Daily Market Update for 12/10
Trend lines drawn from the 10/30 bottom (29d), 12/4 (5d), the 12/9 pivot (2d) and today 12/10 (1d).
If you have ideas to make the daily update better, please let me know in the comments.
I do occasionally have some errors or typos and will correct them in my blog or in the comments on TradingView. I do not have an editor and do this in my free time.
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Thursday, December 10, 2020
Do you remember the days
We built these paper mountains?
Facts: +0.54%, Volume lower, Closing range: 88%, Body: 73%
Good: Held support near 12,250, closed near high
Bad: Gap down at open, then choppy intraday
Highs/Lows: Lower high, Lower low
Candle: Thick green body, high closing range
Advance/Decline: 1.59, three advancing to two declining
Sectors: Energy (XLE +3.07%) was top. Industrials (XLI -0.95%) was bottom.
Expectation: Sideways or Higher
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Market Overview
The Nasdaq opened the day with a gap down after disappointing employment data released in the morning. The index tested the support area around 12,250, but refused to go lower. The bulls ruled the morning as the index rose to the intraday high and then going back and forth in a choppy afternoon but closing near the high. The Nasdaq finished the day with a +0.54% gain on lower volume. The closing range was 88% with a 73% body. There were three advancing stocks for every two declining stocks.
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Indexes and Sectors
The S&P 500 (SPX -0.13%) and Dow Jones Industrial average (DJI -0.23%) declined for the day. The Russell 2000 (RUT +1.08%) outperformed the other indexes and finished the day with a gain.
Energy (XLE +3.07%) led the day. Financials (XLF +0.17%), Technology (XLK +0.14%) and Communications (XLC +0.06%) were the only other sectors with gains. Industrials (XLI -0.95%) was the worst performing sector of the day.
The VIX volatility index gained +1.12%.
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Market Indicators
US30Y and US10Y bond yields dropped for the day and spreads widened slightly between US10Y and US02Y bonds. The US02Y continues the downward trend from a 11/12 pivot.
Corporate Bond yields fell for the day. The spread tightened slightly between corporate and short-term treasury bonds.
The US dollar (DXY -0.29%) dropped for the day.
Silver (SILVER +0.04%) and Gold (GOLD -0.15%) were relatively even compared to the previous days drop. Crude Oil (CRUDEOIL1! +2.96%) spiked as vaccines began rolling out globally. Timber (WOOD +0.29%) gained for the day. Copper (COPPER1! +1.94%) and Aluminum (ALI1! +0.81%) also had gains.
The put/call ratio dropped back to 0.570 showing a little more bullish optimism than yesterday. 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.
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Market Leaders
Apple (AAPL +1.2%) was the only of the four biggest mega-caps to end the day with gains. Amazon (AMZN -0.09%) and Microsoft (MSFT -0.6%) had a second day of losses and closed below the 21d EMA and 50d MA lines. Alphabet (GOOGL -0.57%) continues to slide from 12/3 high and closed right at its 21d EMA.
Not a lot of mega-caps had gains for the day. Tesla (TSLA +3.74%), PayPal (PYPL +2.15%) and Netflix (NFLX +1.52%) were among the top mega-cap gainers. AT&T (T -2.45%) pulled back after two days of big gains.
Many growth stocks reversed yesterday's losses. Cloudflare (NET +8.72%) was a top performer. Twitter (TWTR +8.43%) possibly benefited from news the US government would sue to break up Facebook (FB -0.29%). Restoration Hardware (RH -3.20%) lost on the day after beating expectations in their earnings release.
Adobe (ADBE -1.42%) was down after hours despite beating expectations and providing a stronger-than-expected outlook. It was a similar story for Lululemon (LULU +1.52%), Broadcom (AVGO -1.48%), Oracle (ORCL -0.42%), Costco (COST -0.40%).
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Looking ahead
Tomorrow will bring Producer Price Index data for November before the market opens. New consumer sentiment data will be released in the morning after the market opens.
There are no notable earnings announcements for the daily market update.
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Trends, Support and Resistance
I've added a trend line from yesterday's high to mark a pivot.
The trend line from the 10/30 bottom points to a +1.96% which would bring the index back to new all-time highs. The five-day trend and one-day trend are pointing to a sideways move for a +0.17% gain.
The two day trend line from the 12/9 pivot is pointing to a -1.36% loss which would put the index right at the 12,250 support area that has developed in December. The index would still be above the 21d EMA at that point.
If the index passes through the 21d EMA, then the next support area is the November support around 12,000. A drop tomorrow beyond that point should raise the alarm.
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Wrap-up
If you are a growth investor, it sure did feel like a bullish reversal today, after yesterday's 2% pull back on the Nasdaq. There are some things to keep in mind.
If yesterday shook you out of some positions, be cautious as you move back in as we may see more volatility heading into the holidays.
Take care!
If you have ideas to make the daily update better, please let me know in the comments.
I do occasionally have some errors or typos and will correct them in my blog or in the comments on TradingView. I do not have an editor and do this in my free time.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Thursday, December 10, 2020
Do you remember the days
We built these paper mountains?
