Trend lines drawn from the 3/5 low (13d), 3/18 (5d) and today 3/24 (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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Wednesday, March 24, 2021
Facts: -2.01%, Volume higher, Closing range: 0%, Body: 99%
Good: Nothing, even more nothing than yesterday
Bad: No wicks, all red body, close below 13,000 support
Highs/Lows: Lower high, lower low
Candle: Marubozu Black candle, no visible upper or lower wick, all red body
Advance/Decline: Five declining stocks for every advancing stock
Indexes: SPX (-0.55%), DJI (-0.01%), RUT (-2.35%), VIX (+4.43%)
Sectors: Energy (XLE +2.51%) and Industrials (XLI +0.73%) were top. Consumer Discretionary (XLY -1.48%) and Communications (XLC -2.52%) were bottom.
Expectation: Lower
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Market Overview
In the endless rotations, the four cyclical sectors moved from the bottom to the top of the sector list in another session of selling for big tech, consumer discretionary and growth stocks.
The Nasdaq closed down -2.01% on higher volume. The 0% closing range comes after an all-day bearish move that formed a 99% red body candle. The tiny upper wick is barely visible and there is no lower wick. There were five declining stocks for every advancing stock.
The Russell 2000 (RUT) was the worst performing sector, declining another -2.35%. The S&P 500 (SPX) declined -0.55% and the Dow Jones Industrial average (DJI) declined -0.01%.
The VIX volatility index rose +4.43%.
The cyclical sectors were back on top for the day with Energy (XLE +2.51%) and Industrials (XLI +0.73%) performing best. Technology (XLK -1.21%), Consumer Discretionary (XLY -1.48%), and Communications (XLC -2.52%) were bottom.
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Economic Indicators
The US Dollar (DXY) rose another +0.26%.
The US 30y treasury bond and 10y and 2y treasury note yields all declined for another day. The spread between long term and short term narrowed.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both advanced for another day even as stock indexes dropped.
Silver (SILVER) remained about flat while Gold (GOLD) advanced for the day. Crude Oil (CRUDEOIL1!) rebounded from its sharp decline. Timber (WOOD) declined. Copper (COPPER1!) declined while Aluminum (ALI1!) advanced.
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Investor Sentiment
The put/call ratio rose to 0.751. 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 moved farther into the fear side.
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Market Leaders
All four of the largest mega-caps declined for the day. Apple (AAPL) lost -2.00%, Amazon (AMZN) lost -1.61%, Alphabet (GOOGL) lost -0.43% and Microsoft (MSFT) lost -0.89%. Microsoft is the only of the four that is trading above its 21d EMA.
ASML Holding (ASML) gained +3.53% as the top mega-cap for the day. Exxon Mobil (XOM), Mastercard (MA) and Johnson & Johnson (JNJ) round out the top four. Taiwan Semiconductor (TSM) was at the bottom of the list with a -5.16%. Tesla (TSLA) also gave up significant ground with a -4.82% decline.
Only one growth stock, Dr Horton (DHI), in the daily update list had a gain for the day.
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Looking ahead
Thursday will bring an update on 2020 Q4 GDP numbers. Initial Jobless Claims will also be watched closely for trends in the labor market.
There is a 7-Year Treasury Note auction scheduled for the afternoon.
Several FOMC members are scheduled to speak throughout the day.
For the daily update, there are no relevant earnings releases on Thursday.
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Trends, Support and Resistance
The index fell just below the 13,000 area. Hopefully that will trigger some support and we can see gains in the coming days.
The trend line from the 3/5 bottom points to a +3.80% gain for Thursday, which is back above the 21d EMA and 50d MA.
The five-day trend line points to a +1.80% gain, just below the 21d EMA.
The one-day trend line points to a -1.38% loss and a dip further below the 13,000 support area.
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Wrap-up
In the most recent Market Week In Review, I marked 12,985.05 as a key level to stay above and unfortunately today, the index moved below that line. If you aren't already in defensive mode because of the multiple rotations over the past several weeks, now is a time to be in that mode. We can hope the index makes a turn from here and starts to rally, but there's no indication at this point that will happen.
12,783.40 is where the index would meet the lower side of the channel from the March 2020 bottom.
The next area to watch for is between 12,500 and 12,600. This would be a new neckline on a head and shoulders pattern that is deeper than the one we previously drew in the daily update. If that pattern played out, the base would be near 11,000.
