Daily Market Update for 9/7

Original Chart

Notes

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

Tuesday, September 07, 2021

Facts: +0.07%, Volume lower, Closing Range: 52%, Body: 3% Red
Good: Higher high, higher low on increased volume
Bad: Low A/D ratio, thin red body in middle of candle signals indecision
Highs/Lows: Higher high, Higher low
Candle: Indecisive doji style candle shows buyers and sellers in the market
Advance/Decline: 0.45, two declining stocks for every advancing stock
Indexes:SPX (-0.34%), DJI (-0.76%), RUT (-0.72%), VIX (+10.54%)
Sector List: Consumer Discretionary ( XLY +0.29%) and Communications ( XLC +0.23%) at the top. Utilities ( XLU -1.32%) and Industrials XLI -1.73%) at the bottom.
Expectation: Sideways or Lower

Market Overview

Markets closed the day with mixed results as investors worried about a slowing economy and uncertainty around when the Fed would start bond tapering. Big Tech was viewed as the safe bet, helping keep the growth sectors and the Nasdaq positive for the day.

The Nasdaq ended the day with a +0.07% gain, setting a new all-time and another record close. The 3% red body rests in the middle of the candle, representing the indecision for buyers and sellers during the day. The closing range of 52% is ok. The fight between bulls and bears created a higher volume day than the previous day. There were over two declining stocks for every advancing stock.

The S&P 500 (SPX) declined -0.34%. The Russell 2000 (RUT) lost -0.72%. The Dow Jones Industrial Average (DJI) was the worst of the major indexes, falling -0.76% and following the cyclical sectors underperforming for the day. The VIXVolatility Index ( VIX ) gained +10.54%.

Only the growth sectors ended the day with gains. Consumer Discretionary ( XLY +0.29%) and Communications ( XLC +0.23%) are at the top of the sector list. Utilities ( XLU -1.32%) and Industrials XLI -1.73%) were at the bottom. Losses by 3M Amgen , and Honeywell brought down the Industrials ETF and led the Dow Jones lower.

The US Dollar strengthened today after sliding for the past few weeks. The USD Currency Index ( DXY ) climbed by +0.34%. US Treasury Yields for both long and short-term notes rose for the day. Despite the disappointing jobs report on Friday, bond investors still believe the Fed will continue plans to start tapering bond purchases this fall. The lower demand moves bond prices lower and yields higher.

High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices also fell sharply today. The price movement is tracking along with Treasury prices. The demand for high-yield corporate bonds has been at its highest point since the start of the pandemic as investors seek higher returns. If Treasury yields rise, expect investors to rebalance back toward less risky instruments.

The Put/Call ratio declined to 0.609. The ratio signals that investors remain bullish . The CNN Fear & Greed index remained near neutral.

Three of the four largest mega-caps gained for the day. Only Microsoft MSFT ) declined, testing its 21d EMA but getting support at the key line. Apple AAPL ) gained +1.55% for the day. The top mega-cap for the day was Alibaba (BABA). Chinese stocks got a boost from better than expected trade data for China and Hong Kong reopening their border.

Chinese stocks FUTU Holding ( FUTU ) and JD .com ( JD ) topped the daily update growth list. In third and fourth place were DraftKings DKNG ) and Penn National Gaming ( PENN ), finishing their first weekend of College football and entering the first week of the NFL DocuSign DOCU ) was at the bottom of the list, giving back all of its gains from Friday’s earnings reaction.

Looking ahead

The JOLTs Job Openings report is due on Wednesday. The information could contrast last week’s employment data and show more openings than people willing to fill. With Federal Unemployment Benefits ending this week, supply in the labor market will pick up, helping to fill job openings.

There is a 10-year note auction in the afternoon. Around the same time, the NY Fed’s John Williams is scheduled to speak, and investors will be listening for any taper talk. Expect a reaction in Treasuries to spill over to the USD and Equities.

Lululemon (LULU), Coupa Software (COUP), GameStop ( GME ), and RH RH ) will report earnings on Wednesday.

Trends, Support, and Resistance

The Nasdaq set a new all-time high and record close. Still, there is resistance around 15,400. Watch that area for a breakout this week or for continued resistance to send the index lower.

The trend line from the 8/19 low points to a +1.32% gain for Wednesday.

The one-day and five-day trend lines end with a +0.32% gain.

Wrap-up

Without much economic news to influence investors, nervous sentiment spilled over from Friday’s jobs report. That all could quickly change with new economic data tomorrow and an update from the Fed just as the 10y Treasury Note auction completes.

Based on the Nasdaq chart and the narrow gains focused on big tech today, the expectation is for Sideways or Lower tomorrow.

Stay healthy and trade safe!

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