Daily Market Update for 1/25

Original Chart

Notes

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

Tuesday, January 25, 2022

Facts: -2.28%, Volume lower, Closing Range: 34%, Body: 19% Red
Good: Higher low, less volume on decline
Bad: Lower high, failed rally in afternoon
Highs/Lows: Lower high, Higher low
Candle: Inside day, spinning top indicating indecision
Advance/Decline: 0.75, more declining than advancing stocks
Indexes:SPX (-1.22%), DJI (-0.19%), RUT (-1.45%), VIX (+4.21%)
Sector List: Energy ( XLE +3.88%) and Financials ( XLF +0.42%) at the top. Communications ( XLC -2.05%) and Technology ( XLK -2.31%) at the bottom.
Expectation: Sideways or Lower

Market Overview

Markets were lower on Tuesday as investors awaited the Fed’s interest rate decision on Wednesday. The energy sector tracked oil prices hire on fears that the Ukraine standoff would put pressure on supplies.

The Nasdaq fell -2.28% for the day. Despite the decline, volume was lower than the previous day and the spinning top candle with a lower high and higher low indicate indecision in the market. The 19% red body sits in the middle of the candle above a 34% closing range. There were more declining stocks than advancing stocks.

The Dow Jones Industrial Average (DJI) was down only -0.19% thanks to outperformance in large Energy and Financial stocks. The S&P 500 (SPX) declined -1.22%. The Russell 2000 (RUT) fell -1.45%. The VIXVolatility Index climbed +4.21%.

Energy ( XLE +3.88%) and Financials ( XLF +0.42%) were at the top of the sector list. Communications ( XLC -2.05%) and Technology ( XLK -2.31%) were at the bottom.

Consumer Confidence for January beat the forecast, coming in at 113.8 against an expected 111.8.

The US Dollar index DXY ) was higher by +0.10%. US 30y and 10y Treasury Yields were slightly down while the 2y yield rose. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices were both lower. Gold moved higher as investors bought it for a safe haven. Crude Oil Futures moved higher on potential supply issues from a possible Ukraine standoff.

The put/call ratio ( PCCE ) dropped to 0.682. The CNN Fear & Greed index moved further into the Fear range.

The four largest mega-caps were down for the day. Microsoft MSFT ) closed below its 200d moving average for the first time since the beginning of the pandemic. Apple AAPL ) had an intraday rally for a gain, but then fell back to close with a -1.14% decline. Amazon ( AMZN ) and Alphabet GOOGL ) produced inside days and declines of -3.15% and -2.96%.

Chevron CVX ) and Exxon Mobil XOM ) were the top mega-caps for today. Chevron advanced +4.25% while Exxon Mobil climbed +2.94%. ASML Holding ( ASML ) was at the bottom of the mega-cap list, declining -5.65%. Nvidia NVDA ) was also near the bottom, dropping -5.29% today.

Only three of the Daily Update Growth List stocks gained. Penn National Gaming topped the list with a +1.86% climb. After two days of gains, Peloton (PTON) found itself at the bottom of the list again, declining -10.70%.

Looking ahead

The biggest news for tomorrow will be results of the Fed meeting and their Interest Rate decision. That news will come around 2pm.

In the morning, we’ll get the Goods Trade Balance and Retail Inventories for December. After the market opens, we’ll have New Homes Sales data for December. Later in the morning, the weekly Crude Oil Inventories will be available.

Tesla TSLA ), Abbot Labs ( ABT ), Intel INTC ), AT&T (T), Boeing (BA), ServiceNow (NOW), ADP (ADP), and Progressive ( PGR ) are among the earnings reports for tomorrow.

Trends, Support, and Resistance

The index opened lower, then nearly rallied to a gain before finally fading back to a loss.

The one-day trend line points to a +2.02% advance for Wednesday.

The five-day trend line ends with a -2.45% decline.

The trend line from the 1/12 high results in a -3.96% decline.

Wrap-up

There’s not much investors could do on Tuesday but wait for Wednesday. That resulted in lower volume and a soft rally attempt in the afternoon. The spinning top candle represents that indecisive sentiment.

Earnings reports will significantly impact sentiment this week. Microsoft beat estimates and provide very positive guidance for 2022. That could help bring some support into the market, including the Nasdaq.

Based on the candle and downtrend, the expectation for tomorrow remains Sideways or Lower.

Stay healthy and trade safe!

Comments

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