Daily Market Update for 12/22

Original Chart

Notes

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

Wednesday, December 22, 2021

Facts: +1.18%, Volume lower, Closing Range: 98%, Body: 91% Green
Good: Higher high, higher low, great closing range
Bad: Lower volume
Highs/Lows: Higher high, Higher low
Candle: Mostly green body, tiny upper and lower wicks
Advance/Decline: 1.49, three advancing for every two declining stocks
Indexes:SPX (+1.02%), DJI (+0.74%), RUT (+0.86%), VIX (-11.33%)
Sector List: Consumer Discretionary ( XLY +1.82%) and Technology ( XLK +1.31%) at the top. Industrials XLI +0.28%) and Communications ( XLC +0.25%) at the bottom.
Expectation: Sideways or Higher

Market Overview

Markets moved higher on positive Consumer Confidence data as Omicron fears start to fall. Gains were shared widely across the market with all S&P 500 sectors gaining for the day.

The Nasdaq rose +1.18% today. Volume was lower than the previous day but the 98% closing range and high advance/decline ratio were very bullish . The candle is covered by a 91% green body with tiny upper and lower wicks. There were three advancing stocks for every two declining stocks.

The S&P 500 (SPX) gained +1.02%. The Dow Jones Industrial Average (DJI) rose +0.74%. The Russell 2000 (RUT) advanced +0.86%. The VIXVolatility Index declined -11.33%.

Consumer Discretionary ( XLY +1.82%) and Technology ( XLK +1.31%) were the top sectors for the day. Industrials XLI +0.28%) and Communications ( XLC +0.25%) were at the bottom of the list.

Quarterly GDP growth for Q3 updated to 2.3% compared to the previous 2.1% reading. CB Consumer Confidence came in at 115.8 compared to the expectation of 110.8. Crude Oil Inventories showed higher demand than expected, showing a shortage of -4.715 million barrels compared to a-2.750 million barrel expected shortage.

The US Dollar weakened with the index ( DXY ) dropping -0.37%. US 30y, 10y, and 2y Treasury Yields all declined slightly. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices advanced . Aluminum Futures were up sharply for a second day.

All four largest mega-caps gained for the day with three of the four closing above their 21d EMA and 50d MA. Alphabet GOOGL ) gained the most, rising +2.05%. Microsoft MSFT advanced +1.81%. Apple AAPL ) climbed +1.53%. Amazon ( AMZN ) rose +0.36%, the only one that remains below the key moving average lines.

Tesla TSLA ) was the top mega-cap of the day, gaining +7.49% today after Elon Musk finished selling stock for taxes. Alibaba (BABA) declined -4.20%, dropping to the bottom of the mega-cap list.

Tesla was also the top stock in the Daily Update Growth List. In a distant second was Digital Turbine (APPS), which gained +2.66%. At the bottom of the list was FUTU Holdings ( FUTU ), declining -6.01%.

Looking ahead

Durable Goods Orders data for November will be available in the morning. We’ll also get PCE Price Index data and the weekly Initial Jobless Claims. After the market opens, expect the Michigan Consumer Confidence and Expectations as well as New Home Sales.

Trends, Support, and Resistance

The Nasdaq moved back above the 50d moving average and the 21d exponential moving average lines. It closed below the 15,600 support/resistance area.

If the one-day trend line continues, expect a +0.37% advance for Thursday.

The five-day trend line points to a -1.25% decline.

If the index drops back to the trend line from the 11/22 high, that would mean a -2.57% decline.

Wrap-up

Sentiment is improving as more data emerges about the severity of Omicron. It helped that Biden didn’t mention new lockdowns or travel restrictions in his address to the nation on Tuesday. Top that off with positive economic data and it was a good setup for gains today.

The expectation for tomorrow is Sideways or Higher.

Stay healthy and trade safe!

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