Daily Market Update for 5/25

Original Chart

Notes

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

Tuesday, May 25, 2021

Facts: -0.03%, Volume higher, Closing range: 21%, Body: 54%
Good: The higher high and higher low continues the uptrend
Bad: Could not revisit the high just after open, and higher volume in selling with low A/D
Highs/Lows: Higher high, higher low
Candle: Shallow red body within a tight intraday range. Slightly longer upper wick.
Advanced/Decline: Two declining stocks for every advancing stock.
Indexes:SPX (-24%), DJI (+0.24%), RUT (-0.97%), VIX (-7.73%)
Sectors: Consumer Discretionary ( XLY +0.32%) and Real Estate ( XLRE +0.28%) were top. Utilities ( XLU -1.21%) and Energy ( XLE -2.03%) were bottom.
Expectation: Sideways or Higher

Market Overview

The indices pulled back a bit from yesterday’s gains after consumer confidence numbers were lower than expected, indicating some possible bumps in the economic recovery. That left us still waiting for a higher volume advance with more breadth in gains across the market.

The Nasdaq moved sideways with a small -0.03% declined by the end of the day. Volume was higher for the day. The index fell after a very brief rally after open, creating a 54% red body with small upper and lower wicks. The closing range of 21% is in the middle of the afternoon trading range, with the index moving sideways most of the day. There were two declining stocks for every advancing stock.

The S&P 500 (SPX) declined -0.21%. The Dow Jones Industrial Average (DJI) declined -0.24%. The Russell 2000 (RUT) dropped -0.97% and had an outside day, having a higher high and a lower low than the previous day.

The VIXvolatility index rose +1.30%.

Only four sectors ended the day with gains. Consumer Discretionary ( XLY +0.32%) and Real Estate ( XLRE +0.28%) were the top-performing. Technology ( XLK +0.03%) and Consumer Staples ( XLP +0.03%) also had gains, albeit small advances. Utilities ( XLU -1.21%) and Energy ( XLE -2.03%) were at the bottom of the sector list.

Economic Indicators

The US Dollar DXY ) declined -0.19%.

The US 30y, 10y, and 2y treasure yields all declined for the day, with the spreads between long-term and short-term tightening significantly.

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

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

Bitcoin BTCUSD ) declined -1.14%. Ethereum ETHUSD advanced +1.98%.

Investor Sentiment

The put/call ratio rose to 0.654. 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

Of the four largest mega-caps, only Apple AAPL ) declined today, moving down -0.16% and remaining below the 21d EMA and 50d MA lines. Amazon ( AMZN ) closed with a +0.43% gain after dipping into the afternoon but climbing back up to the moving average lines before close. Microsoft MSFT ) gapped up at open, moved up and down, but closed nearly at the same price as open, gaining +0.37% for the day and creating a bearishDoji star candle. Alphabet GOOGL ) gained +0.08% today.

ASML Holding ( ASML ), Adobe ( ADBE ), Walt Disney (DIS), and Facebook FB ) were at the top of the mega-cap list today. There were slightly more gaining mega-caps than losing mega-caps. Mastercard (MA), Bank of America ( BAC ), Chevron ( CVX ), and Exxon Mobil XOM ) were the biggest losers.

UP Fintech ( TIGR ) and FUTU Holdings ( FUTU ) topped the growth stock list thanks to a positive earnings beat by UP Fintech before the market open. GrowGeneration GRWG ) was third after announcing another acquisition. Ehang Holdings (EH) adds another Chinese stock to the top for growth stocks for today.
Lemonade LMND ), DoorDash (DASH), Digital Turbine (APPS), and SUMO Digital (SUMO) had losses and were at the bottom of the daily update growth list.

Looking ahead

Crude Oil Inventories will be released on Wednesday after the market opens. FOMC member Quarles will speak in the afternoon, before market close.

Earnings releases will include Nvidia NVDA ), Pinduoduo PDD ), Snowflake (SNOW), Workday WDAY ), and Okta OKTA ).

Trends, Support, and Resistance

The index stayed above the 21d EMA and 50d MA today, moving sideways within the 13,600 – 13,700 resistance/ support area .

Following the five-day trend-line would result in a +1.71 gain for tomorrow, taking the index to end just below the 14,000 area.

The one-day trend line points to a -0.51% decline for tomorrow, resting the index right at the 50d MA.

A return to the trend-line from the 4/2 high would result in a -2.67% decline for Tuesday.

Wrap-up

There’s not much to look at in the indices today. We expected sideways or higher. We got sideways within a recent uptrend that continues with the higher high and higher low. It was notable to see the US Dollar and Treasury yields drop due to consumer confidence and housing data. That will be something to watch over the next few days to see the impact ripple through markets.

I’ll continue yesterday’s expectation of sideways or higher until the index gives a strong indication of change. There are not many catalysts for a considerable reaction tomorrow unless there is a surprise in crude oil inventories or something said by FOMC member Randal Quarles in the late afternoon.

I am still waiting for a positive day with higher volume and breadth of gains across the market.

Stay healthy and trade safe!

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