Daily Market Update for 6/3

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: -2.47%, Volume lower, Closing Range: 23%, Body: 42% Red
Good: Support at 21d EMA , lower volume on decline
Bad: Closing Range, A/D ratio
Highs/Lows: Lower high, Higher low
Candle: Inside day, short body in lower half of candle
Advance/Decline: 0.46, more than two declining stocks for every advancing stock
Indexes:SPX (-1.63%), DJI (-1.05%), RUT (-0.77%), VIX (+2.50%)
Sector List: Energy ( XLE +1.32%) and Industrials XLI -0.39%) at the top. Technology ( XLK -2.39%) and Consumer Discretionary ( XLY -2.92%) at the bottom.

Market Overview

An ominous mail from Elon Musk to Tesla management topped the headlines on Friday and certainly dragged down the Nasdaq. However, it was likely the stronger-than-expected Nonfarm Payrolls that caused wider spread declines.

The Nasdaq declined -2.47% on lower volume than the previous day. The 23% closing range comes above a tiny lower wick that kept the index above the 21d EMA for the close. The longer upper wick is above a 42% red body. The lower high and higher low mark an inside day. There were more than two declining stocks for every advancing stock.

The S&P 500 (SPX) declined by -1.63%, also impacted by the Tesla turmoil. The Dow Jones Industrial Average (DJI) declined by -1.05%. The Russell 2000 (RUT) held up well relative to the other indexes, declining only -0.77%. The VIXVolatility Index rose by +2.50%.

Only one S&P 500 sector, Energy ( XLE +1.32%), gained for the day. The other ten declined with the worst losses coming from Technology ( XLK -2.39%) and Consumer Discretionary ( XLY -2.92%).

Nonfarm Payrolls rose by 390,000 in May compared to the forecast of 325,000. The strong performance in the labor market means the Fed needs to worry less about higher interest rates impacting employment. Or at least that’s the theory. Services PM and ISM Non-Manufacturing PMI came in lower than expected for the month of May.

The US Dollar index DXY ) rose by +0.41%. 30y, 10, and 2y Treasury Yields all rose. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices fell. Brent Oil reached $120 per barrel by the end of Friday.

The put/call ratio ( PCCE ) rose to 0.873. The CNN Fear & Greed index moved back toward Extreme Fear but remained in the Fear range.

All big six mega-caps declined. Tesla TSLA ) led the declines with a -9.22% loss after Elon Musk’s leaked emails. The CEO of Tesla said he had a “super bad feeling” about the economy and would need to cut 10% of the workforce.

Exxon Mobil XOM ) was the top mega-cap for the day, rising by +1.45% as oil prices soared again. Tesla was at the bottom of the mega-cap list.

Only three stocks in the Daily Update Growth list advanced Okta OKTA ) was the top gainer after a strong earnings report. Draft Kings ( DKNG ) fell by -10.80%, landing it at the bottom of the growth list for Friday.

Looking ahead

Futu FUTU ) will release earnings on Monday morning.

Trends, Support, and Resistance

The Nasdaq held above the 21d EMA on an inside day.

If the index returns to the trend line from the 5/20 low, that would mean a +3.47% gain on Monday.

The five-day trend line points to a +0.82% gain.

If the one-day trend continues, we can expect a -0.68% decline.

Wrap-up

Bad news was supposed to be good news on Friday. However, the bad news was supposed to be a weak jobs report, not a panicking CEO. Instead, we go a strong jobs report that means the Fed has more freedom to be hawkish in the second half of the year.

Stay healthy and trade safe!

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