Daily Market Update for 4/26

Original Chart

Notes

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

Tuesday, April 26, 2022

Facts: -3.95%, Volume higher, Closing Range: 0%, Body: 100% Red
Good: Nothing
Bad: Sell-off on high volume , no upper or lower wicks
Highs/Lows: Lower high, Lower low
Candle: 100% red body, no wicks
Advance/Decline:
Indexes:SPX (-2.81%), DJI (-2.38%), RUT (-3.26%), VIX (+24.06%)
Sector List: Energy ( XLE +0.14%) and Utilities ( XLU -1.00%) at the top. Technology ( XLK -3.73%) and Consumer Discretionary ( XLY -5.06%) at the bottom.

Market Overview

Investors sold off growth stocks ahead of big tech earnings this week, fearing the worst for the outlook on future growth. Microsoft and Google painted different pictures with their earnings reports after the market closed.

The Nasdaq dropped by a huge -3.95% on higher volume the previous day. The candle is 100% red body with no upper or lower wicks. Prices fell sharply in the morning before pausing and then continued the sell-off late in the afternoon. There were over 8 declining stocks for every advancing stock.

Small-caps were hit hard as well. The Russell 2000 (RUT) declined by -3.26%. The S&P 500 (SPX) dropped by -2.81% and the Dow Jones Industrial Average (DJI) fell by -2.38%. The VIXVolatility Index rose by +24.06% closing at its highest level since early March.

Of the eleven S&P 500 sectors, only Energy ( XLE +0.14%) ended the day with gains. Utilities ( XLU -1.00%) was the next best sector. Technology ( XLK -3.73%) and Consumer Discretionary ( XLY -5.06%) had the biggest losses.

Economic data today was not far off expectations but did arrive lower than forecast. CB Consumer Confidence for April registered at 107.3 compared to the forecast of 108.0. New Home Sales in March were 763,000 compared to the forecast of 765,000.

API Weekly Crude oil Stock was higher than expected. There were 4.8 million barrels compared to the forecast of 2.2 million barrels.

The US Dollar index DXY ) rose by another +0.56%, adding more pressure to large multinationals whose international revenues are impacted by a strong dollar. US 30y, 10y and 2y Treasury Yields all declined. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices also declined, showing the negative sentiment for corporations. Brent Oil rose to $105 a barrel. Timber continued its sharp decline over the past week while both Copper and Aluminum are also declining sharply.

The put/call ratio ( PCCE ) declined to 0.927. The CNN Fear & Greed Index dropped nearly to Extreme Fear.

All of the big six mega-caps had massive declines, but none more than Tesla TSLA ) which dropped by -12.18% on fears of how the Twitter deal might impact Tesla Microsoft MSFT ) dropped by -3.74%, but beat earnings expectations and rose by +4.51% in the after-hours market. Alphabet GOOG ) fell by -3.04% and continued declining another -3.19% after its earnings report.

Only two mega-caps, Pfizer PFE ) and Exxon Mobil XOM ), advanced . Even those two advanced only a bit, gaining +0.16% and 0.04% respectively. Tesla was at the bottom of the mega-cap list.

The Daily Update Growth List had only one advancing stock. Niu Technologies NIO ) rose by +3.47%. The biggest loser on the list was Roku (ROKU) which declined by -9.52%.

Looking ahead

The Goods Trade Balance and Retail Inventories (not including Auto) for March arrive in the morning. After the market opens, Pending Home Sales for March and the weekly Crude Oil Inventories will be available.

Meta ( FB ), Qualcomm QCOM ), and PayPal ( PYPL ) are the high-profile earnings reports for tomorrow. In addition to those, T-Mobile ( TMUS ), Boeing (BA), ADP (ADP), ServiceNow (NOW), and Ford (F) report among many others on another busy earnings day.

Trends, Support, and Resistance

The Nasdaq could not hold onto yesterday’s close above the 13,000 support area . After opening in the positive, it quickly fell to end the day at its lowest close since 2020. Year to date, the index is down -20%.

If the index returns to the trend line from the 3/29 high, it would require a +1.76% gain tomorrow.

The five-day and one-day trend lines point to similar spots, around a -1.34% decline.

Wrap-up

Fears gripped the market today. How will Elon Musk’s purchase of Twitter impact Tesla? What will the outlook be for corporate America as economic and geopolitical issues continue? Is a recession on the horizon?

And yet, the fears that dropped Tesla by 12% are just that. Fears. Fears that are not based on any material change in Tesla’s performance. Fears on the outlook for big tech? With the exception of Google earnings reports have been positive. Not only the results, but Visa reports no impact from recent events and improved their outlook. Microsoft expects to continue driving more adoption of digital technologies. More to come later this week will paint a fuller picture.

Is a recession on the horizon? Maybe, or maybe not.

Stay healthy and trade safe!

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