Daily Market Update for 11/16

Original Chart

Notes

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

Tuesday, November 16, 2021

Facts: +0.76%, Volume higher, Closing Range: 90%, Body: 81% Green
Good: Thick green body, consistent climb throughout day, higher volume
Bad: Resistance at 16,000, advance/decline ratio
Highs/Lows: Higher high, Higher low
Candle: Most green body, equal small upper and lower wick
Advance/Decline: 0.59, more than three declining stocks for every two advancing stocks
Indexes:SPX (+0.39%), DJI (+0.15%), RUT (+0.17%), VIX (-0.73%)
Sector List: Consumer Discretionary ( XLY +1.58%) and Technology ( XLK +1.05%) at the top. Consumer Staples ( XLP -0.63%) and Communications ( XLC -0.75%) at the bottom.
Expectation: Sideways or Higher

Market Overview

Retail sales data helped send growth stocks higher on Tuesday. Earnings reports by big retailers came together with the data, creating an overall surprise on how much consumers are spending despite inflation concerns.

The Nasdaq rose +0.76% for the day. Volume was higher than the previous day. The candle has an 81% green body and a 90% closing range. The equal length upper and lower wicks are short. The gains were concentrated to big tech and specific sectors, leaving three declining stocks for every two advancing stocks.

The S&P 500 (SPX) rose +0.39%, while the Dow Jones Industrial Average (DJI) climbed +0.15%. Small-caps didn’t benefit as much from the positive economic data, rising only +0.17% today. The VIXVolatility index declined -0.73%.

Only five of the eleven S&P 500 sectors rose for the day. Growth sectors Consumer Discretionary ( XLY +1.58%) and Technology ( XLK +1.05%) were at the top of the sector list. Consumer Staples ( XLP -0.63%) and Communications ( XLC -0.75%) were at the bottom.

Core Retail Sales, which excludes automobiles, grew 1.7% in October compared to an expectation of 1% growth. Retail Sales, including automobiles, rose 1.7% compared to an expectation of 1.2%. Industrial Production also climbed more than expected in October, with a 1.6% gain in production compared to the expectation of 0.7%.

API Weekly Crude Oil Stock came in after the market closed and showed higher demand than anticipated.

The US Dollar continues to strengthen, with the index ( DXY ) climbing +0.41% today. The index is at its highest level since July 2020. US 30y and 10y Treasury Yields rose for another day while the 2y yield remained flat. High Yield ( HYG ) Corporate Bond prices rose while Investment Grade ( LQD ) Bond prices fell.

The put/call ratio ( PCCE ) climbed to 0.531. The CNN Fear & Greed Index remains in the Extreme Greed area.

Two of the four largest mega-caps gained for the day. Apple AAPL ) and Microsoft MSFT ) gained +0.67% and 1.02%. Microsoft had its highest close on record. Amazon ( AMZN ) and Alphabet GOOGL ) declined -0.14% and -0.39%.

Qualcomm QCOM ) soared to the top of the mega-cap list with a +7.89% gain after telling investors that it could grow without Apple Home Depot (HD) was the second-best mega-cap with a +5.73% after beating earnings expectations. Walmart ( WMT ) also exceeded earnings expectations but lost -2.55% for the day, ending at the bottom of the list. Investors were concerned about tightening profit margins and comparative store sales growth.

Peloton (PTON) topped the Daily Update Growth List with a +15.50% gain after announcing a stock sale to raise capital. GrowGeneration GRWG ) was at the bottom of the growth list with a -8.05% decline today.

Looking ahead

Building Permits and Housing Starts data for October comes in the morning before the market opens. After the market opens, the weekly Crude Oil Inventories will be available. Three Fed officials are scheduled to speak throughout the day.

Nvidia NVDA ), Cisco ( CSCO ), Lowe’s (LOW), Target ( TGT ), TJX TJX ), Baidu BIDU ), Li Auto (LI), and Bath Body Works (BBWI) report earnings tomorrow.

Trends, Support, and Resistance

The Nasdaq rose steadily throughout the day on Tuesday but met resistance at 16,000.

If the index returns to the trend line from the 10/4 bottom, it would be a +1.29% gain tomorrow.

The one-day trend line would result in a +0.92% gain.

The five-day trend line points to a +0.10% gain.

Wrap-up

Retail sales data was just the positive surprise investors needed to boost favorite big tech stocks today. However, it also boosted the strength of the US Dollar and long-term Treasury yields that drive interest rates. These both typically cause downward pressure on valuations for big tech and multinationals.

So what to expect for the rest of the week? The exuberance over the Retail Sales data will be hard to beat, and it opposes the concern investors had over inflation and consumer sentiment data last week. Given the strengthening US Dollar and higher Treasury yields, we may see some rotation into small-caps to absorb any additional bullish sentiment from investors.

Based on the chart, the expectation is for sideways or higher tomorrow.

Stay healthy and trade safe!

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