Daily Market Update for 2/16
Summary: Indexes took a breather from the big gains on Tuesday while the market awaited the Fed meeting minutes and the world contended with the shifting situation in Ukraine. Investors rotated profits in mid-caps into small-cap and large-cap bets today, focused on value and cyclical stocks.
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 16, 2022
Facts: -0.11%, Volume lower, Closing Range: 83%, Body: 37% Green
Good: Higher high, good closing range, advance/decline above 1.0
Bad: Lower low
Highs/Lows: Higher high, Lower low
Candle: Large lower wick underneath a medium green size body. Small upper wick.
Advance/Decline: 1.12, more advancing than declining stocks
Indexes: SPX (+0.09%), DJI (-0.16%), RUT (+0.14%), VIX (-5.49%)
Sector List: Energy (XLE +0.81%) and Materials (XLB +0.73%) at the top. Technology (XLK -0.10%) and Communications (XLC -0.70%) at the bottom.
Expectation: Sideways or Higher
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Market Overview
Indexes took a breather from the big gains on Tuesday while the market awaited the Fed meeting minutes and the world contended with the shifting situation in Ukraine. Investors rotated profits in mid-caps into small-cap and large-cap bets today, focused on value and cyclical stocks.
The Nasdaq ended the day with a -0.11% decline. Volume was lower than the previous day. The candle has a 37% green body in the upper half resulting in an 83% closing range. The longer lower wick formed right after opening and the index didn't recover until mid-afternoon when the Fed meeting minutes were released. There were more advancing than declining stocks.
The Russell 2000 (RUT) outperformed for the day, gaining by +0.14%. The S&P 500 (SPX) advanced +0.09% while the Dow Jones Industrial Average (DJI) declined -0.16%. The VIX Volatility Index dropped -by 5.49%.
Energy (XLE +0.81%) and Materials (XLB +0.73%) were the top sectors. Only two of the eleven S&P 500 sectors declined, Technology (XLK -0.10%) and Communications (XLC -0.70%).
Economic news was positive, depending on your point of view. Retail Sales for January exceeded the forecast. Core Retail Sales climbed 3.3% month-over-month. The expectation was 0.8% growth in sales. On one hand, it's good to see consumer spending continue but on the other hand, it could cause further price increases as demand continues to outpace supply.
Industrial Production for January was also higher than expected. It grew by 1.4% compared to a 0.4% forecast.
The Fed meeting minutes to January did not contain any surprises. The Fed will begin raising interest rates and reducing the balance sheet in March.
The US Dollar index (DXY) declined by -0.21%. US 30y, 10y, and 2y Treasury Yields all declined and the gap further widened as investors become more comfortable with the economy in the near term. High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices both increased.
The put/call ratio (PCCE) rose to 0.893. The CNN Fear & Greed index moved back toward Neutral but remained in the Fear range.
Three of the big six mega-caps advanced. Amazon (AMZN) had the biggest jump with a +1.02% gain. Meta (FB) fell another -2.02%. We may need to replace Meta with Nvidia, which now has a higher market capitalization.
Novo Nordisk (NVO) had the largest gain in the mega-cap list, rising +1.79% today. Meta was at the bottom of the mega-cap list.
Only a small number of the Daily Update Growth List stocks gained for the day. DataDog (DDOG) was at the top of the list with a +2.92% gain. Fiverr (FVRR) had the most significant loss, dropping by -10.69% and landing at the bottom of the growth list.
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Looking ahead
Building Permits and Housing Starts data for January will be available in the morning. We'll also get the Philadelphia Fed Manufacturing Index for February. The weekly Initial Jobless Claims come tomorrow as well.
Earnings reports for tomorrow will include Walmart (WMT), Palantir (PLTR), Roku (ROKU), and Redfin (RDFN).
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Trends, Support, and Resistance
The Nasdaq opened lower but then recovered in the afternoon after investors found no surprises in the Fed's meeting minutes.
The one-day trend line meets up with the trend line from the 1/24 low at a +1.15% gain for Thursday.
The five-day trend line results in a -1.97% decline.
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Wrap-up
We thankfully had no surprises in the Fed meeting minutes for January. That provided some solid ground for investors to stand on. However, the situation in Ukraine continues to shift as mixed signals come from Russia on whether they are reducing troops on the border.
