Daily Market Update for 3/9
Trend lines drawn from the 2/16 ATH (16d), 3/3 (5d) and today 3/9 (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 9, 2021
Facts: +3.69%, Volume higher, Closing range: 71%, Body: 56%
Good: Good gain on higher volume, higher high, higher low, above 13k
Bad: Selling in last hour of day
Highs/Lows: Higher high, higher low
Candle: Slightly longer upper wick with a thick green body
Advance/Decline: Two advancing stocks for every declining stock
Indexes: SPX (+1.42%), DJI (+0.10%), RUT (+1.91%), VIX (-5.65%)
Sectors: Consumer Discretionary (XLY +3.78%) and Technology (XLK +3.40%) were the top sectors. Financials (XLF -0.91%) and Energy (XLE -1.75%) were bottom.
Expectation: Sideways or Higher
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Market Overview
The rotation reverses. Today saw a reversal of the past several days rotation as money flooded back into big tech, consumer discretionary, and growth stocks. Treasury bond yields seemed to stabilize a bit allowing investors to turn their eyes on the stimulus and the impact it will have on performance in the near term.
The Nasdaq closed with +3.69% gain on higher volume. The closing range of 72% came after some selling in the final hour of trading, forming the upper wick. The green body covers 56% of the candle and represents a day that was dominated by the bulls. There were two advancing stocks for every declining stock.
All major indexes had gains for the day with the Dow Jones Industrial average (DJI) having the smallest gain in contrast to the past several days. The S&P 500 (SPX) gained +1.42% while the Russell 2000 gained +1.91%.
The VIX volatility index declined -5.65%.
Consumer Discretionary (XLY +3.78%) and Technology (XLK +3.40%) were the top sectors as investors rushed in for buying opportunities. Financials (XLF -0.91%) and Energy (XLE -1.75%) were bottom.
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Economic Indicators
The US Dollar (DXY) pulled back -0.38% after several days of gains.
Yields on the US 30y, 10y and 2y treasury bonds all declined for the day. That was a welcome change for investors nervous about the impact of higher yields on big tech and growth stocks.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both gained after several days of declines.
Silver (SILVER) and Gold (GOLD) both advanced for the day. Crude Oil (CRUDEOIL1!) declined. Timber (WOOD) advanced. Copper (COPPER1!) and Aluminum (ALI1!) declined.
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Investor Sentiment
The put/call ratio rose to 0.661. 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 neutral.
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Market Leaders
All four big mega-caps advanced for the day. Apple (AAPL) and Amazon (AMZN) had the biggest gains with +4.06% and 3.76% advances. Microsoft (MSFT) gained +2.81% and Alphabet (GOOGL) gained +1.64%. Microsoft and Alphabet closed back above their 21d EMA. Apple and Amazon remain below the 21d EMA and 50d MA lines.
Tesla (TSLA) made a huge upside reversal with a 19.65% gain. Nvdia (NVDA), ASML Holding (ASML) and PayPal (PYPL) all gained more than 6%. Walt Disney (DIS) dropped -3.66% after a big gain the previous day. Bank of America (BAC) and Exxon Mobil (XOM) led their respective sectors lower with declines of over 2% each.
Sixteen of the growth stocks tracked for the daily update had gains over 10%. Another eighteen had gains between 5% and 10%. Looking at the extended list of growth stocks, the number of stocks with big gains just keeps going. Only Dr Horton (DHI) had a loss, but that was after two days of gains despite the market dipping. Ehang Holdings (EH) was the big winner with a 31% gain. FUTU Holdings (FUTU) and UP Fintech (TIGR) were also Chinese stocks at the top of the growth stock list. Grow Generation (GRWG) had an 18% gain.
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Looking ahead
There are two significant economic events for Wednesday. First, I had anticipated the stimulus vote being today, but Nancy Pelosi announced shortly after my update that it would likely happen Wednesday.
The second big event will be the 10y note auction by the US Treasury. Today's 3y note auction had an average response, alleviating some fears by investors.
Another look at inflation will come on Wednesday with the release of consumer price index data in the morning. Crude Oil Inventories data will come after the market opens.
Oracle (ORCL) will report on Wednesday. Joining Oracle, will be Campbell Soup (CPB), Cloudera (CLDR) and Sumo Logic (SUMO).
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Trends, Support and Resistance
The Nasdaq was able to get back above 13,000 today. It paused slightly in that area before moving higher, showing it's still both a support and resistance line.
If today's rebound continues, the one-day trend line points to a +1.92% gain for tomorrow that would take the index back above the 21d EMA. Another higher volume gain that restores the index above the 21d EMA would be a confidence booster.
The five-day trend line points to a -1.75% loss, back below the 13,000 area. The trend line from the 2/16 ATH is pointing to a -2.94% decline for tomorrow.
I'll remove the head and shoulders pattern from the discussion since we moved back above the neckline. If we decline again, then we'll revisit the levels in the pattern.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It was a positive expectation breaker today. Monday's selling seemed the index wanted to go lower, but the market does what it wants to do. The rotation back into big tech obviously helps the tech-heavy Nasdaq to have huge gains.
Remember that rotations swing back and forth before the right level is discovered in the market. There's plenty of evidence of panic buying in today's bullish results. That panic buying can easily turn into profit taking, especially as these stocks with massive gains hit overhead supply and investors take the chance to get out of what was a losing position.
