Daily Market Update for 5/23

Original Chart

Notes

I’ve been traveling for the past two weeks and have not been able to write the Daily Market Update. I’m back at home and will continue covering the markets as often as I can.

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

Monday, May 23, 2022

Facts: +1.59%, Volume lower, Closing Range: 93%, Body: 56% Green
Good: High closing range
Bad: Lower volume on gain, lower high than previous day
Highs/Lows: Lower high, Higher low
Candle: Inside day, upper half green body, lower half wick
Advance/Decline: 1.07, about the same number of advancing and declining stocks
Indexes:SPX (+1.86%), DJI (+1.98%), RUT (+1.10%), VIX (-3.23%)
Sector List: Financials ( XLF +3.25%) and Energy ( XLE +2.64%) at the top. Health ( XLV +0.88%) and Consumer Discretionary ( XLY +0.75%) at the bottom.

Market Overview

Stocks rallied on Monday thanks to a stronger Euro after the European Central Bank said rate hikes would come later this year.

The Nasdaq rose by +1.59% for the day, but it was not enough to reach the previous day’s high. The inside day came with lower volume , but the closing range of 93% and 56% green body in the upper half of the candle is positive. There was a nearly equal number of advancing and declining stocks.

The Dow Jones Industrial Average (DJI) outperformed the other indexes, gaining by +1.98% while the S&P 500 (SPX) advanced by +1.86%. The Russel 2000 (RUT) climbed by +1.10%. The VIXVolatility Index declined by -3.23% but remained elevated as it has been since the beginning of May.

All eleven S&P 500 sectors gained. Financials ( XLF +3.25%) and Energy ( XLE +2.64%) were the best two sectors for today. Health ( XLV +0.88%) and Consumer Discretionary ( XLY +0.75%) were at the bottom of the sector list.

The US Dollar Index DXY ) dropped by -0.91% and is down 2.5% from its peak in early May. US 30y, 10y, and 2y Treasury Yields all rose. High Yield ( HYG ) Corporate Bond prices moved higher while Investment Grade ( LQD ) Corporate Bond prices declined. Copper and Aluminum Futures continued to rise.

The put/call ratio ( PCCE ) dropped to 0.829. The CNN Fear & Greed index is in the Extreme Fear range.

Five of the big six mega-caps advanced . Amazon ( AMZN ) was the only one to decline but fell just -0.03%. Apple AAPL ) had the biggest gain, advancing +4.01%, followed by Microsoft which moved up by +3.20%. All six have work to do before getting back to their key moving average lines.

Financial stocks topped the broader mega-cap list. JP Morgan ( JPM ) and Bank of America ( BAC ) were the top gainers, advancing +6.19% and +5.94% respectively. Broadcom ( AVGO ) was at the bottom of the list, declining by -3.10%. There were only four mega-caps that declined.

The Daily Update Growth List had some gainers, but overall more than half of the list declined. DoorDash (DASH) topped the list with a +2.39% gain. Peloton (PTON) had the biggest loss, declining by -6.13%.

Looking ahead

Purchasing Manager Index data for May will be available after the market opens tomorrow. That includes Manufacturing, Services, and Composite measurements. We will also get New Home Sales data for April.

Nvidia NVDA ), Trip.com ( TCOM ), and Box Inc (BOX) are a few of the earnings reports for Tuesday.

Trends, Support, and Resistance

Although the day ended with positive gains, the lower high means the index is still in a down trend.

If the one-day trend continues, that would mean a +1.33% gain for Tuesday.

If the index returns to the five-day trend line and or the trend line from the 3/29 high, that would result in a -3.86% decline.

Wrap-up

It’s been a wild few weeks. Part of me is happy I was on break and didn’t report daily. Part of me thinks there was much to learn from the market data and could have benefited.

Let’s hope for some new highs throughout this week and some gains on higher volume , shared broadly across the market.

Stay healthy and trade safe!

Comments

If you find this helpful or have comments, please reply and like at

https://www.tradingview.com/chart/IXIC/v6w1Wgje-Daily-Market-Update-for-5-23/