Daily Market Update for 11/12

Original Chart

Notes

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

Friday, November 12, 2021

Facts: +1.00%, Volume higher, Closing Range: 92%, Body: 64% Green
Good: Gain on higher volume , higher high, higher low
Bad: Nothing
Highs/Lows: Higher high, Higher low
Candle: Thick green body, longer lower wick
Advance/Decline: 0.97, about equal advancing and declining stocks
Indexes:SPX (+0.72%), DJI (+0.50%), RUT (+0.11%), VIX (-7.76%)
Sector List: Communications ( XLC +1.46%) and Technology ( XLK +1.22%) at the top. Utilities ( XLU -0.06%) and Energy ( XLE -0.24%) at the bottom.
Expectation: Sideways or Higher

Market Overview

Investors brushed off fears of inflation and sent indexes higher, led by big tech and growth sectors.

The Nasdaq closed 1% higher on higher volume , signaling the investor hopes for a bounce after dipping this week. The candle has a 64% green body and a longer lower wick, formed right after the market open. There is a tiny upper wick above a 92% closing range. There were about the same number of advancing stocks as declining stocks.

The S&P 500 (SPX) , boosted by the growth sectors, rose +0.72% for the day. The Dow Jones Industrial Average (DJI) gained +0.50%. The Russell 2000 (RUT) rose just +0.11% as small-caps trailed big tech in performance. The VIXVolatility Index declined -7.76%.

Communications ( XLC +1.46%) and Technology ( XLK +1.22%) far outperformed the other S&P 500 sectors for the day. At the bottom of the list, utilities ( XLU -0.06%) and Energy ( XLE -0.24%) were the only sectors to decline.

JOLTs Job Openings came in at 10.438 million against the expectation for 10.3 million. The higher number of openings shows the struggle companies have in hiring workers who are voluntarily leaving jobs in record numbers.

Michigan Consumer Sentiment was at 66.8 compared to an expected 72.4. Consumer Expectations was 62.8 against the expectation of 70.0. The market didn’t seem surprised by the lower numbers and may have been ready for the bad news given inflation data that came earlier in the week.

The US Dollar weakened slightly, with the index ( DXY ) declining -0.03%. The US 30y Treasury Yield rose while the 10y and 2y yields fell. High Yield ( HYG ) Corporate Bond prices advanced while Investment Grade ( LQD ) Corporate Bond prices declined. Silver and Gold prices continued to rise as an investor hedge against inflation .

The put/call ratio ( PCCE ) dropped to 0.526. The CNN Fear & Greed index is in Extreme Greed. The NAAIM money manager exposure index remained above 100, coming in at 103.69 this week. The index remained elevated in November 2020 as well.

The four largest mega-caps all gained for the day. Apple AAPL ) rose above its 21d EMA , closing with a +1.43% gain. All four stocks are now above their key moving averages. Alphabet GOOGL ) had the biggest gain, increasing +2.00%.

Shopify (SHOP) entered the mega-cap list with a +12.02% gain today. The stock soared on seemingly no news. The company did report great earnings a few weeks ago, and there is commentary in the press that consumers are getting holiday shopping done early and seeking deals online to avoid inflation prices. Tesla was the worst-performing mega-cap of the day, declining -2.83%.

The Daily Update Growth List was full of gainers today. DoorDash (DASH) topped the list with a +8.16%. The delivery company is up nearly 30% since its earnings release earlier in the week. Lemonade LMND ) was at the bottom of the growth list with a -2.87% decline.

Looking ahead

The New York Empire State Manufacturing Index for November will be available on Monday.

Lucid (LCID), Tyson Foods TSN ), Warner Music ( WMG ), and Porch Group (PRCH) are a few of the earnings reports to start the week.

Trends, Support, and Resistance

The Nasdaq is working its way back toward last week’s record high.

If the index can return to the trend line from the 10/4 low, it will mean a +1.65% gain for Monday.

If the one-day trend continues into Monday, it would mean a +0.90% advance.

The five-day trend line points to a -1.33% gain for the first day of next week.

Wrap-up

It’s not clear what changed investors’ outlook toward inflation . It could be that there wasn’t much worry about the data released earlier in the week and that the indexes just needed to pull back after a strong rally.

However, today’s gain takes the index to a 0.6 retracement level that could turn to resistance and send it lower. Looking at the weekly chart for the Nasdaq, we have an inside week signaling a fight between bulls and bears.

The expectation for Monday is for Sideways or Higher. The current bull rally is intact, but I’ll be more confident when we break back above the 16,000 level.

Stay healthy and trade safe!

Comments

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