Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
Thursday, September 02, 2021
Facts: +0.14%, Volume lower, Closing Range: 48%, Body: 29% Red
Good: Support forming at 15,300. Sideways move allowing moving averages to catch up.
Bad: Resistance near the weekly high
Highs/Lows: Higher high, Higher low
Candle: Outside day, red body above longer lower wick
Advance/Decline: 1.24, more advancing stocks than declining stocks
Indexes:SPX (+0.28%), DJI (+0.37%), RUT (+0.74%), VIX (+1.86%)
Sector List: Energy ( XLE +2.54%) and Industrials ( XLI +1.08%) at the top. Technology ( XLK -0.11%) and Communications ( XLC -0.67%) at the bottom.
Expectation: Sideways or Lower
Jobs data in the morning improved the economic outlook even while the pandemic remains relentless. Cyclical and defensive sectors outperformed while growth sectors declined for the day.
The Nasdaq gained +0.14% for the day. Volume was lower than the previous day. The 29% red body sits above a longer lower wick and below a shorter upper wick. The closing range of 48% is in the middle of an outside day where the high is higher, and the low is lower than the previous day. That’s two days of sideways trading near the all-time high for the index. There were more advancing stocks than declining stocks today.
Small-caps continue to outperform as the Russell 2000 (RUT) advanced +0.75% today. The S&P 500 (SPX) gained +0.28%, while the Dow Jones Industrial Average (DJI) gained +0.37%. The VIXVolatility Index ( VIX ) gained +1.86% for the day. The Nasdaq and S&P 500 finished the day with more record closes.
Energy ( XLE +2.54%) bounced back above its 21d EMA after declining to the 200d MA this week. Industrials ( XLI +1.08%) was the second-best sector. The growth sectors were the only ones to fall today. Technology ( XLK -0.11%) and Communications ( XLC -0.67%) were at the bottom of the list.
Continuing and Initial Jobless claims were lower than expected, showing significant progress for the economic recovery. Trade Balance was also better than expected with Exports growing and Imports declining. The US Dollar continues to weaken, declining -0.31% today. US Treasuries also dropped for the day. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices increased.
The put/call ratio ( PCCE ) declined to 0.505, starting to get into the overly bullish area. The CNN Fear & Greed index is hovering just above Neutral in the Greed area. The NAAIM money manager exposure index rose to 93.95 from 92.83 in the previous week.
Exxon Mobil ( XOM ) was the best mega-cap of the day, gaining +2.44% and helping Energy lead the sector list for the day. Amazon ( AMZN ) is getting support at its 50d moving average line but declined -0.46% today.
Visa (V) and Mastercard (MA) were the bottom two mega-caps, losing over 2% each. Digital Turbine (APPS) is back on top of the daily update growth list after having a massive gain on Tuesday. Chewy ( CHWY ) was at the bottom of the list, declining -9.29%. Growth is slowing for the company, and analysts were disappointed with guidance during yesterday’s earnings call.
Employment data on Friday morning will show the progress in the labor market recovery. It is data watched closely by the Fed to determine economic policy. We’ll also get the Non-Manufacturing Purchasing Managers Index.
Trends, Support, and Resistance
The Nasdaq set a new all-time high on an outside day for the index. The index moved sideways the last two days.
The trend line from the 8/19 low points to a +1.28% gain for Friday.
The five-day trend line ends with a +0.91% gain.
The one-day trend line would result in a decline of -0.53% for tomorrow.
All eyes are on the employment data to be available on Friday morning. The market is showing some indecision awaiting the data. The inside day on Tuesday, followed by a faded rally (long upper wick) on Wednesday, and now an outside day today puts that indecision on display.
Small-caps continue to outperform, and that should continue if the Employment data is good on Friday. The Russell 2000 is approaching the upper boundary of a trading range it’s been within since February. It will take some momentum to break through the upper bound.
Stay healthy and trade safe!
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