Daily Market Update for 5/3

Original Chart

Notes

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

Tuesday, May 3, 2022

Facts: +0.22%, Volume lower, Closing Range: 56%, Body: 28% Green
Good: Higher high and low, good closing range
Bad: A/D below 1.0, need more volume
Highs/Lows: Higher high, Higher low
Candle: Thin green body within a tight low and high
Advance/Decline: 0.96, slightly more declining stocks than advancing
Indexes:SPX (+0.48%), DJI (+0.20%), RUT (+0.85%), VIX (-9.55%)
Sector List: Energy ( XLE +2.80%) and Financials ( XLF +1.30%) at the top. Consumer Discretionary ( XLY -0.25%) and Consumer Staples ( XLP -0.29%) at the bottom.

Market Overview

There was less choppiness in a lighter volume trading day as investors way for the Fed interest rate decision on Wednesday.

The Nasdaq climbed +0.22% today. Volume was lower than the previous day. The 28% green body sits in the middle of a tighter price range than what we’ve experienced almost daily for the last several weeks. The closing range of 56% is good and we got a higher high and higher low. There were slightly more declining stocks than advancing stocks.

The Russell 2000 (RUT) did the best today, gaining +0.85%. The S&P 500 (SPX) rose by +0.48% and the Dow Jones Industrial Average (DJI) advanced by +0.20%. The VIXVolatility index dropped by -9.55%, but remains elevated.

Nine of the eleven S&P 500 sectors gained. Energy ( XLE +2.80%) and Financials ( XLF +1.30%) were the best sectors. Consumer Discretionary ( XLY -0.25%) and Consumer Staples ( XLP -0.29%) were the two losing sectors.

Both Factory Orders and JOLTs Job Openings for March were higher than forecast. API Weekly Crude Oil Stock was lower than expected, showing high demand.

The US Dollar Index DXY ) dropped by -0.14% as it bounced up and down the last few days. US 30y and 10y Treasury Yields declined while the 2y Treasury Yield rose. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices rose.

The put/call ratio ( PCCE ) declined to 0.753. The CNN Fear & Greed index remained in Fear.

Four of the big six mega-caps gained. Apple AAPL ) led the way with a +0.96% advance. Microsoft MSFT ) declined -0.95%.

Shell ( SHEL ) led the mega-cap list with a +3.55% gain. The top four mega-caps were Energy and Financial companies. Visa (V) had the biggest decline in the list, losing -1.40% today.

The Daily Update Growth List had mixed results. The biggest gain came from Enphase ( ENPH ) which advanced by +3.68%. Okta Inc. OKTA ) was at the bottom of the list, declining by -5.04% today.

Looking ahead

All eyes will be on the Fed Interest Rate Decision tomorrow afternoon. The expectation is for a 50 basis point rise to bring interest rates to 1.00%.

Before the Fed’s decision, we’ll get Trade Balance data for March and the Non-Manufacturing Purchasing Managers Index for April. Crude Oil Inventories come later in the morning.

CVS CVS ), Booking ( BKNG ), Moderna MRNA ), Uber Tech (UBER), Marriot (MAR), Fortinet FTNT ), and eBay EBAY ) are among the companies reporting earnings on Wednesday.

Trends, Support, and Resistance

The Nasdaq stayed within a relatively tight trading range today.

If the one-day trend line continues into Wednesday, expect a +0.38% advance.

If the index returns to the five-day trend line , that would mean a -1.14% decline.

The trend line from the 3/29 high points to a -2.48% decline.

Wrap-up

Let’s hope the Fed gives us a boring day tomorrow, by doing exactly as expected and raising interest rates by 50 basis points. Boring is good for the stock market.

Stay healthy and trade safe!

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