Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
Friday, June 25, 2021
Facts: -0.06%, Volume higher, Closing range: 32%, Body: 57%
Good: Sideways trading with the high/low range of previous day
Bad: Lower high, drop on high volume , thick red body
Highs/Lows: Lower high, higher low
Candle: Inside day, mostly red body with small upper and lower wicks, lower wick is slightly longer
Advanced/Decline: 0.91, more declining stocks than advancing stocks
Indexes:SPX (+0.33%), DJI (+0.69%), RUT (+0.03%), VIX (-2.19%)
Sectors: Financials ( XLF +1.21%) and Utilities ( XLU +1.07%) at top. Materials ( XLB +0.01%) and Technology ( XLK -0.12%) were bottom.
Expectation: Sideways or Lower
The S&P 500 closed at another record on Friday while the Nasdaq couldn’t make new gains. Economic data is sending mixed signals on the progress of the recovery. For example, while higher than the previous month, consumer data was not as high as analysts expected.
The Nasdaq traded inside the previous day’s high and low range and closed lower by the end of the day. The 57y% red body is in the upper part of the candle. The index formed the longer lower wick in morning volatility that set the intraday high and intraday low within the first hour of the trading session. The closing range of 32% is low. The big spike in volume was due to the Russell 3000 rebalancing activity. As a result, there were more declining stocks than advancing stocks.
The S&P 500 (SPX) had another record close, after a 0.33% gain for the day. The Dow Jones Industrial Average (DJI) gapped up at the market open and ended the day with a +0.69% gain. The Russell 2000 (RUT) could not hold onto intraday gains, ending the day with just a +0.03% advance.
Financials ( XLF +1.21%) continued to make gains as Treasury yields begin to recover. Utilities ( XLU +1.07%) and Consumer Staples ( XLP +0.77%) were second and third on the sector list, showing some defensive stance in the market. Only the Technology ( XLK -0.12%) sector closed the day with a loss.
The US 30y, 10y, and 2y Treasury Yields advanced .
The put/call ratio rose to 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. Below that level is overly bullish .
The CNN Fear & Greed index is on the fear side, moving back toward neutral.
The NAAIM money manager exposure index dropped to 70.86 this week.
Of the four largest mega-caps, only Alphabet ( GOOGL ) held onto a slight gain, advancing +0.01%. Amazon ( AMZN ) fell -1.38%, the second day of losses and nearing the 21d EMA line. Microsoft ( MSFT ) declined -0.63%. Apple ( AAPL ) lost -0.22%.
Nike ( NKE ) soared above the other mega-caps with a +15.53% gain on a massive revenue surprise. Alibaba (BABA), Bank of America ( BAC ), and Netflix ( NFLX ) were also in the top four. Amazon ( AMZN ), ASML Holding ( ASML ), PayPal ( PYPL ), and Eli Lilly ( LLY ) were the bottom four mega-caps for the day.
Most of the growth stocks in the daily update list declined, but there were still quite a few winners. Alibaba (BABA), JD .com ( JD ), Beyond Meat ( BYND ), and Enphase ( ENPH ) were at the top of the list. At the bottom of the list were Square ( SQ ), Digital Turbine (APPS), Upwork ( UPWK ), and GrowGeneration ( GRWG ).
The Fed member John Williams will speak on Monday morning as the market is opening.
There are no relevant earnings reports for the daily update on Monday.
Trends, Support, and Resistance
The Nasdaq traded flat today, with the high and low within the previous day’s high and low.
The five-day trend-line points to a +1.00% gain for Monday.
The trend-line from the 5/12 low leads to a +0.32%.
The one-day trend-line would continue the fade from Thursday’s high and result in a -0.10% decline.
This week, the Nasdaq gained +2.35%, a significant move that included new all-time highs and record closes. So it is ok if there is a slight pause to end the week. The day had mixed economic news, but it also had the Russell 3000 rebalance that added huge volume and unknowns to the market.
Investors got defensive, moving into sectors like Utilities and Consumer Staples. Look for some of that defense to turn back into offense on Monday.
Stay healthy and trade safe!
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