Daily Market Update for 11/18

Original Chart

Notes

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

Thursday, November 18, 2021

Facts: +0.45%, Volume lower, Closing Range: 89%, Body: 13% Green
Good: High closing range, high volume gain
Bad: Lower low, advance/decline line low
Highs/Lows: Higher high, Lower low
Candle:Outside day, long lower wick under a thin green body
Advance/Decline: 0.3, more than three declining stocks for every advancing stock
Indexes:SPX (+0.34%), DJI (-0.17%), RUT (-0.56%), VIX (+2.81%)
Sector List: Consumer Discretionary ( XLY +1.13%) and Technology ( XLK +1.00%) at the top. Energy ( XLE -0.59%) and Communications ( XLC -0.72%) at the bottom.
Expectation: Sideways or Higher

Market Overview

Big tech mega-caps led the Nasdaq and growth sectors higher while seemingly leaving the rest of the market behind. The Dow Jones Industrial and Russell 2000 declined.

The Nasdaq closed with a +0.45%. The index dipped in the morning but recovered to close higher, leaving a long lower wick underneath a thin green body. The body covers only 13% of the candle. The closing range of 89% is excellent, and the gain comes with higher volume . However, most of that volume seems to be from sellers who sent three stocks lower for every stock that gained.

The S&P 500 (SPX) was the only other major index to climb higher, rising +0.34%, also carried by the large mega-caps. The Dow Jones Industrial Average (DJI) declined -0.17%. The Russell 2000 (RUT) fell -0.56%. The VIXVolatility Index rose +2.81%.

Only three sectors gained for the day, with the third just barely hanging on to positive territory. The top two sectors were Consumer Discretionary ( XLY +1.13%) and Technology ( XLK +1.00%). Energy ( XLE -0.59%) and Communications ( XLC -0.72%) were at the bottom.

Initial Jobless Claims came in at 268,000 compared to an expected 260,000. That is still better than the previous week of 269,000 but is still a head-scratcher given recent employment data and reports of labor shortages. The Philadelphia Manufacturing Index gave a similar surprise to the NY Empire State index, coming in at 39 compared to the expectation of 24.

The US Dollar Index DXY ) dropped -0.30% for the day. US 30y and 10y Treasury yields fell while the 2y yield rose slightly. High Yield ( HYG ) Corporate Bond prices declined, but Investment Grade ( LQD ) Corporate Bond prices rose. Silver and Gold remain near recent high levels. Timber is in a steady climb over the past week, but Copper and Aluminum Futures remain well below recent high levels.

The put/call ratio ( PCCE ) is at 0.529. The CNN Fear & Greed index is right at the line between Greed and Extreme Greed. The NAAIM money manager exposure index fell to 102.54 but is in its fourth week above 100.

All four of the largest mega-caps gained for the day. Amazon ( AMZN ) climbed +4.14% as analysts predict it will be a top stock in 2021. Apple AAPL ) soared to a new record close with a +2.85% gain. Microsoft MSFT ) and Alphabet GOOGL ) also had record closes with +0.63% and +1.21% gains.

Nvidia NVDA ) climbed +8.25% after smashing earnings expectations. That also helped Taiwan Semiconductor ( TSM ) gain +3.64% to end the day in the third position in the mega-cap list. Alibaba (BABA) was at the bottom of the list with a -11.13% decline. The company lowered guidance amid a drop in earnings due to China’s crackdown on big tech.

Following Nvidia JD.com JD ) was the next best stock in the Daily Update Growth List, gaining +5.95% today. Only ten stocks in the list gained for the day, and the other ~30 declined. Robinhood (HOOD) joined Alibaba at the bottom of the list with a -11.13% decline.

Looking ahead

There is not much economic news scheduled for Friday. Two Fed officials (Waller and Clarida) speak in the afternoon.

Investors await a decision from Joe Biden on whom he will nominate for the next Fed Chair. Analysts expect a swift reaction from the market depending on the choice.

Trends, Support, and Resistance

After dipping in the morning, the Nasdaq climbed back to the 16,000 resistance area , closing the day just below that level.

If the index returns to the trend line from the 10/4 low, expect a +1.51% advance for Friday.

The one-day and five-day trend lines point to a +0.34% gain.

Wrap-up

Nvidia’s huge earnings beat helped drive big tech higher as the outlook for cloud computing looks bright . The largest mega-caps moved higher, but the sentiment wasn’t shared across the entire market. Most stocks moved lower for the day as we await a decision from Joe Biden on his Fed Chair pick.

Analysts expect a reaction in the Market if Fed picks Brainard. They expect that Brainard will extend easy money policies beyond what Powell has signaled in recent months.

The expectation for Friday is Sideways or Higher.

Stay healthy and trade safe!

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