Daily Market Update for 9/10

Original Chart

Notes

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

Friday, September 10, 2021

Facts: -0.87%, Volume higher, Closing Range: 2%, Body: 91% Red
Good: Stayed above 21d EMA , but maybe just because the market closed
Bad: Failed support at 15,200, all red body candle
Highs/Lows: Lower high, Lower low
Candle: Tiny upper wick and no lower wick, all red body
Advance/Decline: 0.36, three declining stocks for every advancing stock
Indexes:SPX (-0.77%), DJI (-0.78%), RUT (-0.96%), VIX (+11.44%)
Sector List: Materials ( XLB -0.02%) and Energy ( XLE -0.04%) at the top. Real Estate ( XLRE -1.26%) and Utilities ( XLU -1.40%) at the bottom.
Expectation: Lower

Market Overview

Markets reacted on fears of a slowing economy while demand remains higher than supply in several parts of the economy, and indicators show continued inflation for producers. The day marks the fourth straight session of declines for equities.

The Nasdaq lost -0.87% for the day on a higher volume than average. The candle is 91% red body with a tiny upper wick and barely visible lower wick. The closing range was 2%. There were three declining stocks for every advancing stock.

The Russell 2000 (RUT) led the losses for the day with a -0.96% decline. The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) lost -0.77% and -0.78%. The VIXVolatility Index ( VIX ) rose +11.44%.

All sectors declined today. Materials ( XLB -0.02%) and Energy ( XLE -0.04%) performed the best while Real Estate ( XLRE -1.26%) and Utilities ( XLU -1.40%) were at the bottom of the sector list. It’s notable that after 13:00, when the afternoon selling began, Utilities and Consumer Staples outperformed the other sectors.

Producer price index data was higher than expected, showing that inflation will be here for a while. The indicator is a good forward predictor of inflation as higher producer prices get passed along to consumers. The US Dollar strengthened, and Treasury Yields rose after the data was released. The dollar index advanced +0.13%. Both High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices declined for the day.

Aluminum continued its climb, gaining over 7% this week. Copper is also starting to climb sharply, advancing +3.34% for the day. Timber has been on a decline this week and lost another -0.32% on Friday. Crude Oil Futures are still bouncing inside a range since the end of August.

The put/call ratio rose to 0.729 as investors became a bit more bearish on Friday. The CNN Fear & Greed index moved well into the Fear area, approaching Extreme Fear.

Apple AAPL ) lost -3.31% today after a judge ruled that the company must make the rules in its app store more flexible. Microsoft MSFT ) and Alphabet GOOGL ) joined Apple with declines that took them below their 21d EMA . Amazon ( AMZN ) declined as well but remained above its key moving average lines.

Nvidia NVDA ) topped a shortlist of mega-caps that gained for the day, advancing +1.36%. Apple was the worst-performing mega-cap, followed by United Health ( UNH ) and Tesla TSLA ).

UP Fintech ( TIGR ), Peloton (PTON), and Zynga ZNGA ) topped the daily update growth list with more than 6% gains each. Investors forgave UP Fintech for missing expectations as the company still grew sales almost 100% year over year, and the outlook appears promising. After two analyst downgrades, Sumo Digital (SUMO) was at the bottom of the list with a +9.49% decline. Earnings were good, but the growth outlook was driven mainly by a single large customer.

Looking ahead

OPEC’s Monthly report is due on Monday morning. The Federal Budget Balance comes in the afternoon.

Oracle ORCL ) reports earnings on Monday.

Trends, Support, and Resistance

The Nasdaq lost support at 15,200 and sold off in the afternoon, closing above its 21d exponential moving average . The move had the feeling it would have kept going if the closing bell didn’t ring.

The index would need to climb +2.73% on Monday to get back to the trend line from the 8/19 low.

The five-day trend line , which is in decline, ends with a +0.57% gain for Monday.

If the one-day trend continues, the index will decline another +0.62% to start next week.

Wrap-up

The sour mood for the market in the morning seemed to change around mid-day, but then investors turned defensive again in the afternoon. That sent indexes lower. Although defensive sectors were at the bottom of the daily sector list, they outperformed the other sectors in the afternoon selling.

The question is whether the bearish mood in the afternoon is just defense heading into the weekend while COVID fears continue to rise. Or will markets catch a bottom here, and investors buy the dip to start the week? Based on the chart, I expect Lower on Monday, with little economic news to change the mood.

Stay healthy and trade safe!

Comments

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