Daily Market Update for 10/1

Original Chart

Notes

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

Friday, October 1, 2021

Facts: +0.82%, Volume lower, Closing Range: 86%, Body: 25% Green
Good: High closing range, closed above the 14,500 support area
Bad: Big dip in the morning, gain on lower volume
Highs/Lows: Lower high, Lower low
Candle: Long lower wick under a small green body in the upper half of the candle
Advance/Decline: Not available today
Indexes:SPX (+1.15%), DJI (+1.43%), RUT (+1.69%), VIX (-8.60%)
Sector List: Energy ( XLE +3.36%) and Communications ( XLC +1.69%) at the top. Health ( XLV +0.02%) and Utilities ( XLU +0.00%) at the bottom.
Expectation: Sideways

Market Overview

Markets fell in the morning before bouncing and closing higher as investors returned to reopening trades and went hunting for discounts in the growth sectors.

The Nasdaq closed the day with a +0.82% gain. Volume was lower than the previous day. The 25% green body sits above a long lower wick that formed in the morning. The index recovered to end the day with a 86% closing range. The lower high and lower low for the day continues a downtrend.

Small caps performed well for the day, with the Russell 2000 (RUT) gaining +1.69%. The S&P 500 (SPX) advanced +1.15%, while the Dow Jones Industrial Average (DJI) gained +1.43%. The VIXVolatility Index declined -8.60% but remains above moving averages.

All sectors gained for the day. Energy ( XLE +3.36%) and Communications ( XLC +1.69%) were at the top of the sector list. Health ( XLV +0.02%) and Utilities ( XLU +0.00%) were at the bottom.

PCE Price Index data was higher than forecast, but not enough to alarm investors. Manufacturing data showed higher than expected activity. Consumer Sentiment numbers were higher than forecast.

The US Dollar index DXY ) fell for another day after hitting a 52-week high on Wednesday. Treasury yields also retreated for the day. The gap between long-term and short-term yields is widening.

The put/call ratio ( PCCE ) declined to 0.737. The CNN Fear & Greed index moved back into the Fear range after dipping to Extreme Fear earlier this week. The NAAIM money manager exposure index declined to 55.02 from 77.7 the previous week.

Microsoft MSFT ) and Alphabet GOOGL ) gained over +2% as investors bought big tech stocks at a discount . Merck ( MRK ) entered the mega-cap list with a +8.37% gain after announcing an anti-viral pill that lowers the risk of hospitalization and death in COVID patients. Walt Disney (DIS) gained +4.04% for the day after settling a lawsuit with Scarlett Johansson. Alibaba (BABA) sat at the bottom of the mega-cap list with a -2.60% decline.

PENN National Gaming ( PENN ) and DraftKings DKNG ) were at the top of the daily update growth list with +8.52% and +4.98% gains. At the bottom of the list were RH RH ) and Lemonade MND ), both declining more than -3%.

Looking ahead

There is an OPEC meeting scheduled for Monday morning. Factory Orders data for August will be available after the market opens.

Trends, Support, and Resistance

The Nasdaq dipped to 14,300 before recovering and closing above the 14,500 support area .

The one-day trend line leads to a +1.65% gain on Monday.

Following the trend line from the 9/7 high would result in a -0.40% decline.

The five-day trend line ends with a -1.90% loss.

Wrap-up

It was nice to end the week with a gain in the markets. However, the gain came on lower volume , and the Nasdaq is still in a downtrend. Still, investors seemed optimistic about the economy as they increased bets in reopening trades and shopped for discounts in big tech stocks. It’s amazing what a little pill can do for optimism. Thanks Merck!

The expectation for Monday is Sideways, while the market determines if today’s low was a bottom.

Stay healthy and trade safe!

Comments

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