the list, declining -by 1.57%.
All stocks in the Daily Update Growth List gained today. Enphase (ENPH) rose by +12.03% to top the list. The company beat on earnings and revenue and provided a strong outlook for this year. Zynga (ZNGA) was at the bottom of the list but still advanced by +0.33%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
The most anticipated economic news this week comes in the morning. It is the Consumer Price Index data for January which will give a read on inflation. The numbers are due at 8:30a. At the same time, we will get the weekly Initial Jobless Claims data.
The earnings season continues to outperform analyst expectations. Tomorrow will bring earnings from Coca-Cola (KO), PepsiCo (PEP), Unilever (UL), Datadog (DDOG), DexCom (DXCM), Cloudflare (NET), Twitter (TWTR), Zillow (Z), InMode (INMD), and UpWork (UPWK) among others. Check your portfolio for earnings events as the list is long.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The gap-up for the Nasdaq started above the 21d EMA and the index continued to rise before hitting the 14,500 support/resistance area.
If the one-day trend continues, expect a +0.72% advance for Thursday.
The five-day trend line and trend line from the 1/24 low point to a -0.32% decline.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
We are getting the types of signal that we like to see before a strong uptrend, but much will depend on what the inflation data tells the market tomorrow morning.
Today's broad gains on higher volume are constructive and represent investors' reactions over a stronger-than-expected earnings season.
We may see a lateral move tomorrow or a dip to fill the gap created this morning. A more severe decline would come if inflation data surprises high. The expectation based on the chart is Sideways or Higher.
Stay healthy and trade safe!
Website: drewby.com
Twitter: twitter.com/drewrobbins
All ideas are for information purposes only. I may or may not invest in the stocks discussed. Before investing in any stock, do your research and trade using your rules.
Twitter: twitter.com/drewrobbins
All ideas are for information purposes only. I may or may not invest in the stocks discussed. Before investing in any stock, do your research and trade using your rules.
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