Daily Market Update for 8/30

Original Chart

Notes

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

Monday, August 30, 2021

Facts: +0.90%, Volume lower, Closing Range: 85% (w/gap), Body: 81% Green
Good: Strong gain in morning, held near high in the afternoon
Bad: Lower volume , low A/D ratio
Highs/Lows: Higher high, Higher low
Candle:Gap-up at open, with tick green body and tiny upper wick. No lower wick.
Advance/Decline: 0.61, more than three declining stocks for every two advancing
Indexes:SPX (+0.43%), DJIA (-0.16%), RUT (-0.49%), VIX (-1.22%)
Sector List: Real Estate ( XLRE +1.22%) and Technology ( XLK +1.08%) at the top. Energy ( XLE -1.18%) and Financials ( XLF -1.41%) at the bottom.
Expectation: Sideways or Higher

Market Overview

Technology stocks rallied today after the Fed expressed a dovish stance toward tapering and interest rate hikes on Friday. Cyclical sectors faded while growth sectors dominated the top of the sector list.

The Nasdaq gained +0.90% for another record close. The closing range of 85% is just under a small upper wick, formed from a dip in the last hour of trading. The 81% Green body developed in the morning rally, with the index leveling off at a new all-time high and holding that level in the afternoon. Volume was lower than the previous day, and there were three declining stocks for every two advancing stocks.

The S&P 500 also had a record close, advancing +0.43% for the day. The Dow Jones Industrial Average (DJI) lost -0.16%. The Russell 2000 (RUT) declined -0.49%. The small-cap index had a healthy pullback after a significant gain on Friday.

Real Estate ( XLRE +1.22%) and Technology ( XLK +1.08%) topped the sector list today. Energy ( XLE -1.18%) and Financials ( XLF -1.41%) were at the bottom. Real Estate and Financials are reacting in opposite directions to the Fed’s dovish stance toward interest rates. Lower interest rates mean lower costs for the Real Estate sector, but they negatively impact income for the Financial sector. The lower interest rates and a weaker dollar are favorable for the Technology sector.

Pending Home Sales slid -1.8% for July after declined -2.0% in June. It’s unclear from the data whether the reduction in signed contracts is a supply or demand issue. However, with the Real Estate sector outperforming, it is likely a supply issue.

The US Dollar remained about the same for the day. US Treasury yields declined. The Fed will likely taper bond buying more slowly than expected, even if they start within this year. High Yield Corporate Bond ( HYG ) prices advanced another day, hitting their highest level since the start of the pandemic. Investment Grade Corporate Bonds ( LQD ) also rose for the day. Commodities remained about the same, with Wood and Copper having the most gains for the day.

The put/call ratio dropped to 0.597. The CNN Fear & Greed index moved into the Greed area but is still near Neutral.

All four of the largest mega-caps gained for the day, with Apple AAPL ) advancing +3.04% to a new all-time high. The gain came after news that Alphabet will pay Apple almost $15 billion this year to retain its position as the default search option in iOS. PayPal ( PYPL ) was the top mega-cap for the day. The big banks were at the bottom of the mega-cap list. UP Fintech ( TIGR ) was the top growth stock in the daily update list.

RobinHood (HOOD) was the worst-performing stock in the list, losing over -6%. The SEC said that banning payment for order flow is a possibility.

Zoom Video (ZM) disappointed investors in its earnings call. The company showed slowing growth despite beating analyst expectations. They also announced an acquisition of Five9 FIVN ). Zoom was down more than 12% in after-hours trading. Five9 was down more than 10%.

Hurricane Ida hit New Orleans this weekend and stayed around long enough to disrupt power and possibly impact fuel supply. That sent oil prices up, but the Energy sector was at the bottom of the sector list.

Looking ahead

Inflation data for Europe will be available on Tuesday morning. CB Consumer Confidence data will be released after the market opens. API Weekly Crude Oil Stock is updated after the market closes.

CrowdStrike ( CRWD ), NetEase NTES ), and FUTU Holdings ( FUTU ) release earnings .

Trends, Support, and Resistance

It was another new all-time high for the Nasdaq today.

The trend line from the 8/19 low and the one-day trend line both point to about a +0.68% gain for Tuesday.

The five-day trend line ends with a lateral move of +0.04%.

Wrap-up

Jerome Powell’s speech at Jackson Hole last week is still being absorbed into the market. The impact is more bullish investor sentiment in both the equity and bond markets.

There is quite a bit of space between today’s close and the 21d exponential moving average . So although the candle is bullish today, a lateral move or even minor pullback would be constructive for tomorrow.

The expectation is set for Sideways or Higher. Lower would not be a big surprise.

Stay healthy and trade safe!

Comments

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