So proceed with caution. The expectation tomorrow is set for sideways or higher. Keep an eye on your favorite stocks and see how they perform over the next few days before overcommitting.
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 9, 2021
Facts: +3.69%, Volume higher, Closing range: 71%, Body: 56%
Good: Good gain on higher volume, higher high, higher low, above 13k
Bad: Selling in last hour of day
Highs/Lows: Higher high, higher low
Candle: Slightly longer upper wick with a thick green body
Advance/Decline: Two advancing stocks for every declining stock
Indexes: SPX (+1.42%), DJI (+0.10%), RUT (+1.91%), VIX (-5.65%)
Sectors: Consumer Discretionary (XLY +3.78%) and Technology (XLK +3.40%) were the top sectors. Financials (XLF -0.91%) and Energy (XLE -1.75%) were bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The rotation reverses. Today saw a reversal of the past several days rotation as money flooded back into big tech, consumer discretionary, and growth stocks. Treasury bond yields seemed to stabilize a bit allowing investors to turn their eyes on the stimulus and the impact it will have on performance in the near term.
The Nasdaq closed with +3.69% gain on higher volume. The closing range of 72% came after some selling in the final hour of trading, forming the upper wick. The green body covers 56% of the candle and represents a day that was dominated by the bulls. There were two advancing stocks for every declining stock.
All major indexes had gains for the day with the Dow Jones Industrial average (DJI) having the smallest gain in contrast to the past several days. The S&P 500 (SPX) gained +1.42% while the Russell 2000 gained +1.91%.
The VIX volatility index declined -5.65%.
Consumer Discretionary (XLY +3.78%) and Technology (XLK +3.40%) were the top sectors as investors rushed in for buying opportunities. Financials (XLF -0.91%) and Energy (XLE -1.75%) were bottom.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) pulled back -0.38% after several days of gains.
Yields on the US 30y, 10y and 2y treasury bonds all declined for the day. That was a welcome change for investors nervous about the impact of higher yields on big tech and growth stocks.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both gained after several days of declines.
Silver (SILVER) and Gold (GOLD) both advanced for the day. 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 rose to 0.661. 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 neutral.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four big mega-caps advanced for the day. Apple (AAPL) and Amazon (AMZN) had the biggest gains with +4.06% and 3.76% advances. Microsoft (MSFT) gained +2.81% and Alphabet (GOOGL) gained +1.64%. Microsoft and Alphabet closed back above their 21d EMA. Apple and Amazon remain below the 21d EMA and 50d MA lines.
Tesla (TSLA) made a huge upside reversal with a 19.65% gain. Nvdia (NVDA), ASML Holding (ASML) and PayPal (PYPL) all gained more than 6%. Walt Disney (DIS) dropped -3.66% after a big gain the previous day. Bank of America (BAC) and Exxon Mobil (XOM) led their respective sectors lower with declines of over 2% each.
Sixteen of the growth stocks tracked for the daily update had gains over 10%. Another eighteen had gains between 5% and 10%. Looking at the extended list of growth stocks, the number of stocks with big gains just keeps going. Only Dr Horton (DHI) had a loss, but that was after two days of gains despite the market dipping. Ehang Holdings (EH) was the big winner with a 31% gain. FUTU Holdings (FUTU) and UP Fintech (TIGR) were also Chinese stocks at the top of the growth stock list. Grow Generation (GRWG) had an 18% gain.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
There are two significant economic events for Wednesday. First, I had anticipated the stimulus vote being today, but Nancy Pelosi announced shortly after my update that it would likely happen Wednesday.
The second big event will be the 10y note auction by the US Treasury. Today's 3y note auction had an average response, alleviating some fears by investors.
Another look at inflation will come on Wednesday with the release of consumer price index data in the morning. Crude Oil Inventories data will come after the market opens.
Oracle (ORCL) will report on Wednesday. Joining Oracle, will be Campbell Soup (CPB), Cloudera (CLDR) and Sumo Logic (SUMO).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The Nasdaq was able to get back above 13,000 today. It paused slightly in that area before moving higher, showing it's still both a support and resistance line.
If today's rebound continues, the one-day trend line points to a +1.92% gain for tomorrow that would take the index back above the 21d EMA. Another higher volume gain that restores the index above the 21d EMA would be a confidence booster.
The five-day trend line points to a -1.75% loss, back below the 13,000 area. The trend line from the 2/16 ATH is pointing to a -2.94% decline for tomorrow.
I'll remove the head and shoulders pattern from the discussion since we moved back above the neckline. If we decline again, then we'll revisit the levels in the pattern.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
It was a positive expectation breaker today. Monday's selling seemed the index wanted to go lower, but the market does what it wants to do. The rotation back into big tech obviously helps the tech-heavy Nasdaq to have huge gains.
Remember that rotations swing back and forth before the right level is discovered in the market. There's plenty of evidence of panic buying in today's bullish results. That panic buying can easily turn into profit taking, especially as these stocks with massive gains hit overhead supply and investors take the chance to get out of what was a losing position.
So proceed with caution. The expectation tomorrow is set for sideways or higher. Keep an eye on your favorite stocks and see how they perform over the next few days before overcommitting.
Stay healthy and trade safe!
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