Daily Market Update for 8/17

Original Chart

Notes

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

Tuesday, August 17, 2021

Facts: -0.93%, Volume higher, Closing range: 63%, Body: 9%
Good: Stayed above 50d MA
Bad: Break down below 21d EMA on higher volume
Highs/Lows: Lower high, lower low
Candle: Thin red body in upper half of candle, longer lower wick
Advanced/Decline: 0.32, more than three declining stocks for every advancing stock
Indexes:SPX (-0.71%), DJI (-0.79%), RUT (-1.19%), VIX (+11.24%)
Sectors: Health ( XLV +1.18%) and Real Estate ( XLRE +0.19%) at the top. Materials ( XLB -1.15%) and Consumer Discretionary ( XLY -2.37%) at the bottom.
Expectation: Lower

Market Overview

Disappointing retail sales data confirmed fears that the rising cases of the Delta variant are slowing down the economic recovery. That sent major indexes lower on Tuesday.

The Nasdaq closed with a -0.93% loss on higher volume than the previous day. It was a distribution day as only the defensive sectors ended the day with gains. The candle has a thin red body in the upper half of the candle. The closing range is 63%, and the body only covers 9% of the candle. The lower wick is longer than the upper wick. There were more than three declining stocks for every advancing stock on the Nasdaq.

The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) broke a multi-day winning streak, declining -0.71% and -0.79% today. The Russell 2000 (RUT) lost -1.19%.

The VIXvolatility index rose +11.24%.

The defensive sectors topped the sector list for the third day. Health ( XLV +1.18%) and Real Estate ( XLRE +0.19%) were the best sectors of the day. Only the four defensive sectors gained for the day. At the bottom of the sector list are Materials ( XLB -1.15%) and Consumer Discretionary ( XLY -2.37%). The poor performance for Consumer Discretionary comes after dismal retail sales data in the morning.

Economic Indicators

Retail Sales data for July showed negative month-over-month growth. The expectation was for sales to fall, but not at such a large amount.
Industrial Production was up more than expected. Fed Chair Jerome Powell made public comments today, expressing concern over the Delta variant’s impact on the economy.

The US Dollar DXY advanced +0.56%.

The US 30y and 10y Treasury Yields declined while the 2y Treasury Yield rose.

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

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

Bitcoin BTCUSD ) declined -2.51%. Ethereum ETHUSD ) declined -3.87%. (Time of writing)

Market Leaders

All four of the largest mega-caps declined today. Amazon ( AMZN ) has the most concerning chart, closing below its 200d moving average. The other three are trading above moving averages and continue to show an uptrend. Microsoft MSFT ) declined -0.52%, Apple AAPL ) fell -0.62%, and Alphabet GOOGL ) lost -1.19%.

The top four mega-caps were all health-related. Pfizer PFE ), Novo Nordisk NVO ), United Health ( UNH ), and AbbVie ABBV ) were the top four, all gaining more than 1%. At the bottom of the list are Tesla TSLA ), Taiwan Semiconductor ( TSM ), Home Depot (HD), and Alibaba (BABA).

Sea Limited (SE), Peloton (PTON), Fastly FSLY ), and Etsy ETSY ) were the top gainers in the daily update growth list today. GrowGeneration GRWG ), UP Fintech ( TIGR ), Lemonade LMND ), and Alibaba (BABA) are at the bottom of the list.

Investor Sentiment

The put/call ratio rose to 0.753. 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 slipped back into the fear range.

Looking ahead

Wednesday’s economic data include Building Permits and Housing Starts before the market opens. After the market opens, we’ll get an update on Crude Oil Inventories. The Fed will release last month’s meeting minutes in the afternoon.

Tencent ( TCEHY ), Nvidia NVDA ), Cisco ( CSCO ), Lowe’s (LOW), Target ( TGT ), TJX TJX ), Synopsys (SNPS), and Bath Body Works (BBWI) are some of the earnings reports for Wednesday.

Trends, Support, and Resistance

The Nasdaq closed below the 21d EMA today but stayed above the 50d MA.

The trend line from the 8/5 high points to a sideways move with a +0.01% gain tomorrow.

The five-day trend line ends with a -0.12% decline.

The one-day trend line points to a -0.74% decline.

Wrap-up

Retail Sales data confirmed fears that economic activity is slowing, as consumer sentiment data warned last week. On the other hand, Walmart reported strong revenue growth for the quarter and stated that the Delta variant isn’t having any meaningful impact on business.

The distribution day should bring some caution to the investor. Without some bullish news, we could see more pullback before investors start to buy the dip. The expectation for tomorrow is for Lower.

Stay healthy and trade safe!

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