Daily Market Update for 4/27

Original Chart

Notes

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

Tuesday, April 27, 2021

Facts: -0.34%, Volume higher, Closing range: 24%, Body: 75%
Good: Higher high, higher low
Bad: Gap up at open, but couldn’t hold on, distribution day on higher volume
Highs/Lows: Higher high, higher low
Candle: No upper wick, thick red body with a short lower wick
Advance/Decline: Two declining stocks for each advancing stock
Indexes:SPX (-0.02%), DJI (+0.01%), RUT (+0.14%), VIX (-0.45%)
Sectors: Energy ( XLE +1.21%) and Industrials XLI +0.83%) were top. Health ( XLV -0.58%) and Utilities ( XLU -0.77%) were bottom.
Expectation: Sideways

Market Overview

The Nasdaq opened with a gap up but couldn’t hold on, selling off briskly in the morning along with the other major indexes. Eventually positive consumer confidence numbers and continued growing demand outlook from OPEC helped the markets to settle down and end the day with a relatively small pull back overall.

The Nasdaq closed with a -0.34% decline on higher volume . The distribution day resulted in a 75% red body that ended with a 25% closing range. A small lower wick was formed in the morning before the index found support above 14,000. The higher high and higher low continue an uptrend since last Wednesday. There were two declining stocks for every advancing stock.

The Russell 2000 (RUT) outperformed again with a +0.14% gain. The Dow Jones Industrial average (DJI) ended the day with a +0.01% gain. The S&P 500 (SPX) declined -0.02%.

The VIX volatility index declined -0.45%.

Only three sectors gained for the day. Energy ( XLE +1.21%), Industrials XLI +0.83%), Financials ( XLF +0.79%) were the gainers. Health ( XLV -0.58%) and Utilities ( XLU -0.77%) were the biggest losers.

Economic Indicators

The US Dollar DXY ) had a small +0.05% gain.

The US 30y treasury bond and US 10y and 2y note yields all advanced for the day. The spread widened between the 10y and 2y note yields.

High Yield Corporate Bond ( HYG ) and Investment Grade Corporate Bond ( LQD ) prices both declined.

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

Investor Sentiment

The put/call ratio dropped to 0.548. 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 remains just on the greed side of the neutral area.

Market Leaders

Microsoft MSFT ) and Amazon ( AMZN advanced with +0.16% and +0.25% gains. Apple AAPL ) and Alphabet GOOGL ) declined with -0.24% and -0.82% losses. Both Microsoft and Alphabet beat expectations on earnings reports after hours. Microsoft declined almost 4% in afterhours trading before gaining back some. Alphabet GOOGL ) gained over 4% in afterhours. The mixed reactions are result of the high expectations from investors. Microsoft had great results, but  Alphabet absolutely smashed results. Alphabet also announced a stock buyback of $50 billion.

Alibaba (BABA), Exxon Mobile ( XOM ), Bank of America ( BAC ) and Oracle ORCL ) were a diverse mix of mega-caps to top the list for today. Tesla TSLA ) was at the bottom of the list with a -4.53% decline despite beating analyst expectations in their earnings report yesterday. Intel INTC ), Verizon ( VZ ) and PayPal ( PYPL ) round out the top four mega-caps.

Growth stocks were mixed for the day. Ehang Holdings (EH), RH RH ), Moderna MRNA ) and JD .com ( JD ) were the top gainers, all advancing over 3%. UP Fintech ( TIGR ), NIO NIO ) and Tesla TSLA ) were at the bottom of the list.

Investors reacted positively to AMD’s ( AMD earnings report, sending the stock up 4%. Pinterest (PINS) warned about lower user growth after the pandemic and the stock slid over 10% in afterhours trading.

Looking ahead

Wednesday’s news will include the Goods Trade Balance and Retail Inventories before market open. Crude Oil Inventories after the market open. There is a Fed Interest Rate Decision and FOMC Press Conference after 2pm. No changes are expected to monetary policy , but investors will watch closely the words and tone during the broadcast. President Biden is expected to announce his tax proposals in a speech after the market closes.

There may be some caution added to the market sentiment tomorrow based on the latter two news events.

Wednesday includes earnings reports from Apple AAPL ), Facebook FB ), Qualcomm QCOM ), Boeing (BA), Shopify (SHOP), ServiceNow (NOW), ADP (ADP), Spotify (SPOT), Ford (F), eBay EBAY ), and Teladoc ( TDOC ).

Be sure to check your portfolio for earnings reports so you are not surprised.

Trends, Support and Resistance

The index nearly made it to a new all-time high before dipping in the morning. It did hold key support areas.

The five-day trend line results in a +0.96% gain. The trend line from the 3/5 low, points to a +0.25% decline.

The one-day trend line shows a sideways trend to -0.08%, which may be reasonable if sentiment is cautious heading into the late day speeches by the Fed and President.

Wrap-up

It feels like the market is search for some direction based on earnings reports released so far this week. Tesla had great results, but investors are cautious about some of the headwinds in China and the safety issues in the US. Microsoft had record results but not quite enough to keep investors satisfied after hours. Alphabet and AMD were heartedly supported after their results. The reaction to other earnings reports such as Visa and Starbucks seem to be in line with the results.

Based on the candlestick chart, the higher high and higher low kept the Nasdaq in an uptrend, but the red candle and failed gap up provide some mixed signal. So the expectation is for sideways tomorrow and investors continue to cautiously watch earnings while also reacting to the tone from the Fed and any unexpected news from Biden .

Stay healthy and trade safe!

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