Daily Market Update for 4/16

Original Chart

Notes

The private indicator I use to draw the large candles on the Daily Market Update chart is not working today (you can see the issue looking at previous daily updates). TV identified the issue and is working on it. Until its fixed, I’ll include just the daily summary data at the top of the chart and include an additional daily candlestick chart in the report below.

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

Friday, April 16, 2021

snapshot

Facts: +0.10%, Volume higher, Closing range: 88%, Body: 8%
Good: Higher high after early selling turns to late buying
Bad: Red body, morning sell-off, slight dip at end of session
Highs/Lows: Higher high, higher low
Candle: Long lower wick with a thin body at the top of the candle
Advance/Decline: More than three declining stocks for every two advancing stocks
Indexes:SPX (+0.36%), DJI (+0.48%), RUT (+0.25%), VIX (-1.93%)
Sectors: Materials ( XLB +1.21%), Utilities ( XLU +0.81%) were top. Communications ( XLC -0.07%) and Energy ( XLE -0.80%) were bottom.
Expectation: Sideways or Higher

Market Overview

The indexes set more records on Friday, with the Dow Jones Industrial and S&P 500 closing at new all-time highs again. That gains initially came at open after positive building data drove the materials sector to the top of the sector list. It was not a straight line. The market dipped in the morning and the indexes needed to climb back to close near intraday highs.

The Nasdaq closed with +0.10%, above yesterday’s close but slightly below the opening price. The bears took over shortly after open, bringing the index nearly to yesterday’s low. But the bears fought back and bought it back to make an intraday high before dipping into close. The long lower wick was formed in the morning selling. The thing 8% body is at the top of the candle which has an 88% closing range. There were more than three declining stocks for every two advancing stocks.

The Dow Jones Industrial average (DJI) gained +0.48% a bit below the 0.64% it gained in the first 10 minutes of the session. The S&P 500 (SPX) gained +0.36%. Both closed a new all-time highs. The Russell 2000 (RUT) continues to slowly work itself out of a base with a +0.25% advance today.

The VIX volatility index dropped another -1.93%.

Materials ( XLB +1.21%) was the top sector, gapping up at open on the positive building data. Utilities ( XLU +0.81%) was the second best sector, signaling some caution from investors perhaps on lower than expected consumer data or protecting against the volatility of a big options expiration day. Communications ( XLC -0.07%) and Energy ( XLE -0.80%) were bottom.

Economic Indicators

The US Dollar DXY ) continues its downward trend with a -0.14% decline today.

The US 30y treasury bond yield declined while the US 10y and 2y note yields advanced for the day.

High Yield Corporate Bond ( HYG ) and Investment Grade Corporate Bond ( LQD ) prices declined advanced for the day.

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

Investor Sentiment

The put/call ratio ended the day at 0.567. 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 moving toward the greed side.

Market Leaders

Microsoft MSFT ) continued its breakout, setting another new all-time high with a +0.48% advance. Amazon ( AMZN ) also advanced , gaining +0.60% and regaining ground from a pullback earlier in the week. Apple AAPL ) and Alphabet GOOGL ) declined -0.25% and -0.11% but the base within their uptrends remain intact.

Pfizer PFE ), Cisco ( CSCO ), Comcast ( CMCSA ), and Home Depot (HD) topped the mega-cap list today. Most mega-caps faired pretty well for the day. At the bottom of the list are PayPal ( PYPL ), Nvidia NVDA ), Exxon Mobil XOM ) and Facebook FB ).

It was a different story for growth stocks. There were some winners with Moderna MRNA ), Dr Horton ( DHI ), FUTU Holdings ( FUTU ) and RH RH ) topping the daily update list. However, there were more losers than winners and some of the losses were a surprise. Pinterest (PINS) dropped nearly 10% on news that an analyst is forecasting a deceleration in omnichannel spending from retailers. DataDog DDOG ) and Fiverr ( FVRR ) gave up recent gains with 5% declines today.

Looking ahead

The only thing on the economic calendar for Monday is a short-term treasury bill auction. It’s not likely to impact outlook on bonds or equities.

Coca-Cola (KO) will kick-off the week with a premarket earnings release. After market close, IBM IBM ), United Airlines ( UAL ), and Steel Dynamics STLD ) could be important earnings reports to watch.

Trends, Support and Resistance

The index testing the 14,000 support area in the morning. That was a spot for the bulls to come back in and start buying, helping the index to bounce of the line and make it back to a higher high before close.

The five-day trend and one-day trend lines point to a +0.36% gain, moving the index slowly but surely toward a new all-time high.

The trend line from the 3/5 low points to a -0.89% decline for Monday.

Wrap-up

It’s been six trading days in a row that the advance/decline ratio is below 1.0 even as the index makes higher highs. Looking at the QQQ (weighted) index vs the QQQE (equal weight) index, the gains for the week are a bit more for the weighted index, but not that much higher. A closer look could tell, but likely what happened is the mega-caps kept moving up as lower cap stocks rotated throughout the week, keeping the daily A/D ratio low each day despite a broader gain on a weekly basis.

What that means for the trend needs some more thought. Perhaps in the weekly update something will pop and provide some insight of where we can expect things to go next week. On the daily look, it seems the index has support and will continue to move up as economic activity continues picking up. For growth investors, it sure would be nice to have the gains be more broadly (and consistently) shared across the index.

Stay healthy and trade safe!

Comments

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