Daily Market Update for 8/24

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 24, 2021

Facts: +0.52%, Volume lower, Closing Range: 79% (w/gap), Body: 60% Green
Good: Higher high, higher low, fourth day of green candles
Bad: Lower volume , otherwise nothing
Highs/Lows: Higher high, Higher low
Candle: Thinner candle with small upper and lower wicks, mostly green body
Advance/Decline: 1.33, more advancing than declining stocks
Indexes:SPX (+0.15%), DJI (+0.09%), RUT (+1.02%), VIX (+0.41%)
Sector List: Energy ( XLE +1.66%) and Consumer Discretionary ( XLY +0.71%) at the top. Real Estate ( XLRE -0.75%) and Consumer Staples ( XLP -0.76%) at the bottom.
Expectation: Sideways or Higher

Market Overview

Small-caps led the markets higher for another day, giving indexes their fourth day of gains after last week’s dip. Even meme stocks were back in play with huge gains from GME and AMC .

The Nasdaq closed +0.52% higher. Volume was lower than the previous day with a short candle that is still mostly body. The 60% body is in between a small upper and lower wick. The index ended the day with a 79% closing range, including the gap. There were more advancing stocks than declining stocks.

The Russell 2000 (RUT) led again today, gaining +1.02%. The index is bouncing back from the bottom of the trading range it’s been in most of this year. The S&P 500 (SPX) gained +0.15%, setting another record close. The Dow Jones Industrial Average (DJI) advanced +0.09%. The VIXVolatility Index gained +0.29% for the day.

The top of the sector list is a mix of cyclical and growth sectors. Energy ( XLE +1.66%) led the day, with Consumer Discretionary ( XLY +0.71%) coming in second. Technology ( XLK -0.11%) pulled back a bit today after several days of gains. Defensive sectors at the bottom of the list include Real Estate ( XLRE -0.75%) and Consumer Staples ( XLP -0.76%).

The US Dollar declined again with a -0.10% loss today. The US 30y and 10y Treasury yields both gained for the day while the US 2y Treasury yield dropped. High Yield Corporate Bond ( HYG ) prices advanced . Investment Grade Corporate Bond ( LQD ) prices declined. Commodities mostly gained, with Aluminum hitting record highs again. Crude Oil prices are recovering from recent selling.

The put/call ratio dropped to 0.512 as investors become more bullish with the current moves in the indexes. The CNN Fear & Greed index remains in Fear but is moving closer to neutral.

Alibaba (BABA) topped the mega-cap list with a +6.61% gain. Amazon ( AMZN ) moved back above its 200d moving average line with a +1.22% advance. Microsoft MSFT ) pulled back from all-time highs, declining -0.67% as it starts to form a base. JD .com ( JD ) pleased investors with earnings and soared +14.44% on a good day for Chinese stocks. Meme stocks GameStop ( GME ) and AMC AMC ) were back in play with +27.53% and +20.35% gains respectively.

The House approved the $3.5 trillion budget proposal today and promised a vote promised by the end of September on the $1 trillion infrastructure bill. Investors are making moves ahead of the Fed’s Jerome Powell’s speech on Friday in Jackson Hole.

Looking ahead

Durable Goods Orders on Wednesday give another look at the pace of economic growth. Crude Oil Inventories will also be available after the market open. Higher demand would be a positive for oil and the energy sector.

Salesforce.com ( CRM ), Snowflake (SNOW), Autodesk ADSK ), and Ehang Holdings (EH) are some of the interesting earnings reports on Wednesday.

Trends, Support, and Resistance

The Nasdaq set another all-time high and record close today, moving above the 15,000 area acting as resistance.

The trend line from the 8/19 low is pointing to a +1.60% for Wednesday.

The five-day trend line ends with a +0.76% gain.

The one-day trend line results in a +0.19% for tomorrow.

Wrap-up

The rally continues as investor outlook overcomes dismal economic data from last week. We’ve had three good structural days with the advance/decline ratio above 1.0 and decent volume . Those have resulted in higher highs, higher lows, and high closing ranges each day.

After several days of gains, it would not be a surprise for a lateral move or even a pullback. Still, the chart and fundamentals in the market are showing a strong uptrend. The expectation for tomorrow is set to Sideways or Higher.

Stay healthy and trade safe!

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