Daily Market Update for 8/11

Original Chart

Notes

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

Wednesday, August 11, 2021

Facts: -0.16%, Volume higher, Closing range: 48%, Body: 46%
Good: Support at 21d EMA , rally after support creates longer lower wick
Bad: Lower high, morning selling after hitting intraday high
Highs/Lows: Lower high, lower low
Candle: Red body covers upper half of candle, long lower wick covers lower half.
Advanced/Decline: 0.83, more declining stocks than advancing stocks
Indexes:SPX (+0.25%), DJI (+0.62%), RUT (+0.49%), VIX (-4.35%)
Sectors: Materials ( XLB +1.41%) and Industrials XLI +1.30%) at the top. Technology ( XLK +0.01%) and Health ( XLV -0.99%) at the bottom.
Expectation: Sideways or Lower

Market Overview

Recovery and value stocks helped send the S&P 500 and Dow Jones to yet another record close on the day after the Infrastructure bill made it through the Senate.

The Nasdaq closed with a loss of -0.16%. Volume was slightly higher than the previous day. The index opened up with a short rally to the intraday high and then sold off through the morning until getting support at the 21d exponential moving average before moving higher. The action created a long lower wick underneath a 46% red body and a 48% closing range. There were more declining stocks than advancing stocks on the growth-heavy Nasdaq. Beyond the Nasdaq, there were far more advancing stocks than declining stocks in the US markets.

The Dow Jones Industrial Average (DJI) led the major indexes for another day with a +0.62% gain for another record close. The S&P 500 (SPX) also had a record close, advancing +0.25% today. The Russell 2000 (RUT) gained +0.49%.

The VIX volatility index declined -4.25%.

Cyclical sectors led the sector list for another day, with Materials ( XLB +1.41%) and Industrials XLI +1.30%) performing the best with a boost from the Infrastructure bill progress. At the bottom of the list was Health Services ( XLV -0.99%), weighed down by losses from several large vaccine providers.

Economic Indicators

Inflation data available this morning included no huge surprises. The core consumer price index came in slightly lower than expected. Crude Oil Inventories showed lower demand than forecast. There was good demand for the 10-year Treasury Note auction in the afternoon, helping send yields lower.

The US Dollar DXY ) declined -0.19%.

The US 30y Treasury yield was flat while the 10y and 2y Treasury yields declined for the day.

High Yield Corporate Bond ( HYG ) and Investment Grade Corporate Bond ( LQD ) prices advanced after several days of decline.

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

Bitcoin BTCUSD advanced +0.03%. Ethereum ETHUSD advanced +0.79%. (Time of writing)

Market Leaders

Apple AAPL ) and Microsoft MSFT ) gained +0.18% today as they continue getting support at their 21d exponential moving average lines. Alphabet GOOGL ) is well above the key moving average line but lost -0.39% today. Amazon ( AMZN ) tested its 200d simple moving average line today and ended the day with a -0.86% decline.

Wells Fargo ( WFC ), Home Depot (HD), Bank of America ( BAC ), and JP Morgan Chase ( JPM ) were the top mega-cap gainers today. Pfizer PFE ) declined -3.90% after data showed its vaccine might be less effective against the Delta variant of the COVID virus. Other mega-caps at the bottom of the list include Nvidia NVDA ), Visa (V), and Eli Lilly ( LLY ).

The daily update growth list did a little better than yesterday but was still primarily decliners today. Etsy ETSY ), D.R Horton ( DHI ), DataDog DDOG ), and RH RH ) were the top four gainers on the list. At the bottom of the list are FUTU Holding ( FUTU ), Crowdstrike ( CRWD ), Robinhood (HOOD), and Cloudflare (NET).

Investor Sentiment

The put/call ratio advanced to 0.749. The put/call ratio ( PCCE ) is a contrarian indicator of 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 in the middle of the Fear range, moving toward neutral.

Looking ahead

The Produce Price Index data publishes on Thursday. We’ll also get an update of Jobless Claims data that surprised investors last week.

Wednesday’s earnings reports include Walt Disney (DIS), Airbnb (BNB), DoorDash (DAH), Baidu BIDU ), Palantir ( PLTR ), Xpeng ( XPEV ), and LifeMD LFMD ).

There are many earnings reports next week. Keep an eye out for reports from companies in your portfolio.

Trends, Support, and Resistance

The Nasdaq got support at the 21d EMA today before recovering some of the morning losses.

The trend from the 7/19 low points to a +1.00% gain for Thursday.

The five-day and one-day trend lines end with a -0.22% decline.

Wrap-up

There are no surprises today as the Infrastructure Bill moves investors back into recovery and value stocks, focused on those stocks likely to benefit from the spending bill. The Nasdaq declined for a second day as the rotation pulled people away from growth stocks that make up the index.

There were many bullish indicators in the market today. Inflation is not out of control. Earnings reports continue to be strong, with positive outlooks. Demand for 10y Treasury notes remains high. Commodities advanced. Major indexes set record closes.

Based on the chart, the Nasdaq got support at the 21d EMA today but is trending downward and may continue moving sideways or lower over the next few days as the current rotation completes.

Stay healthy and trade safe!

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