Daily Market Update for 11/23

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 23, 2021

Facts: -0.50%, Volume lower, Closing Range: 59%, Body: 12% Red
Good:Recovered to close above 21d EMA , rising advance/decline ratio
Bad: Lower high, low and close and dip below 21d EMA
Highs/Lows: Lower high, Lower low
Candle: Long lower wick, thin red body, good closing range
Advance/Decline: 0.54, about two declining stocks for every advancing stock
Indexes:SPX (+0.17%), DJI (+0.55%), RUT (-0.15%), VIX (+1.10%)
Sector List: Energy ( XLE +3.07%) and Financials ( XLF +1.57%) at the top. Communications ( XLC -0.27%) and Consumer Discretionary ( XLY -0.73%) at the bottom.
Expectation: Sideways or Lower

Market Overview

Big tech and growth stocks continued their slide on Tuesday as Treasury Yields rise in anticipation of action from the Fed on inflation .

The Nasdaq dipped below its 21d Exponential Moving Average , then recovered before closing the day with a -0.50% decline. Volume was lower than the previous day. The dip created a long lower wick below the 12% red body. The closing range was 59%. There were two declining stocks for every advancing stock.

The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) fared better with +0.17% and +0.55% advances. The Russell 2000 (RUT) declined -0.15%. The VIXVolatility Index rose +1.10%.

Energy ( XLE +3.07%) and Financials ( XLF +1.57%) were the top sectors for another day. The three growth sectors were the only sectors to decline today. Communications ( XLC -0.27%) and Consumer Discretionary ( XLY -0.73%) fell the most.

France, Germany, Great Britain, and the Euro Zone all reported surprisingly strong economic data today. All these countries reported higher than expected Purchasing Managers Index (PMI) data. They halted the climb of the US Dollar Index (which measures the US dollar against a basket of other foreign currencies).

US Manufacturing PMI was 59.1, higher than the expected 59.0. US Services PMI was lower than expected, coming in at 57.0 against an expectation of 59.0.

The US Dollar index DXY ) declined -0.01%. The rose over the past few weeks to its highest point since July 2020. US 30y, 10y, and 2y Treasury yields rose for the day. Mid-term yields are rising faster than long-term yields. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices continue to fall.

Silver and Gold prices fell another -2.16% and -0.86%. Crude Oil Futures moved higher despite the US coordinating a release of strategic oil reserves to combat higher gasoline prices.

The put/call ratio ( PCCE ) rose to 0.603. The CNN Fear & Greed Index is in the Greed zone but creeping toward neutral.

Two of the four largest mega-caps gained for the day. Apple AAPL ) rose +0.24%. Amazon ( AMZN ) gained +0.21%. Microsoft MSFT ) declined -0.63%. Alphabet GOOGL ) declined -0.36% and was the only of the four to close below its 21d EMA .

Abbvie ABBV ) was the top mega-cap for the day, gaining +2.79%. The remaining top 10 mega-caps were all in the Financial services and Energy sectors. Tesla TSLA ) was the worst-performing mega-cap for the day, declining -4.14%.

Just seven stocks in the Daily Update Growth List gained for the day. SNAP (SNAP) was the top stock in the list, gaining +2.86% today. Zoom Video (ZM) landed at the bottom of the growth list, declining -14.71% today after their earnings call revealed slowing revenue growth. Analysts adjusted price targets down.

Looking ahead

Tomorrow brings a busy morning for economic data. The releases include GDP for Q3, Durable Goods Orders, and New Home Sales for October, the weekly Initial Jobless Claims.

After the market opens, all eyes will turn to the PCE Price Index data for October, a key inflation indicator. Crude Oil Inventories data will be available later in the morning.

Earnings reports for Wednesday include Deere $ Company (DE), Trip.com ( TCOM ), and Futu FUTU ).

Trends, Support, and Resistance

The index dipped below the 21d EMA but then rallied into close, finishing above the key moving average line. Support formed around 15,600, the same area the index dropped to on November 10.

If the index returns to the trend line from the 10/4 low, that would mean a +1.41% gain for Wednesday.

The five-day trend line points to a +0.13% gain for tomorrow.

If the one-day trend line continues, the index will decline -1.01% tomorrow.

Wrap-up

Treasury Yields rise, and the US Dollar remains strong compared to other world currencies. Both these factors put downward pressure on valuations for multinationals, big tech, and growth stocks. Inflation data tomorrow could ease fears or pour more fuel on the fire that’s burning.

The expectation for tomorrow is Sideways or Lower.

Stay healthy and trade safe!

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