Daily Market Update for 8/18

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 18, 2021

Facts: -0.89%, Volume lower, Closing range: 5%, Body: 61%
Good: Lower volume
Bad: Close below the 50d MA, sell-off before close of market
Highs/Lows: Lower high, lower low
Candle: Large red body below short upper wick
Advanced/Decline: 0.38, nearly three declining stocks for every advancing stock
Indexes:SPX (-1.07%), DJI (-1.08%), RUT (-0.84%), VIX (+20.32%)
Sector List: Consumer Discretionary ( XLY +0.36%) and Utilities ( XLU -0.51%) at the top. Health ( XLV -1.52%) and Energy ( XLE -2.08%) at the bottom.
Expectation: Lower

Market Overview

Stocks slid after the Fed release meeting minutes from last month, raising fears that tapering support for the economy could come earlier than previously thought. Most sectors declined, with only Consumer Discretionary holding onto a gain for the day.

The Nasdaq closed with a -0.89% loss, dipping just below the 50-day moving average line. Volume was lower than the previous day. The closing range of 5% is below a 61% red body. There is a short upper wick with a very tiny lower wick. There were almost three stocks declining for every advancing stock.

The S&P 500 (SPX) declined -1.07%. The Dow Jones Industrial Average (DJI) lost -1.08%. The Russell 2000 (RUT) was down -0.84% at the end of the day.

The VIXvolatility index rose +20.32%.

Consumer Discretionary ( XLY +0.36%) was the only sector to gain for the day but was significantly lower at close than where it was early in the day. Utilities ( XLU -0.51%) was the next best sector for the day. Health ( XLV -1.52%) and Energy ( XLE -2.08%) were the worst two sectors.

Economic Indicators

Building Permits data was higher than expected, while Housing Starts was a bit lower than expected. Crude Oil Inventories showed more demand than forecast. The Fed Meeting Minutes from last month mentioned that employment might recover within this year to the required level to begin removing economic support.

The US Dollar DXY advanced +0.03%. The dollar fell sharply after the Fed minutes but recovered most of the loss.

The US 30y and 10y Treasury Yields declined while the 2y Treasury Yield remained about the same.

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

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

Bitcoin BTCUSD ) declined -0.24%. Ethereum ETHUSD ) declined -0.14%. (Time of writing)

Market Leaders

All four of the largest mega-caps declined. Apple AAPL ) fell -2.55% to close below its 21d EMA . Microsoft MSFT ) and Alphabet GOOGL ) declined -0.80% and -0.89% but remained above the key moving average lines. Amazon ( AMZN ) lost -1.26%, moving farther below -1.26%.

Tesla TSLA ) topped the mega-cap list today after being at the bottom of the list for the start of the week. Including Tesla , only four mega-caps gained for the day. The other three were Salesforce.com ( CRM ), Netflix NFLX ), and Home Depot (HD). Nvidia NVDA ), Pfizer PFE ), Oracle ORCL ), and Apple were at the bottom of the mega-cap list.

Robinhood (HOOD), Palantir ( PTR ), UP Fintech ( TIGR ), and FUTU Holding ( FUTU ) were at the top of the daily update growth list, which surprisingly at quite a few gainers. Peloton (PTON), Cloudflare (NET), Roku (ROKU), and Pinterest (PINS) were the biggest losers in the list.

Investor Sentiment

The put/call ratio dropped to 0.622. 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 moved back into extreme fear.

Looking ahead

Initial Jobless Claims data will be available on Thursday morning. We’ll also get the Philadelphia Manufacturing Index on Thursday. Last month, the New York and Philadelphia indexes showed different readings on manufacturing activity.

Applied Materials (AMAT), Estee Lauder (EL), Ross Stores ROST ), Farfetch FTCH ), Kohls KSS ), and Macy’s (M) are some of the earnings reports for Thursday.

Trends, Support, and Resistance

The Nasdaq closed just under the 50d moving average line.

The trend line from the 8/5 high points to a sideways move with a +0.62% gain tomorrow.

The one-day and five-day trend lines end with a +0.29% advance.

Wrap-up

I doubt the content of the Fed meeting minutes was much of a surprise to most. However, it did become the catalyst that finally brought some selling momentum that seemed to be building the past week. Let’s see if that was enough to get the bearishness out of the system.

Based on the chart, the expectation remains Lower until the market gives us some reason to expect something different.

Stay healthy and trade safe!

Comments

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