Daily Market Update for 1/12

Original Chart

Trend lines drawn from the 10/30 bottom (50d), 1/6 (5d) and today 1/12 (1d).

Ideas always welcome in the comments. Errors will be amended as comments on TradingView or and corrected inline in my blog.

I’m working to condense this daily update over the next few weeks. I need to reduce it for both brevity and preparation time.

Tuesday, January 12, 2021

Facts: +0.28%, Volume higher, Closing range: 77%, Body: 7%
Good: Close in upper side of range, dipped just briefly below 13,000
Bad: Thin body, second indecisive day, LH/LL
Highs/Lows: Lower high, lower low
Candle: An indecisive candle with close just above open, long lower shadow
Advance/Decline: 2.23, more than two advancing for every declining stock
Indexes:SPX (+0.04%), DJI (+0.19%), RUT (+1.77%), VIX (-3.11%)
Sectors: Energy ( XLE +3.49%) and Consumer Discretionary ( XLY +1.53%) were top. Communications ( XLC -1.61%) and Health Services ( XLV -1.09%)
Expectation: Sideways

Market Overview

If you are invested in growth stocks and small caps you are probably delighted, but it may be a bit confusing to look at the indexes. The growth and small cap segments did exceptionally well, but the major indexes show an indecisive day. The Nasdaq dipped mid-day but finished just above its open.

The index closed up +0.28% on higher volume . The closing range of 77% is a positive, but the 7% body displays the indecisiveness. However, the advance/decline number of 2.23 shows a much more bullish picture, raising questions whether the broader market can continue to advance without the bigger players advancing.

Another way to see the power of the small-caps is the Russell 2000 (RUT) index that soared above the other indexes with a +1.77% gain and a fat green candle with no lower wick and a tiny upper wick. The S&P 500 (SPX) and Dow Jones Industrial (DJI) had smaller gains than the Nasdaq, all show indecisive candles.

Energy ( XLE +3.49%) and Consumer Discretionary ( XLY +1.53%) were the top sectors of the day. Communications ( XLC -1.61%) and Health Services ( XLV -1.09%) were at the bottom.

Economic Indicators

The US Dollar DXY ) declined for the day after several days of gains. Likewise, US Treasury 30y ( US30Y ), 10y ( US10Y ) bond yields pulled back from recent gains. Corporate Bonds ( HYG ) prices gained slightly for the day.

Silver SILVER ) and Gold GOLD ) both gained today, after their declines since the start of the new year. Crude Oil (CRUDEOIL1!) advanced for another day. Timber (WOOD), Copper (COPPER1!) and Aluminum (ALI1!) all advanced for the day.

Investor Sentiment

The put/call ratio declined to 0.542 as investor optimism remains very bullish . 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.

Market Leaders

Of the four biggest mega-caps, only Amazon ( AMZN advanced for the day, but still set a lower high and a lower low. Apple AAPL ), Microsoft MSFT ), Alphabet GOOGL ) all declined. Only Apple remains above the 50d MA while the others are below the key 21d EMA and 50d MA. The big question for the big mega-caps is can the broader market rally without them.

Tesla TSLA ) regained some of the previous day’s losses. Intel INTC ), Exxon Mobile ( XOM ) and Home Depot HD ) round out the top four performing mega-caps. But overall, six of the largest 10 mega-caps delivered losses for the day. Very different than the broader market.

Growth stocks were very strong for the day. Top stocks included FUTU Holdings ( FUTU +15.27%), Etsy ETSY +12.08%), Fiverr ( FVRR +9.33%) and SUMO Logic (SUMO +9.31%).

Twitter TWTR -2.24%) and Facebook FB -2.24%) continue to suffer from the past week’s events.

Looking ahead

Consumer price index data will be released tomorrow, giving a view on inflation . After today’s remarks from Esther George on the possibility of surprise inflation , investors will be watching these numbers closely.

Crude Oil inventories will also be updated tomorrow after market open.

No notable earnings reports for this update are scheduled for Wednesday.

Trends, Support and Resistance

The five-day trend and long trend line from the 10/30 bottom point to a +1.06% gain.

The one-day trend points to a -0.17% loss.

The 21d EMA is about 2% below the index which should be an area of support if there’s further downside. The index also held the 12,550 area recently. If it passes that area, the next support area is 12,250.

Wrap-up

Today the small-caps and growth stocks shined. The major indexes didn’t show it as large-cap and mega-caps held back the Nasdaq and S&P 500 . The question is whether the Russell 2000 and small-caps can continue to rally without the big players advancing too.

Stay healthy and take care!

Comments

If you find this helpful or have comments, please reply and like at

https://www.tradingview.com/chart/IXIC/xlk7PCEZ-Daily-Market-Update-for-1-12/