Daily Market Update for 4/12

Original Chart

Trend lines drawn from the 3/5 low (25d), 4/5 (5d) and today 4/9 (1d).

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

Monday, April 12, 2021

Facts: -0.36%, Volume higher, Closing range: 71%, Body: -5%
Good: Higher low than previous day, high closing range
Bad: Distribution day, lower high, loss on higher volume
Highs/Lows: Lower high, higher low
Candle: Inside day, thin red body in upper half of candle
Advance/Decline: Almost three declining for every advancing stock
Indexes:SPX (-0.02%), DJI (-0.16%), RUT (-0.16%), VIX (+1.32%)
Sectors: Consumer Discretionary ( XLY +0.64%) and Real Estate ( XLRE +0.59%) were top. Technology ( XLK -0.48%) and Energy ( XLE -0.79%) were bottom.
Expectation: Sideways or Lower

Market Overview

After several days of big gains, its ok for the markets to take a pause. Morning selling turned into buying as treasury auctions showed little trouble and yields remained under control. But the confidence wasn’t enough to hold the indexes near intraday highs as investors turned their attention to inflation data becoming available Tuesday morning.

The Nasdaq closed the session with a -0.36% decline on higher volume , marking a distribution day for the index. The thin red body of 5% represents indecision between the good news on treasury auctions, but the potential for bad news in inflation data. The positive is that the body is in the upper half of the candle with a high closing range of 71%, showing a slightly more bullishness in the market. There were 3 declining stocks for every advancing stock.

The S&P 500 (SPX) declined -0.02%. The Dow Jones Industrial average (DJI) declined -0.16%. The Russell 2000 (RUT) continues to underperform the other indexes with a -0.43% decline today.

The VIX volatility index advanced +1.32%.

Consumer Discretionary ( XLY +0.64%) and Real Estate ( XLRE +0.59%) were top performing sectors for the day. Technology ( XLK -0.48%) and Energy ( XLE -0.79%) were bottom. Energy opened the day at the top of the sector list, but quickly moved to the bottom.

Economic Indicators

The US Dollar DXY ) declined -0.11%.

The US 30y treasury bond yield remained flat while the and 10y treasury note yield advanced . The shorter term 2y note yield advanced , helping bring down the spread between short term and long term.

Prices on both High Yield Corporate Bond ( HYG ) and Investment Grade Corporate Bond ( LQD ) declined for the day.

Silver SILVER ) and Gold GOLD ) both declined. Crude Oil (CRUDEOIL1!) advanced . Timber (WOOD) declined slightly. Copper (COPPER1!) declined while and Aluminum (ALI1!) advanced .

Investor Sentiment

The put/call ratio ended the day at 0.596. 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 moved back to the neutral area.

Market Leaders

Of the big four mega-caps, Microsoft MSFT ) and Amazon ( AMZN ) were able to hold onto gains for the day despite closing below intraday highs. Apple AAPL ) and Alphabet GOOGL ) both declined. All four are trading above key moving average lines. Apple is getting close to getting the 21d EMA to cross above the 50d MA.

The accelerated gains for the big four this past week results in their prices getting extended and some pullback or pause may be in order. That may mean another day or two of pause in the indexes as well.

Alibaba (BABA) topped the mega-cap list despite being fined a record amount by the Chinese government over the weekend. The company stated the fine will have little impact to the company and investors must be relieved that the outcome wasn’t worse.

Nvidia NVDA ), Tesla TSLA ) and Pfizer PFE ) fill out the remaining top four mega-caps for the day. In addition to Apple and Alphabet , the big mega-cap losers for the day included Taiwan Semiconductor ( TSM ) and Intel INTC ).

The mega-caps topped the growth stock list as well. Just below them in the list were Snowflake (SNOW), MongoDb MDB ), Okta OKTA ) and DataDog DDOG ). At the bottom of the growth list were FUTU Holdings ( FUTU ), DraftKings DKNG ), UP Fintech ( TIGR ) and Ehang Holdings (EH).

Looking ahead

All eyes will be on the Consumer Price Index data for March being released before market open on Tuesday. The data compliments the produce price index data released this past week. The produce price index data is leading indicator to consumer price index data, both providing an outlook on inflation . Investors are fearful of inflation bringing an end to lower interest rates.

Earnings reports will start to pick up this week, but there are no notable earnings for the daily update on Tuesday.

Trends, Support and Resistance

The index is inching toward the 14,000 support/resistance area. A breakthrough of that line will be a confidence booster on the way to new all-time highs for the Nasdaq.

The five-day trend line points to a +0.37% gain for Tuesday. The one-day trend line points to a +0.06% gain.

The trend line from the 3/5 low points to a -1.09% loss.

Wrap-up

It was an indecisive day as investors await inflation data and key earnings reports from big finance this week. For inflation , it seems investors are fearing the worst. That could be a good thing if the data is not quite as frightful as feared.

Last week, the Nasdaq climbed +3.12% while the S&P 500 and Dow Jones Industrial average set new all-time highs. So it should not come as a huge surprise that the market takes a breather, especially as more economic data is on its way. In fact, we may see a little more pullback or sideways action before the Nasdaq marches toward new all-time highs for itself.

Stay healthy and trade safe!

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