Daily Market Update for 10/21

Original Chart

Notes

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

Thursday, October 21, 2021

Facts: +0.62%, Volume higher, Closing Range: 95%, Body: 87% Green
Good: Another HH/HL day, thick green body, higher volume
Bad:Advance/decline ratio
Highs/Lows: Higher high, Higher low
Candle: Thick green body with tiny upper and lower wicks
Advance/Decline: 0.72, more declining than advancing stocks
Indexes:SPX (+0.30%), DJI (-0.02%), RUT (+0.28%), VIX (-3.10%)
Sector List: Consumer Discretionary ( XLY +1.47%) and Health ( XLV +0.41%) at the top. Financials ( XLF -0.42%) and Energy ( XLE -1.85%) at the bottom.
Expectation: Sideways or Higher

Market Overview

Investors continued the bullish rally on positive earnings reports, sending the S&P 500 to a new record close. However, it wasn’t all positive, with some companies taking a beating after disappointing results.

The Nasdaq gained +0.62% on a much higher volume than the previous day. The 87% green body covers the candle, leaving behind tiny upper and lower wicks. The closing range was 95%. Despite the bullish candle, there were more declining stocks than advancing stocks in the index.

The S&P 500 (SPX) hit a new record close, gaining +0.30% for the day. The Russell 2000 (RUT) climbed by +0.28%, while a disappointing earnings report from IBM held down the Dow Jones Industrial Average (DJI). The industrial index declined -0.02% for the day. The VIXVolatility Index fell -3.10%, ending the day with its lowest close since the start of the pandemic.

Consumer Discretionary ( XLY +1.47%) and Health ( XLV +0.41%) were at the top of the sector list. The cyclical sectors underperformed, with Financials ( XLF -0.42%) and Energy ( XLE -1.85%) losing the most for the day.

Initial Jobless Claims were at 290,000 compared to a forecast of 300,000. The Philadelphia Fed Manufacturing Index missed expectations, signaling some slowdown in demand. The index measured 23.8 against a forecast of 25.0. Existing Home Sales for September were 6.29 million compared to the forecast of 6.09 million.

The US Dollar index DXY ) rose by +0.17%. US Treasury Yields rose while the gap between long-term and short-term yields tightened. Both High Yield ( HYG ) and Investment Grade ( LQD ) corporate bond prices declined, impacted by rising yields (yields go up, prices go down). Copper and Aluminum Futures fell sharply, dropping -3.52% and -5.57%.

The put/call ratio ( PCCE ) remained about the same, ending the day at 0.548. The CNN Fear & Greed index is inching toward the Extreme Greed range. The NAAIM money manager exposure index rose to 98.02 from 64.46 the previous week.

Microsoft MSFT ) led the four largest mega-caps higher, gaining +1.09% for the day. Apple AAPL ), Amazon ( AMZN ), and Alphabet GOOGL ) all had gained, and their respective charts look healthy. Netflix NFLX ) rose +4.48%, topping the mega-cap list after the market reacted negatively to a stellar earnings report two days earlier. PayPal ( PYPL ) declined sharply for a second day, dropping -5.86% today and ending at the bottom of the mega-cap list.

IBM IBM ) fell -9.56% after missing expectations on earnings , weighing down the Dow for the day.

FUTU Holdings ( FUTU ) and UP Fintech ( TIGR ) topped the Daily Update Growth List as the two Chinese brokerages bounced back from a sharp sell-off last week. Fiverr ( FVRR ) and PayPal ( PYPL ) are at the bottom of the list, declining -3.91% and -5.86%.

Digital World Acquisition Corp ( DWAC ) rose +356.83% after revealing they would facilitate a reverse merger with Donald Trump’s new media company, Trump Media & Technology Group.

Looking ahead

Manufacturing and Services PMI data becomes available Friday morning as the market opens. Jerome Powell is scheduled to speak later in the morning.

Honeywell (HON), American Express AXP ), and Royal Caribbean ( RCL ) release earnings tomorrow.

Trends, Support, and Resistance

The Nasdaq continued its uptrend today with another higher high and higher low.

The five-day trend line points to a +0.62% gain for Friday.

The one-day and five-day trend lines point to a +0.17% advance.

Wrap-up

The bullish sentiment continues as the S&P 500 (SPX) sets yet another record close for the year. While bond tapering is sure to begin in the next month, investors seem to be ready for the transition. The next deadline for the government budget and dead ceiling is in December, which allows for some more time before a potential event that will change sentiment.

The expectation continues to be Sideways or Higher until the market tells us something different.

Stay healthy and trade safe!

Comments

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