Daily Market Update for 9/17

Notes

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

The Daily Market Update growth list is here: https://www.tradingview.com/watchlists/3… It is not a list of all growth stocks, and the stocks in the list are not recommendations.

Friday, September 17, 2021

Facts: -0.91%, Volume higher, Closing Range: 27%, Body: 71% Red
Good: Support at 15,000
Bad: Close below 21d EMA , lower high
Highs/Lows: Lower high, Lower low
Candle: Mostly red body with a small lower wick
Advance/Decline: 0.82, more declining stocks than advancing stocks
Indexes:SPX (-0.91%), DJI (-0.48%), RUT (+0.18%), VIX (+11.34%)
Sector List: Health ( XLV +0.10%) and Consumer Discretionary ( XLY -0.35%) at the top. Technology ( XLK -1.56%) and Materials ( XLB -2.06%) at the bottom.
Expectation: Sideways or Lower

Market Overview

Indexes closed lower while volume soared on quadruple-witching Friday. Only the Russell 2000 was able to end the day with gains.

The Nasdaq moved back below its 21d EMA with a -0.91% decline today. Volume was more than 50% over average daily volume due to index and stock options expiration. The candle is primarily red body with a small lower wick. The closing range of 27% came after a rally before close. There were more declining stocks than advancing stocks.

The Russell 2000 (RUT) was the only index to gain for the day, advancing +0.18%. The S&P 500 (SPX) declined -0.91%, and the Dow Jones Industrial Average (DJI) fell -0.48%. The VIXVolatility index rose +11.34%.

Only the Health ( XLV +0.10%) sector ended the day with gains. Consumer Discretionary ( XLY -0.35%) was the second-best sector but declined for the day. Technology ( XLK -1.56%) and Materials ( XLB -2.06%) were at the bottom of the sector list.

Michigan Consumer Sentiment data was slightly lower than expected. The US Dollar strengthened by +0.41%. Treasury Yields continue to rise as bond investors anticipate the Fed to begin tapering bond purchases later this year. Both High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices tracked along with Treasury prices to close lower.

Silver dropped another -2.33%, while Gold remained about the same. Timber declined -1.40%. Aluminum is holding near record-high levels.

The put/call ratio ( PCCE ) rose 0.747. The CNN Fear & Greed index moved closer to Extreme Fear.
The NAAIM money manager exposure index rose to 87.02 from 84.68 the previous week.

All of the four largest mega-caps declined. Microsoft MSFT ) closed just above its 21d EMA . Amazon ( AMZN ) also is above its 21d EMA and 50d MA. Alphabet GOOGL ) dropped below its 21d EMA , and Apple AAPL ) moved below its 50d MA.

The mega-cap list had only ten advancing stocks for the day. Thermo Fisher Scientific TMO ) was the top gainer with a 6.49% advance. The company provided strong guidance on growth at its investor’s day event. PayPal ( PYPL ) was at the bottom of the list, declining -2.34%. Digital Turbine (APPS) was the top gainer in the daily update growth list.

Looking ahead

There is not much economic news scheduled for Monday. Watch for news on the $3.5 trillion budget that will include a corporate tax hike. Also, look for any signs from the Fed that bond tapering will begin.

There are no relevant earnings reports for Monday.

Trends, Support, and Resistance

The Nasdaq moved back below the 21d EMA but found support above 15,000.

If the five-day trend line continues into Monday, it will end with a +0.22% gain.

The trend line from the 9/7 high points to a -0.48% decline.

The one-day trend line ends with a -0.75% decline.

Wrap-up

A broad sell-off comes during a week of ups and downs among robust economic data. A positive for the economy, the data raises the possibility of the Fed tapering bond purchases faster. The result is rising yields on Treasury bonds and a strong US dollar , and both apply downward pressure on big tech and growth stocks.

Add to that the potential for increased corporate taxes eating into earnings , and investors can expect further declines in the major indexes.

The expectation for Monday is sideways or lower.

Stay healthy and trade safe!