Daily Market Update for 1/10

Original Chart

Notes

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

Monday, January 10, 2022

Facts: +0.05%, Volume higher, Closing Range: 97%, Body: 45% Green
Good: High closing range, end day in positive on higher volume
Bad: Dip below the 200d simple moving average
Highs/Lows: Lower high, Lower low
Candle: Long lower wick under a thick green body, high closing range
Advance/Decline: 0.55, about two declining stocks for every advancing stock
Indexes:SPX (-0.14%), DJI (-0.45%), RUT (-0.40%), VIX (+3.41%)
Sector List: Health ( XLV +1.03%) and Technology ( XLK +0.02%) at the top. Materials ( XLB -1.02%) and Industrials XLI -1.13%) at the bottom.
Expectation: Sideways or Lower

Market Overview

Markets dipped in the morning, but the Nasdaq rallied in the afternoon to close the day with a small gain.

The Nasdaq closed the day with a +0.05% advance. Volume was higher than the previous day, returning to the 50d average volume . The index dipped below the 200d moving average for the first time since the March 2020 correction. However, it recovered to close slightly higher for the day. That created a long lower wick under a 45% green body and a 97% closing range. There were almost two declining stocks for every advancing stock.

All major indexes dipped in the morning and recovered in the afternoon, but only the Nasdaq finished the day positive. The S&P 500 (SPX) declined -0.14%. The Dow Jones Industrial Average (DJI) fell -0.45%. The Russell 2000 (RUT) lost -0.40%. The VIXVolatility Index rose +3.41%.

Only two of the eleven S&P 500 sectors gained for the day. Health ( XLV ) rose +1.03% and Technology ( XLK ) gained +0.02%. At the bottom of the sector list was Materials ( XLB -1.02%) and Industrials XLI -1.13%).

The US Dollar Index DXY ) rose +0.22%. The US 30y and 10y Treasury yields declined while the 2y yield advanced . High Yield ( HYG ) Corporate Bond prices advanced while the Investment Grade ( LQD ) Corporate Bond prices declined further.

The put/call ratio ( PCCE ) rose to 0.753. The CNN Fear & Greed index moved to the Fear side of Neutral, but remained at Neutral.

Three of the four largest mega-caps ended the day with gains. Alphabet GOOGL ) gained +1.21%. Microsoft MSFT ) and Apple AAPL ) had smaller gains of +0.07% and +0.01%. Amazon ( AMZN ) declined -0.66%.

Looking ahead

Intel INTC ) was the top mega-cap for the day, gaining +3.31%. Tesla TSLA ) was second on the mega-cap list, climbing +3.03%. Nike NKE ) was at the bottom of the list with a -4.16% decline.

Zynga ZNGA ) blew away the Daily Update Growth List with a 40 .67% gain after Take-Two Interactive ( TTWO ) announced a $12.7b acquisition of the company. That’s almost twice the market cap for Zynga at the beginning of the session. Take-Two Interactive dropped -13.13% on the news. Surprisingly, the Growth List was mostly gainers. The biggest loser was DraftKings DKNG ) with a -4.07% decline.

Three Fed members , including Fed Chair Jerome Powell, are scheduled to speak tomorrow. The EIA Short-Term Energy Outlook will be released at noon.

Albertsons ( ACI ) will release earnings tomorrow.

Trends, Support, and Resistance

Despite the morning dip, the index was in an uptrend the remainder of the day.

If the one-day trend continues into Tuesday, we can expect a +1.81% advance.

The trend line from the 12/18 high points to a -1.30% decline.

The five-day trend line results in a -3.53% decline for Tuesday.

Wrap-up

It was an odd day for the market. The Nasdaq dips below its 200d simple moving average , only to recover and close the day with a slight gain. More odd is the number of growth stocks that had significant gains for the day.

Seeing big gains for Intel Tesla and Adobe, while the indexes showed stress is perplexing. Were investors buying the dip and getting positioned back for growth? Or is it a bull trap and further selling is on the horizon?

Based on the chart, the expectation for tomorrow is Sideways or Lower. The intraday uptrend (on higher volume ) gives some hope, but the overall trend in the chart is still down.

Stay healthy and trade safe!

Comments

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