Daily Market Update for 5/21

Original Chart

Notes

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

Friday, May 21, 2021

Facts: -0.48%, Volume lower, Closing range: 5%, Body: 95%
Good: Higher high, higher low, lower volume on down day
Bad: Selling throughout session, high at open, low near close
Highs/Lows: Higher high, higher low
Candle: Barely visible lower wick, no upper wick, mostly red body
Advanced/Decline: Slightly more declining than advancing stocks
Indexes:SPX (-0.08%), DJI (+0.36%), RUT (+0.34%), VIX (-2.52%)
Sectors: Financials ( XLF +0.99%) and Utilities ( XLU +0.52%) were top. Consumer Discretionary ( XLY -0.50%) and Technology ( XLK -0.55%) were bottom.
Expectation: Sideways

Market Overview

Big tech and growth stocks paused after two days of gains, while investors boosted recovery stocks after good economic data in the morning. The purchasing manager indexes for Manufacturing and Services were higher than expected, indicating an uptick in demand in both sectors.

The Nasdaq started the day in the positive but ended with a -0.48% decline after a full day of selling. Volume was lower than the previous day. The Nasdaq did put in a higher high and higher low than Thursday. However, the candle is an almost entirely red body, with a 5% closing range. There were slightly more declining stocks than advancing stocks.

The Dow Jones Industrial Average (DJI) benefited from the economic data in the morning, advancing +0.36% for the day. The Russell 2000 (RUT) ended the day with a +0.34% gain. The small-cap index was up more than 1.3% in the morning. The S&P 500 (SPX) declined -0.08% for the day.

The VIXvolatility index declined -2.52%.

Financials ( XLF +0.99%) and Utilities ( XLU +0.52%) were the top sectors for the day. Cyclical sectors did well. Consumer Discretionary ( XLY -0.50%) and Technology ( XLK -0.55%) were at the bottom of the list.

Economic Indicators

The US Dollar DXY advanced +0.31% for the day.

The US 30y and 10y Treasury yields declined while the 2y treasure yield advanced .

Both High Yield Corporate Bond ( HYG ) and Investment Grade Corporate Bond ( LQD ) prices advanced .

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

Bitcoin BTCUSD ) declined -7.87%. Ethereum ETHUSD ) declined -12.25%.

Investor Sentiment

The put/call ratio rose slightly to 0.668. 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. Below that level is overly bullish .

The CNN Fear & Greed index is moving more into the fear zone.

Market Leaders

All four largest mega-caps reversed yesterday’s gains. Apple AAPL ) declined -1.48%. Microsoft MSFT ) lost -0.53%. Amazon ( AMZN ) declined -1.37%. Alphabet GOOGL ) is the only of the four to remain above the 21d EMA and 50d MA lines, despite declining -0.56% today.

Nvidia NVDA ), Bank of America ( BAC ), AT&T (T), and JP Morgan ( JPM ) were the top gaining mega-caps for today. Alibaba (BABA), Apple , Taiwan Semiconductor ( TSM ), and Tesla TSLA ) were at the bottom of the list.

There were more decliners in the daily update growth list today. The top gainers included Crowdstrike ( CRWD ), Sumo Digital (SUMO), Nvidia NVDA ), and Fastly FSLY ). At the bottom of the list were FUTU Holding ( FUTU ), Etsy ETSY ), GrowGeneration GRWG ), and Ehang Holding (EH).

Looking ahead

There is not much economic news scheduled for Monday. Fed member Brainard will speak in the morning, and Bostic will speak at noon.

Lordstown Motors (RIDE) will report earnings on Monday.

Trends, Support, and Resistance

The index was not able to hold above the 21d EMA today. It first hit resistance at 13,600, then moved below the 21d EMA . The moving average line then acted as resistance in two afternoon attempts by the index to move back above.

The give-day trend-line points to a +0.60% advance for tomorrow.

The one-day trend-line ends with a -0.75% decline.

The trend-line from the 4/2 high shows a -2.48% decline on Monday.

Wrap-up

Excitement over the morning economic news allowed the Nasdaq to open in the positive. But the excitement faded along with prices throughout the day. The bullish higher high and higher low contrasts with a bearish red candle.

The day brings to close an inside week for the Nasdaq. The weekly high and low is within the previous week’s high and low. It shows investors are still undecided on the future of inflation and reactions from the Fed, moving in and out of big-tech and growth stocks that will be sensitive to any changes.

Stay healthy and trade safe!

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