Daily Market Update for 10/25

Original Chart

Notes

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

Monday, October 25, 2021

Facts: +0.90%, Volume lower, Closing Range: 83%, Body: 44% Green
Good: Higher high, higher low, advance/decline ratio
Bad: Nothing
Highs/Lows: Higher high, Higher low
Candle: Green body above previous days red body, longer lower wick
Advance/Decline: 1.19, more advancing than declining stocks
Indexes:SPX (+0.47%), DJI (+0.18%), RUT (+0.93%), VIX (-1.23%)
Sector List: Consumer Discretionary ( XLY +2.48%) and Energy ( XLE +1.47%) at the top. Financials ( XLF -0.12%) and Utilities ( XLU -0.43%) at the bottom.
Expectation: Higher

Market Overview

Tesla led major indexes and the Consumer Discretionary sector higher today as it became the newest trillion-dollar company after announcing a 100k car order from Hertz. That sent EV stocks higher and kicked off a big earnings week with fresh optimism.

The Nasdaq finished the day with a +0.90% climb. The index rose throughout the morning to settle just above last week’s high. The green body covers 44% of the candle and is almost entirely above Friday’s red body. The long lower wick formed after the market opened, but the index quickly turned to the upside to close with an 83% closing range. There were more advancing than declining stocks.

Small-caps outperformed for the day, with the Russell 2000 (RUT) gaining +0.93%. The S&P 500 (SPX) rose +0.47%, while the Dow Jones Industrial Average (DJI) advanced +0.18%. The VIXVolatility Index ( VIX ) declined -1.23%.

Consumer Discretionary ( XLY +2.48%) led the sector list, boosted by Tesla . Energy ( XLE +1.47%) was the second-best sector as energy prices continued to soar on high demand. Financials ( XLF -0.12%) and Utilities ( XLU -0.43%) were the bottom two sectors for today.

The US Dollar index DXY ) gained +0.23%. The US 30y Treasury Yield rose while the 10y and 2y yields declined. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices rose. Silver and Gold prices climbed despite the stronger dollar. Crude Oil Futures continued to march higher.

The put/call ratio ( PCCE ) dropped to 0.531. The CNN Fear & Greed index is moving closer to Extreme Fear.

The four largest mega-caps underperformed the market. They all declined today as their earnings reports approach this week. Amazon ( AMZN ) and Alphabet GOOGL ) are below their 21d EMA and 50d MA lines, while Apple AAPL ) and Microsoft MSFT ) are above the critical moving averages.

Tesla TSLA ) passed Facebook as the fifth largest mega-cap and became the latest trillion-dollar company. The company topped the mega-cap list with a +12.66%, thanks to the 100k card order from Hertz. PayPal was in a distant second, with a +2.70% gain after the company called off any intentions to acquire Pinterest. Danaher ( DHR ) was the worst-performing mega-cap for the day, declining -2.32%.

After Tesla NIO NIO ) was the second-best stock in the Daily Update Growth List, gaining +6.15%. Most Electric Vehicle stocks gained today, thanks to the Tesla news showing the broad movement to electric is closer than previously expected. Pinterest (PINS) declined -12.71%, ending up at the bottom of the list. They reversed last week’s gains that came on the PayPal acquisition news.

Facebook FB ) shares rose 2% after hours, thanks to an earnings beat. Investors shrugged off the whistleblower report.

Looking ahead

Consumer Confidence numbers for October and New Home Sales for September will be available tomorrow morning. The API Weekly Crude Oil Stock will get an update after the market closes.

Microsoft MSFT ), Alphabet GOOGL ), Visa (V), Eli Lilly ( LLY ), United Parcel Service (UPS), AMD AMD ), Raytheon RTX ), General Electric ( GE ), 3M MMM ), Lockheed Marin ( LMT ), Chubb CB ), Sherwin-William ( SHW ), Twitter TWTR ), RobinHood (HOOD), Enphase ( ENPH ), Logitech ( LOGI ), F5 Networks FFIV ), Quantumscape ( QS ), Juniper ( JNPR ), and InMode INMD ) are just a small list of the many companies across sectors reporting earnings tomorrow. Many of those reports will be seen as a barometer for their respective segments.

Check your portfolio for earnings reports this week.

Trends, Support, and Resistance

The Nasdaq had a constructive gain today with more advancing stocks than declining stocks. There may be some resistance at 12,250, but overall the uptrend is intact.

The one-day trend line results in a +1.04% gain for Tuesday.

The trend line from the 10/4 low ends with a +0.60% advance.

The five-day trend line is flatter and points to a -0.22% decline for tomorrow.

Wrap-up

The news on Tesla in the morning and the Facebook earnings after hours is a tremendous bullish start to the week. With most of the significant earnings reports coming in the after-hours tomorrow, we should see good momentum at the market open. However, watch out for the UPS earnings report and the Consumer Confidence numbers as two data points that could raise concern.

The expectation for tomorrow is Higher.

Stay healthy and trade safe!

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