Daily Market Update for 1/6

Original Chart

Notes

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

Thursday, January 06, 2022

Facts: -0.13%, Volume lower, Closing Range: 59%, Body: 20% Green
Good: Support at 15,000. Lower volume on decline.
Bad: Lower high, lower low
Highs/Lows: Lower high, Lower low
Candle: Indecisive spinning top candle
Advance/Decline: 0.95, just slightly more declining than advancing stocks
Indexes:SPX (-0.10%), DJI (-0.47%), RUT (+0.56%), VIX (-0.61%)
Sector List: Energy ( XLE +2.23%) and Financials ( XLF +1.47%) at the top. Health ( XLV -1.16%) and Materials ( XLB -1.26%) at the bottom.
Expectation: Sideways or Lower

Market Overview

Stocks stabilized a bit on Thursday after selling-off the previous day due to the Fed’s hawkish meeting minutes release. Small-caps outperformed and investors bought dips in select growth stocks.

The Nasdaq closed with a -0.13% decline. Volume was lower than the previous day. The candle has equal upper and lower wicks surrounding a thin green body of just 20%. The candle pattern is a spinning top that signals indecision among bulls and bears. Whether the trend continues or reverses will be determined another day. There were about equal number of advancing and declining issues.

The Russell 2000 (RUT) was the only of the four indexes to gain, advancing +0.56%. The S&P 500 (SPX) declined -0.10% and the Dow Jones Industrial Average (DJI) fell -0.47%. The VIXVolatility Index remained elevated, falling just -0.61% today.

Energy ( XLE +2.23%) and Financials ( XLF +1.47%) led the sector list again. The two sectors have outperformed in the first week of 2022. Health ( XLV -1.16%) and Materials ( XLB -1.26%) were the biggest losing sectors today.

There were 10,000 more Initial Jobless Claims than expected with the total for the week ending at 207,000, showing some possible impact from the Omicron surge. More insight will come with tomorrow’s payroll reports. The ISM Non-Manufacturing PMI print was 62.0 compared to a forecast of 66.9.

The US Dollar index DXY ) rose +0.06%. The US 30y Treasury Yield declined while the 10y and 2y yields rose. High Yield ( HYG ) Corporate Bond prices rose slightly. Investment Grade ( LQD ) Corporate Bond prices continued to decline. Silver and Gold both declined. Crude Oil Futures are on the rise, tracking the energy sector higher.

The put/call ratio ( PCCE ) rose to 0.792. The CNN Fear & Greed index is at Neutral.

All four largest mega-caps declined. Apple AAPL ) closed below its 21d EMA . The other three are all below their 21d EMA and 50d MA.

Alibaba (BABA) was the top mega-cap for the day, gaining +4.51%. Accenture ( ACN ) was at the bottom of the list with a -4.83% decline.

There were many gainers in the Daily Update Growth List, bouncing of the previous day’s losses. Beyond Meat BYND ) topped the list with a +14.65% advance. The company announced a deal to provide Beyond Chicken to Yum Brand’s Kentucky Fried Chicken the previous day, but the reaction was delayed until today’s positive session. Lemonade LMND ) was at the bottom of the list, declining -3.97%.

Looking ahead

In the morning, focus will be on Payrolls and Unemployment data for December. Payrolls are expected to increase by 400k while the Unemployment rate is expected to decline to 4.1%.

Trends, Support, and Resistance

The Nasdaq bounced between support at 15,000 and resistance at 15,200 on choppy day that ended in indecision.

The one-day trend line and a trend line from the 12/28 high points to a +0.62% gain for Friday.

The give-day trend line points to a -0.65% decline.

Wrap-up

There was a mix of bulls and bears in the market one day after the Fed’s surprisingly hawkish meeting minutes. That left us with an indecisive candle on the Nasdaq. It could be the start of a reversal from here or a continuation in the current downtrend.

The expectation for tomorrow is Sideways or Lower.

Stay healthy and trade safe!

Comments

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