Daily Market Update for 6/8

Original Chart

Notes

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

Wednesday, June 8, 2022

Facts: -0.73%, Volume higher, Closing Range: 18%, Body: 33% Red
Good: Higher high and higher low, support above 21d EMA
Bad: Closing range, higher volume on decline
Highs/Lows: Higher high, Higher low
Candle: A thing red body in the bottom of candle
Advance/Decline: 0.63, three declining stocks for every two advancing
Indexes:SPX (-1.08%), DJI (-0.81%), RUT (-1.49%), VIX (-0.25%)
Sector List: Energy ( XLE +0.22%) and Communications ( XLC -0.27%) at the top. Materials ( XLB -2.08%) and Real Estate ( XLRE -2.40%) at the bottom.

Market Overview

Indexes finished lower on Wednesday as investors fret over a slowing economy and wait for inflation data to come later this week.

The Nasdaq finished the day -0.73% lower after a morning rally failed. Volume was higher than the previous day. The candle has a long upper wick from the morning rally. The 33% red body sits in the lower half of the candle and results in an 18% closing range. There were three declining stocks for every two advancing stocks.

The Russell 2000 (RUT) had the biggest decline for the day, falling by -1.49%. The S&P 500 (SPX) declined by -1.08% and the Dow Jones Industrial Average (DJI) retreated by -0.81%. The VIXVolatility Index declined by -0.25%.

Of the eleven S&P 500 sectors, only Energy ( XLE +0.22%) ended the day with gains. Materials ( XLB -2.08%) and Real Estate ( XLRE -2.40%) were the worst-performing indexes.

Crude Oil Inventories rose by 2.025 million barrels. The forecast was for a decline of -1.917 million barrels. The 10y Treasury Note auction sent the yield on the 10y note back above 3%.

The US Dollar Index DXY ) rose by +0.21%. The 30y, 10y, and 2y Treasury Yields all rose. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices dropped. Brent Oil rose back above $120, ending the day at $122.65 a barrel.

The put/call ratio ( PCCE ) fell to 0.709. The CNN Fear & Greed index moved further toward Neutral but remained in the Fear range.

Three of the big six mega-caps gained for the day. Tesla TSLA ) led the gains with a +1.25% advance. Amazon ( AMZN ) led the decliners, losing -1.48% today.

Alibaba (BABA) soared +14.67% today, landing at the top of the mega-cap list. At the bottom of the mega-cap list was Abbot Laboratories ( ABT ).

In the Daily Update Growth List, another Chinese stock followed Alibaba higher. NIU Technologies NIU ) gained +10.67% to land behind Alibaba on the list. At the bottom of the growth list was GrowGeneration GRWG ) which declined by -4.03%.

Looking ahead

The weekly Initial Jobless Claims will be published at 8:30a on Thursday.

Earnings Reports for Thursday include Nio NIO ), DocuSign DOCU ), and Billibili ( BILI ).

Trends, Support, and Resistance

The Nasdaq held above the 21d EMA for the past eight sessions, helping to form support at 12,000.

If the index returns to the trend line from the 5/20 low, that would mean a +2.90% gain for Thursday. That’s likely out of reach for tomorrow as investors would need positive inflation news on Friday for a rally.

If the index continues along the five-day trend line , which is nearly flat, expect a +0.13% gain for Thursday.

A continuation of today’s one-day trend line would mean a -1.36% decline for tomorrow.

Wrap-up

The indexes are forming a nice base over the past eight trading days. Tomorrow will likely continue trading within that range. If we get the right inflation data on Friday, this base could add support for a nice rally. If the opposite happens, we may return to the lows set in May.

For the broader economic picture, ask five analysts and you’ll get five different answers.

Stay healthy and trade safe!

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