Daily Market Update for 4/25

Original Chart

Notes

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

Monday, April 25, 2022

Facts: +1.29%, Volume lower, Closing Range: 98%, Body: 89% Green
Good: Gains on higher volume , great closing range
Bad: Lower high, lower low
Highs/Lows: Lower high, Lower low
Candle: Piercing candle that opens gap-down but ends day with gain
Advance/Decline: 0.94, slightly more declining than advancing stocks
Indexes:SPX (+0.57%), DJI (+0.70%), RUT (+0.70%), VIX (-4.22%)
Sector List: Technology ( XLK +1.50%) and Communications ( XLC +1.37%) at the top. Utilities ( XLU -0.69%) and Energy ( XLE -3.31%) at the bottom.

Market Overview

Investor sentiment changed mid-day, reversing a gap-down open into gains across all major indexes by the end of the day.

The Nasdaq closed the day with a +1.29% gain on higher volume than the previous day. The candle has an 89% green body sitting above a small lower wick and the day ended with a 98% closing range. The lower high and lower low continue a downtrend, but the piercing candle that starts with a gap-down and ends with gains could signal a reversal. There were slightly more declining than advancing stocks for the day.

The other major indexes all have longer lower wicks as they dipped further after open before the Nasdaq led them higher. The Russell 2000 (RUT) ended the day with a +0.70% gain. The Dow Jones Industrial Average (DJI) also advanced by +0.70%. The S&P 500 (SPX) gained +0.57%. The VIXVolatility Index declined by -4.22%.

Six of the eleven S&P 500 sectors ended the day with gains, and another ended the day flat. Growth sectors led the way with Technology ( XLK +1.50%) and Communications ( XLC +1.37%) having the best gains. Utilities ( XLU -0.69%) and Energy ( XLE -3.31%) were at the bottom of the sector list.

The US Dollar index DXY ) continues to climb, rising +0.61% today. The US 30Y, 10Y, and 2Y Treasury Yields all declined. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices rose. Silver and Gold continue to drop sharply as the US dollar rises. Brent Oil ended the day near $102 a barrel.

The put/call ratio ( PCCE ) remained above 1.0, ending the day at +1.027. That indicates that investors are hedging despite the gains in growth stocks today. The CNN Fear & Greed Index remains in the Fear range.

Of the big six mega-caps, only Tesla TSLA ) declined. It’s possible Tesla investors are worried about possible sales by Elon Musk to fund his purchase of Twitter Alphabet GOOG ) led the gains in the group with a +3.04% advance.

Alphabet was also the top overall mega-cap, followed by Novo Nordisk NVO ) which gained +2.73%. Big energy companies were at the bottom of the mega-cap list. Exxon Mobil XOM ) had the biggest loss, declining by -3.37% today.

There was a lot of green in the Daily Update Growth List. Snowflake (SNOW) was at the top of the list, gaining +7.56%. There were only a handful of declining stocks, mostly Chinese companies. UP Fintech ( TIGR ) was at the bottom of the list, dropping by -2.94% today.

Looking ahead

Tuesday will kick off with an update on Durable Goods Orders for March. After the market opens, we’ll get New Home Sales for March. CB Consumer Confidence for April will also be published after the market open. In the afternoon is the Weekly APICrude Oil Stock update.

Big tech kicks off earnings this week (With the exception of Tesla , which went early in order to announce on 4/20). Microsoft MSFT ) and Alphabet GOOG ) will report after the closing bell on Tuesday.

In addition, Visa (V), PepsiCo PEP ), Novartis ( NVS ), United Parcel Service (UPS), Texas Instruments ( TXN ), HSBC HSBC ), General Electric ( GE ), Chubb CB ), 3M MMM ), Sherwin-Williams ( SW ), General Motors ( GM ), Chipotle ( CMG ), and Enphase ( ENPH ) report among many others.

It is not just a long list of big companies reporting, but the diversity across sectors and markets means we will get a very real look at performance and, more importantly, outlook for corporate America in the current economic and geopolitical context.

Trends, Support, and Resistance

The Nasdaq opened with a gap-down but then received support mid-day and marched higher, closing above the 13,000 support area .

If the one-day trend line continues into Tuesday, it would mean a +1.37% advance.

If the index returns to the five-day trend line , that will result in a -1.15% decline.

The trend line from the 3/29 high points to a -3.20% decline.

Wrap-up

Did Elon Musk cause the market to reverse to the upside? That’s what some think. It very well could be true. His purchase of Twitter may have turned sentiment toward buying growth stocks and carried the Nasdaq higher, followed by the other indexes.

What matters now is the story that comes out of tomorrow’s earnings reports and through the rest of this week. Investors will be watching closely the results, but even more so the underlying metrics for each business and the outlook for executives. They will get that story across several industries and from companies both big and small.

Stay healthy and trade safe!

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