Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
Wednesday, September 01 , 2021
Facts: +0.33%, Volume higher, Closing Range: 30% (w/gap), Body: 1% Green
Good: Gain on higher volume , higher high, higher low
Bad: Fade from new all-time high
Highs/Lows: Higher high, Higher low
Candle:Gap-up to long upper wick, almost no body, no lower wick
Advance/Decline: 0.99, one advancing for every declining stock
Indexes:SPX (+0.03%), DJI (-0.14%), RUT (+0.58%), VIX (-2.25%)
Sector List: Real Estate ( XLRE +1.72%) and Utilities ( XLU +1.31%) at the top. Financials ( XLF -0.57%) and Energy ( XLE -1.47%) at the bottom.
Expectation: Sideways or Lower
Markets rallied in the morning before investors turned defensive and the gains faded, weighed down by big tech stocks that all sold off in the later afternoon. Regardless, most of the market held onto some gain for the day.
The Nasdaq closed with a +0.33% gain but was up 0.80% midday. Volume was higher than the previous day. A gap-up at open turned into a morning rally, creating a long upper wick with no lower wick. However, the index faded in the afternoon, leaving a green body covering only 1% of the candle. There was an equal number of advancing and declining stocks for the day.
Real Estate ( XLRE +1.72%) and Utilities ( XLU +1.31%) led the sector list as investors were defensive on the first day of September, typically a bearish month in the markets. Cyclical sectors declined for the day, with Financials ( XLF -0.57%) and Energy ( XLE -1.47%) at the bottom of the sector list.
It’s not clear what caused the selling in the afternoon. Morning economic data had Investors already skittish with defensive sectors leading the whole day, but indexes still rose. The Fed’s Raphael Bostic made comments around noon that may have spooked the market. He stated that a surge in evictions may weigh on the economic recovery and said it is reasonable that bond-buying taper could start in October.
ADP Nonfarm Employment change data was less than forecast. Manufacturing PMI was higher than expected, and demand for Crude Oil beat the forecast. The US Dollar weakened further, declining -0.15% today. US 30y and 10y Treasury Yields fell while the US 2y Treasury yield remained about the same. High Yield Corporate Bond ( HYG ) prices declined sharply after making a new post-pandemic high. Investment Grade Corporate Bond ( LQD ) prices also fell slightly. Most of the commodity prices I track remained about the same, although Copper and Aluminum declined.
All four of the largest mega-caps retreated from mid-day highs, bringing down the Nasdaq with them. Alibaba (BABA) was the top-performing mega-cap for the day as Chinese stocks all seemed to do well. FUTU Holdings ( FUTU ) and UP Fintech ( TIGR ) were the top stocks in the daily update growth list, helped by FUTU showing strong growth and beating street expectations.
September is historically one of the most bearish months. Last September, the Nasdaq retreated 13%, and the S&P 500 fell 10%. The Russell 2000 (RUT) also retreated 10% last September but then finished the year with a 50% gain from its September low.
Thursday morning will bring an update to Exports/Imports for July and Initial Jobless Claims for the week.
Trends, Support, and Resistance
The Nasdaq set another new all-time high and record close today.
The one-day trend line ends with a +0.12% gain for tomorrow.
The long upper wick has a more bearish look and may result in a decline for Wednesday.
Investors entered the new month with optimism, sending indexes higher. Then it seemed they suddenly realized it was September. September is historically a bearish month, with the last three years seeing dips in the month. Is this a year that September will buck the trend?
Based on the long upper wick and almost no candle body after a gap-up and rally, the expectation for tomorrow is Sideways or Lower.
Stay healthy and trade safe!
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