Daily Market Update for 6/2

Original Chart

Notes

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

Friday, June 3, 2022

Facts: +2.69%, Volume lower, Closing Range: 99%, Body: 89% Green
Good: Higher close than Friday, 99% closing range, A/D ratio
Bad: Lower volume
Highs/Lows: Higher high, Higher low
Candle: Mostly green body with small lower wick
Advance/Decline: 2.17, more than two advancing stocks for every declining stock
Indexes:SPX (+1.84%), DJI (+1.33%), RUT (+2.31%), VIX (-3.78%)
Sector List: Consumer Discretionary ( XLY +3.06%) and Materials ( XLB +2.76%) at the top. Utilities ( XLU +0.67%) and Energy ( XLE -0.32%) at the bottom.

Market Overview

Sentiment turned positive once again on Thursday, but volume was lower as analysts await Friday’s employment data to add to a mixed bag of good and bad economic signals this week.

The Nasdaq rose by +2.69% and closed higher than last week’s high, keeping an uptrend intact. However, the volume was lower than the previous day. The candle has an 89% green body with a small lower wick and a 99% closing range leaving behind no upper wick. There were more than two advancing stocks for every declining stock.

The Russell 2000 (RUT) climbed by +2.31%. The S&P 500 (SPX) advanced +1.84%. The Dow Jones Industrial Average (DJI) ended with a +1.33% gain. The VIXVolatility Index fell by -3.78%.

Ten of the eleven S&P 500 sectors ended the day with gains. Consumer Discretionary ( XLY +3.06%) had the biggest advance, followed by Materials ( XLB +2.76%). The only declining sector was Energy ( XLE -0.32%).

ADP Nonfarm Employment change for May showed jobs growing much slower than expected. The market added just 128,000 jobs compared to an expected 300,000. However, Initial Jobless Claims were lower than expected for the week. Unit Labor Costs continued to grow in Q1.

The change in Crude Oil Inventories showed much higher demand than expected with the balance changing by -5m barrels compared to the forecast of -1.4m barrels.

The US Dollar index DXY ) declined by -0.78%. The US 30y and 10y Treasury Yields rose while the 2y yield declined. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices both advanced Brent Oil rose sharply to 117.33 a barrel despite dropping late on Wednesday. Copper Futures also rose sharply, gaining by +3.56% today.

The put/call ratio ( PCCE ) declined to 0.802. The CNN Fear & Greed index is in the Fear range but continues to move toward Neutral. The NAAIM money manager exposure index rose slightly to 34.33 from 33.19 the week prior.

All of the big six mega-caps gained today. Microsoft MSFT ) somehow ended the day with a gain despite dropping by -3% in the premarket after lowering Q4 guidance. Meta ( FB ) had the biggest gain, advancing by +5.42%. All six closed the day above their 21d EMA lines.

Nvidia NVDA ) was the top mega-cap for the day, gaining 6.94%. Costco (COST) was not far behind, advancing +6.70%. Eli Lilly ( LLY ) was at the bottom of the mega-cap list, falling by -2.78% today.

All of the stocks in the Daily Update Growth List gained today, but there were some big winners. Chewy CHWY ) topped the gains, soaring by +24.22% after beating revenue and earnings estimates. MongoDB MDB ) also beat on the top and bottom line, helping their stock rise by +18.56%. Six of the stocks in the list gained more than 10% and more than half of the list gained more than 5%. The smallest gain was by DoorDash (DASH), which advanced +1.42% today.

Looking ahead

Tomorrow is employment data Friday. Nonfarm Payrolls and the Unemployment Rate for May will be the top metrics for the day. We’ll also get the Services PMI and the ISM Non-Manufacturing PMI data for May.

DocuSign DOCU ) is in a short list of earnings reports for Friday.

Trends, Support, and Resistance

The Nasdaq briefly touched the 21d EMA again in the morning, but then gained throughout the day as it headed toward the 50d MA.

If the one-day trend line continues into Friday, that would result in a +3.0% gain.

The trend line from the 5/20 low points to a +1.10% gain.

Following the five-day trend line would result in a +0.20% gain.

Wrap-up

The ADP Jobs data today seems like it would be bad news for the economy. But for those watching the interest rate hikes, it could mean the Fed backs down from further rates later in the year. Whether that turns out to be true is still to be written, but nonetheless is a reason for optimism in the market today.

Stay healthy and trade safe!

Comments

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