The outside day today keeps yesterday's gains intact, and with the high closing range, the expectation for tomorrow 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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wednesday, February 16, 2022
Facts: -0.11%, Volume lower, Closing Range: 83%, Body: 37% Green
Good: Higher high, good closing range, advance/decline above 1.0
Bad: Lower low
Highs/Lows: Higher high, Lower low
Candle: Large lower wick underneath a medium green size body. Small upper wick.
Advance/Decline: 1.12, more advancing than declining stocks
Indexes: SPX (+0.09%), DJI (-0.16%), RUT (+0.14%), VIX (-5.49%)
Sector List: Energy (XLE +0.81%) and Materials (XLB +0.73%) at the top. Technology (XLK -0.10%) and Communications (XLC -0.70%) at the bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Indexes took a breather from the big gains on Tuesday while the market awaited the Fed meeting minutes and the world contended with the shifting situation in Ukraine. Investors rotated profits in mid-caps into small-cap and large-cap bets today, focused on value and cyclical stocks.
The Nasdaq ended the day with a -0.11% decline. Volume was lower than the previous day. The candle has a 37% green body in the upper half resulting in an 83% closing range. The longer lower wick formed right after opening and the index didn't recover until mid-afternoon when the Fed meeting minutes were released. There were more advancing than declining stocks.
The Russell 2000 (RUT) outperformed for the day, gaining by +0.14%. The S&P 500 (SPX) advanced +0.09% while the Dow Jones Industrial Average (DJI) declined -0.16%. The VIX Volatility Index dropped -by 5.49%.
Energy (XLE +0.81%) and Materials (XLB +0.73%) were the top sectors. Only two of the eleven S&P 500 sectors declined, Technology (XLK -0.10%) and Communications (XLC -0.70%).
Economic news was positive, depending on your point of view. Retail Sales for January exceeded the forecast. Core Retail Sales climbed 3.3% month-over-month. The expectation was 0.8% growth in sales. On one hand, it's good to see consumer spending continue but on the other hand, it could cause further price increases as demand continues to outpace supply.
Industrial Production for January was also higher than expected. It grew by 1.4% compared to a 0.4% forecast.
The Fed meeting minutes to January did not contain any surprises. The Fed will begin raising interest rates and reducing the balance sheet in March.
The US Dollar index (DXY) declined by -0.21%. US 30y, 10y, and 2y Treasury Yields all declined and the gap further widened as investors become more comfortable with the economy in the near term. High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices both increased.
The put/call ratio (PCCE) rose to 0.893. The CNN Fear & Greed index moved back toward Neutral but remained in the Fear range.
Three of the big six mega-caps advanced. Amazon (AMZN) had the biggest jump with a +1.02% gain. Meta (FB) fell another -2.02%. We may need to replace Meta with Nvidia, which now has a higher market capitalization.
Novo Nordisk (NVO) had the largest gain in the mega-cap list, rising +1.79% today. Meta was at the bottom of the mega-cap list.
Only a small number of the Daily Update Growth List stocks gained for the day. DataDog (DDOG) was at the top of the list with a +2.92% gain. Fiverr (FVRR) had the most significant loss, dropping by -10.69% and landing at the bottom of the growth list.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Building Permits and Housing Starts data for January will be available in the morning. We'll also get the Philadelphia Fed Manufacturing Index for February. The weekly Initial Jobless Claims come tomorrow as well.
Earnings reports for tomorrow will include Walmart (WMT), Palantir (PLTR), Roku (ROKU), and Redfin (RDFN).
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq opened lower but then recovered in the afternoon after investors found no surprises in the Fed's meeting minutes.
The one-day trend line meets up with the trend line from the 1/24 low at a +1.15% gain for Thursday.
The five-day trend line results in a -1.97% decline.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
We thankfully had no surprises in the Fed meeting minutes for January. That provided some solid ground for investors to stand on. However, the situation in Ukraine continues to shift as mixed signals come from Russia on whether they are reducing troops on the border.
The outside day today keeps yesterday's gains intact, and with the high closing range, the expectation for tomorrow is Sideways or Higher.
Stay healthy and trade safe!
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