Daily Market Update for 5/2

Original Chart

Notes

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

Monday, May 2, 2022

Facts: +1.63%, Volume higher, Closing Range: 98%, Body: 60% Green
Good: Closing range, gain on higher volume
Bad: Lower high, lower low
Highs/Lows: Lower high, Lower low
Candle: Green body covers upper half of candle
Advance/Decline: 1.08, about the same number of advancing and declining stocks
Indexes:SPX (+0.57%), DJI (+0.26%), RUT (+1.01%), VIX (-3.17%)
Sector List: Communications ( XLC +2.76%) and Energy ( XLE +1.60%) at the top. Consumer Staples ( XLP -1.31%) and Real Estate ( XLRE -2.60%) at the bottom.

Market Overview

A late rally helped stocks close higher on Monday as long-term Treasuries rose above 3% ahead of the Fed meeting this week.

The Nasdaq closed up by +1.63%. The high closing range of 98% came after the index rallied in the final hour of trading. The index flipped from a red to green in the rally, leaving behind a long lower wick below a 60% green body. Volume was higher than the previous day. There was a nearly equal number of advancing and declining stocks.

The Russell 2000 (RUT) gained +1.01%. The S&P 500 (SPX) rose by +0.57%. The Dow Jones Industrial Average advanced by +0.26%. The VIXVolatility Index fell by -3.17%.

Six of the eleven S&P 500 sectors gained today. Communications ( XLC +2.76%) and Energy ( XLE +1.60%) topped the sector list while Consumer Staples ( XLP -1.31%) and Real Estate ( XLRE -2.60%) were at the bottom.

Purchasing Manager Index data released in the morning showed a contraction in manufacturing activity which echoed data coming from China.

The US Dollar Index DXY ) gained +0.38% today, moving back toward recent highs. The US 30y Treasury Yield topped 3% for the first time since 2019. The 10y and 2y Treasury Yields also rose today. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices were lower. Silver and Gold continue to sink, credit to the strengthening dollar. Brent Oil is at $107 per barrel.

The put/call ratio ( PCCE ) declined to 1.03, remaining in a bearish range. The CNN Fear & Greed index remains deep in the Fear range.

All of the big six mega-caps gained today. Meta ( FB ) led the gains with a +5.32% advance. Amazon ( AMZN ) just barely closed with a gain, rising +0.18% for the day after dipping nearly 5% earlier in the session.

Meta and Nvidia NVDA ) both gained +5.32% to top the mega-cap list. PepsiCo PEP ) was at the bottom of the list with a -2.30% decline.

All but two stocks in the Daily Update Growth List gained today, most advancing more than 4%. Roku (ROKU) was the top gainer with a +11.01% advance. DataDog DDOG ) and Niu Tech ( NIU ) were the two decliners, dropping by -0.48% and -1.05%, respectively.

Looking ahead

The big news this week be on Wednesday with the Fed interest rate decision. For tomorrow, we will get Factory Orders and the JOLTs Job Openings report for March. In the afternoon, the weekly APICrude Oil Stock report will arrive.

Pfizer PFE ), AMD AMD ), Airbnb (ABNB), Starbucks SBUX ), and Hilton HLT ) are among the earning reports for Tuesday.

Trends, Support, and Resistance

The late session rally wasn’t enough to move the one-day regression trend line to an uptrend.

The one-day and five-day trend lines and the trend line from the 3/29 high are pointing to a -1.52% decline for Tuesday.

Wrap-up

I’m not sure the rally in the late afternoon today means much. The put/call ratio is still high. So as some investors turned bullish , there are still plenty of investors that are betting on further declines.

There’s not much to go on for expectations on Tuesday, but we can probably look forward to more choppiness as investors prepare for Wednesday’s Fed decisions.

Stay healthy and trade safe!

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