Daily Market Update for 2/15

2022년 2월 16일

Summary: Markets bounced back on the good news that Russia would reduce forces at the Ukraine border. The result was broad gains across the market and upward jumps in the major indexes.

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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Tuesday, February 15, 2022

Facts: +2.53%, Volume higher, Closing Range: 98%, Body: 86% Green
Good: Higher volume upward move with breadth gains (A/D ratio), closing range
Bad: Nothing
Highs/Lows: Higher high, Higher low
Candle: Mostly green body, small lower wick, gap up at open
Advance/Decline: 3.32, more than three advancing for every declining stock
Indexes: SPX (+1.58%), DJI (+1.22%), RUT (+2.75%), VIX (-9.28%)
Sector List: Technology (XLK +2.63%) and Consumer Discretionary (XLY +2.24%) at the top. Utilities (XLU -0.47%) and Energy (XLE -1.05%) at the bottom.
Expectation: Sideways or Higher

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Market Overview

Markets bounced back on the good news that Russia would reduce forces at the Ukraine border. The result was broad gains across the market and upward jumps in the major indexes.

The Nasdaq gapped up at the open and closed the day with a +2.53% gain. Volume was slightly higher than the previous day but lower than the 50-day average. The candle has an 86% green body and a 98% closing range. A small lower wick formed at mid-day before the index rallied into a close. There were more than three stocks that gained for every stock that declined.

Small-caps outperformed with the Russell 2000 (RUT) gaining +2.75%. The S&P 500 (SPX) advanced +1.58% and the Dow Jones Industrial Average (DJI) gained +1.22%. The VIX Volatility Index (VIX) fell by -9.32% but remained elevated.

Nine of the eleven S&P 500 sectors rose for the day. Technology (XLK +2.63%) and Consumer Discretionary (XLY +2.24%) were the top two sectors. Utilities (XLU -0.47%) and Energy (XLE -1.05%) were the only two to decline. Energy fell as the crisis eases in the Ukraine and pressures on oil prices alleviate.

Economic data was not great for today. The Producer Price Index numbers for January were higher than expected, signaling further inflation coming for consumers. The NY Empire State Manufacturing Index for February was lower than expected, printing 3.10 against the forecast of 12.15.

The US Dollar index (DXY) declined -by 0.32%. 30y and 10y US Treasury Yields advanced while the 2y yield declined, putting at least a pause on the flattening yield curve. High Yield (HYG) Corporate Bond prices improved while Investment Grade (LQD) Corporate Bond prices declined.

Silver and Gold fell sharply as investors moved back to riskier assets. Crude Oil Futures declined on the Ukraine news.

The put/call ratio declined to 0.759. The CNN Fear & Greed index is in the Fear range.

All big six mega-caps advanced. Apple (AAPL) gained +2.32% to close above its 21d EMA and 50d MA lines. Tesla (TSLA) topped them all with a +5.33% gain.

Nvidia (NVDA) topped the mega-cap list, advancing +9.18% today. The three mega-cap oil companies were at the bottom of the list. Exxon Mobile (XOM), Shell (SHEL), and Chevron (CVX) all lost more than 1%.

Sea Limited (SE) bounced back from yesterday's huge loss, gaining +15.78% today and topping the Daily Update Growth List. Investors sold the stock yesterday on news that one of its popular games would be banned in India. They came back today after giving it a second thought and seeing Cathie Wood's Ark Investment firm buy into the dip. There was only one loser, Zynga (ZNGA), on the growth list. The company declined -by 0.11%.

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Looking ahead

Tomorrow morning will bring Retail Sales data for January. Sales dipped more than expected in December and are expected to recover last month. We will also get Industrial Production and Business Inventories for January, both indicators for the economy. Weekly Crude Oil Inventories numbers will be available after the market opens.

Tech giants Nvidia (NVDA) and Cisco (CSCO) report earnings tomorrow evening. Applied Materials (AMAT), Shopify (SHOP), Synopsys (SNPS), Hilton (HLT), Kraft Heinz (KHC), Trade Desk (TTD), DoorDash (DASH), Hyatt (H), Quantamscape (QS), Crocs (CROX), and Fisker (FSR) are among others reporting tomorrow.

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Trends, Support, and Resistance

The Nasdaq gapped up and gained throughout the day, closing below the 21d EMA.

If the index returns to the trend line from the 1/24 low, it would mean a +1.18% gain for tomorrow.

The one-day trend line points to a +0.50% advance.

The five-day trend line ends with a -3.12% decline.

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Wrap-up

With Russia removing some troops from Ukraine, a conflict seems less likely. That helped ease oil prices and worries about even more inflation on top of already high inflation. The gap between long-term and short-term yields widened as the short-term outlook turned slightly better.

There's still a lot of reason to expect volatility over the next few months. The dynamics looked good today, but there are unknowns with the Fed that won't start to be resolved until next month.

For tomorrow, the expectation is Higher or Sideways.

Stay healthy and trade safe!