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=-
Wednesday, March 24, 2021
Facts: -2.01%, Volume higher, Closing range: 0%, Body: 99%
Good: Nothing, even more nothing than yesterday
Bad: No wicks, all red body, close below 13,000 support
Highs/Lows: Lower high, lower low
Candle: Marubozu Black candle, no visible upper or lower wick, all red body
Advance/Decline: Five declining stocks for every advancing stock
Indexes: SPX (-0.55%), DJI (-0.01%), RUT (-2.35%), VIX (+4.43%)
Sectors: Energy (XLE +2.51%) and Industrials (XLI +0.73%) were top. Consumer Discretionary (XLY -1.48%) and Communications (XLC -2.52%) were bottom.
Expectation: Lower
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
In the endless rotations, the four cyclical sectors moved from the bottom to the top of the sector list in another session of selling for big tech, consumer discretionary and growth stocks.
The Nasdaq closed down -2.01% on higher volume. The 0% closing range comes after an all-day bearish move that formed a 99% red body candle. The tiny upper wick is barely visible and there is no lower wick. There were five declining stocks for every advancing stock.
The Russell 2000 (RUT) was the worst performing sector, declining another -2.35%. The S&P 500 (SPX) declined -0.55% and the Dow Jones Industrial average (DJI) declined -0.01%.
The VIX volatility index rose +4.43%.
The cyclical sectors were back on top for the day with Energy (XLE +2.51%) and Industrials (XLI +0.73%) performing best. Technology (XLK -1.21%), Consumer Discretionary (XLY -1.48%), and Communications (XLC -2.52%) were bottom.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
The US Dollar (DXY) rose another +0.26%.
The US 30y treasury bond and 10y and 2y treasury note yields all declined for another day. The spread between long term and short term narrowed.
High Yield Corporate Bonds (HYG) and Investment Grade Corporate Bond (LQD) both advanced for another day even as stock indexes dropped.
Silver (SILVER) remained about flat while Gold (GOLD) advanced for the day. Crude Oil (CRUDEOIL1!) rebounded from its sharp decline. Timber (WOOD) declined. Copper (COPPER1!) declined while Aluminum (ALI1!) advanced.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Investor Sentiment
The put/call ratio rose to 0.751. 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 moved farther into the fear side.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
All four of the largest mega-caps declined for the day. Apple (AAPL) lost -2.00%, Amazon (AMZN) lost -1.61%, Alphabet (GOOGL) lost -0.43% and Microsoft (MSFT) lost -0.89%. Microsoft is the only of the four that is trading above its 21d EMA.
ASML Holding (ASML) gained +3.53% as the top mega-cap for the day. Exxon Mobil (XOM), Mastercard (MA) and Johnson & Johnson (JNJ) round out the top four. Taiwan Semiconductor (TSM) was at the bottom of the list with a -5.16%. Tesla (TSLA) also gave up significant ground with a -4.82% decline.
Only one growth stock, Dr Horton (DHI), in the daily update list had a gain for the day.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Thursday will bring an update on 2020 Q4 GDP numbers. Initial Jobless Claims will also be watched closely for trends in the labor market.
There is a 7-Year Treasury Note auction scheduled for the afternoon.
Several FOMC members are scheduled to speak throughout the day.
For the daily update, there are no relevant earnings releases on Thursday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support and Resistance
The index fell just below the 13,000 area. Hopefully that will trigger some support and we can see gains in the coming days.
The trend line from the 3/5 bottom points to a +3.80% gain for Thursday, which is back above the 21d EMA and 50d MA.
The five-day trend line points to a +1.80% gain, just below the 21d EMA.
The one-day trend line points to a -1.38% loss and a dip further below the 13,000 support area.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
In the most recent Market Week In Review, I marked 12,985.05 as a key level to stay above and unfortunately today, the index moved below that line. If you aren't already in defensive mode because of the multiple rotations over the past several weeks, now is a time to be in that mode. We can hope the index makes a turn from here and starts to rally, but there's no indication at this point that will happen.
12,783.40 is where the index would meet the lower side of the channel from the March 2020 bottom.
The next area to watch for is between 12,500 and 12,600. This would be a new neckline on a head and shoulders pattern that is deeper than the one we previously drew in the daily update. If that pattern played out, the base would be near 11,000.
Stay healthy and trade safe!
