Daily Market Update for 8/26

Original Chart

Notes

The update is late today due to travel.

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

Thursday, August 26, 2021

Facts: -0.64%, Volume lower, Closing Range: 5%, Body: 66% Red
Good: Lower volume
Bad: Closing range, low A/D ratio, lower high/low
Highs/Lows: Lower high, Lower low
Candle: Thick red body at bottom of candle. Longer upper wick than lower wick.
Advance/Decline: 0.42, two declining stocks for every advancing stock
Indexes:SPX (-0.58%), DJI (-0.54%), RUT (-1.13%), VIX (+12.21%)
Sector List: Real Estate ( XLRE +0.06%) and Utilities ( XLU -0.25%) at the top. Consumer Discretionary ( XLY -0.92%) and Energy ( XLE -1.52%) at the bottom.
Expectation: Sideways or Lower

Market Overview

Indexes moved lower for the first time in several days as investors became defensive after slightly higher than expected jobless claims data.

The Nasdaq closed with a -0.64% decline on lower volume than the previous day. The red body covers 66% of the candle which has a longer upper wick than lower wick. The closing range of 5% shows the selling continued into close. There were two declining stocks for every advancing stock.

The Russell 2000 (RUT) pulled back the most, declining -1.13%. The S&P 500 (SPX) declined -0.58% and the Dow Jones Industrial Average (DJI) lost -0.54%. The VIXVolatility Index ( VIX ) gained +12.21%.

Only one sector, Real Estate ( XLRE +0.06%) gained for the day. The defensive sectors topped the list with Utilities ( XLU -0.25) landing in the second spot. The worst performing sectors for the day were Consumer Discretionary ( XLY -0.92%) and Energy ( XLE -1.52%).

The US Dollar DXY ) gained +0.24%. Treasury yields remained about the same. High Yield Corporate Bond ( HYG ) and Investment Grade Corporate Bond ( LQD ) prices declined just slightly. Commodities overall declined a bit, but remain near recent levels.

The put/call ratio rose to 0.692 as investors became a bit more bearish . The CNN Fear & Greed index moved further toward neutral, but remains in the Fear range. The NAAIM money manager exposure index moved up to 92.83 this week.

Salesforce.com ( CRM ) was the top mega-cap for the day after reporting great earnings . Alibaba (BABA) was the worst performer for the day. Snowflake (SNOW) topped the daily update growth list, also because of a great earnings report. Most of the list was decliners with Digital Turbine (APPS) losing the most.

Looking ahead

There are two important sets of economic data to watch for on Friday. PCE Price Index data is a primary indicator of inflation . The data will be available before the market opens. After the market opens, attention will turn to the update for Michigan Consumer Sentiment numbers for August. The preliminary numbers two weeks ago were well below expectation.

Probably the most important event for tomorrow is the Fed’s Jerome Powell’s comments at the Jackson Hole Economic Symposium. Investors will watch his comments closely for stance on the economic recovery and how the US and other governments should provide economic support moving forward.

Big Lots (BIG) releases earnings on Friday morning.

Trends, Support, and Resistance

The Nasdaq dropped back below 15,000, but remains within the support area .

The trend line from the 8/19 low points to a +2.03% gain for Friday.

The five-day trend line ends with a +1.60% gain for tomorrow.

The one-day trend line points to a -0.31% decline.

Wrap-up

After several days of gains and new all-time highs, there’s no surprise the indexes took a pullback day. The question is will economic data and Jerome Powell’s speech on Friday sour sentiment more or will indexes bounce back for a gain.

Based on the red candle with a low closing range, the expectation for tomorrow is Sideways or Lower.

Stay healthy and trade safe!

Comments

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