Facts: +0.54%, Volume lower, Closing range: 88%, Body: 73%
Good: Held support near 12,250, closed near high
Bad: Gap down at open, then choppy intraday
Highs/Lows: Lower high, Lower low
Candle: Thick green body, high closing range
Advance/Decline: 1.59, three advancing to two declining
Sectors: Energy (XLE +3.07%) was top. Industrials (XLI -0.95%) was bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
The Nasdaq opened the day with a gap down after disappointing employment data released in the morning. The index tested the support area around 12,250, but refused to go lower. The bulls ruled the morning as the index rose to the intraday high and then going back and forth in a choppy afternoon but closing near the high. The Nasdaq finished the day with a +0.54% gain on lower volume. The closing range was 88% with a 73% body. There were three advancing stocks for every two declining stocks.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Indexes and Sectors
The S&P 500 (SPX -0.13%) and Dow Jones Industrial average (DJI -0.23%) declined for the day. The Russell 2000 (RUT +1.08%) outperformed the other indexes and finished the day with a gain.
Energy (XLE +3.07%) led the day. Financials (XLF +0.17%), Technology (XLK +0.14%) and Communications (XLC +0.06%) were the only other sectors with gains. Industrials (XLI -0.95%) was the worst performing sector of the day.
The VIX volatility index gained +1.12%.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Indicators
US30Y and US10Y bond yields dropped for the day and spreads widened slightly between US10Y and US02Y bonds. The US02Y continues the downward trend from a 11/12 pivot.
Corporate Bond yields fell for the day. The spread tightened slightly between corporate and short-term treasury bonds.
The US dollar (DXY -0.29%) dropped for the day.
Silver (SILVER +0.04%) and Gold (GOLD -0.15%) were relatively even compared to the previous days drop. Crude Oil (CRUDEOIL1! +2.96%) spiked as vaccines began rolling out globally. Timber (WOOD +0.29%) gained for the day. Copper (COPPER1! +1.94%) and Aluminum (ALI1! +0.81%) also had gains.
The put/call ratio dropped back to 0.570 showing a little more bullish optimism than yesterday. 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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Apple (AAPL +1.2%) was the only of the four biggest mega-caps to end the day with gains. Amazon (AMZN -0.09%) and Microsoft (MSFT -0.6%) had a second day of losses and closed below the 21d EMA and 50d MA lines. Alphabet (GOOGL -0.57%) continues to slide from 12/3 high and closed right at its 21d EMA.
Not a lot of mega-caps had gains for the day. Tesla (TSLA +3.74%), PayPal (PYPL +2.15%) and Netflix (NFLX +1.52%) were among the top mega-cap gainers. AT&T (T -2.45%) pulled back after two days of big gains.
Many growth stocks reversed yesterday's losses. Cloudflare (NET +8.72%) was a top performer. Twitter (TWTR +8.43%) possibly benefited from news the US government would sue to break up Facebook (FB -0.29%). Restoration Hardware (RH -3.20%) lost on the day after beating expectations in their earnings release.
Adobe (ADBE -1.42%) was down after hours despite beating expectations and providing a stronger-than-expected outlook. It was a similar story for Lululemon (LULU +1.52%), Broadcom (AVGO -1.48%), Oracle (ORCL -0.42%), Costco (COST -0.40%).
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Looking ahead
Tomorrow will bring Producer Price Index data for November before the market opens. New consumer sentiment data will be released in the morning after the market opens.
There are no notable earnings announcements for the daily market update.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
I've added a trend line from yesterday's high to mark a pivot.
The trend line from the 10/30 bottom points to a +1.96% which would bring the index back to new all-time highs. The five-day trend and one-day trend are pointing to a sideways move for a +0.17% gain.
The two day trend line from the 12/9 pivot is pointing to a -1.36% loss which would put the index right at the 12,250 support area that has developed in December. The index would still be above the 21d EMA at that point.
If the index passes through the 21d EMA, then the next support area is the November support around 12,000. A drop tomorrow beyond that point should raise the alarm.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
If you are a growth investor, it sure did feel like a bullish reversal today, after yesterday's 2% pull back on the Nasdaq. There are some things to keep in mind.
- The S&P 500 and Dow Jones Industrial both dropped for the day, showing some lopsided focus to the one day rally.
- With the exception of Apple, the biggest mega-caps did not participate in the rally and are trading below key moving average lines.
- Good growth stocks releasing earnings that beat expectations are selling off on the news. Smart investors selling into strength to protect profits.
- The Two-Year Treasury bond yield has been sliding since a mid-November pivot and is approaching early September levels.
- Although, yesterday's pullback helped elevate the put/call ratio, it dropped back today and continues to show overlay bullish outlook by investors, something that can be dangerous.
- SQQQ volume is elevated as investors hedge portfolios and/or expect a drop in prices.
If yesterday shook you out of some positions, be cautious as you move back in as we may see more volatility heading into the holidays.
Take care!
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