Daily Market Update for 6/14

Original Chart

Notes

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

Tuesday, June 14, 2022

Facts: +0.18%, Volume lower, Closing Range: 49%, Body: 36% Red
Good: Ok closing range
Bad: Lower high, lower low, A/D ratio weak
Highs/Lows: Lower high, Lower low
Candle: Thin red body in upper half of candle, long lower wick
Advance/Decline: 0.61, three advancing for every two declining stocks
Indexes:SPX (-0.38%), DJI (-0.50%), RUT (-0.39%), VIX (-3.91%)
Sector List: Technology ( XLK +0.63%) and Energy ( XLE +0.19%) at the top. Consumer Staples ( XLP -1.18%) and Utilities ( XLU -2.53%) at the bottom.

Market Overview

A wait-and-see day ended with a further dip across the market, but a bounce in technology stocks helped the Nasdaq end the day with a gain. Investors’ full attention is on the Fed’s rate-hike decision on Wednesday.

Nasdaq advanced by +0.18%. Volume was much lower than the previous day as most investors are waiting for Wednesday’s Fed meeting. A 36% red body sits above a long lower wick that formed late in the session as the index dipped to a lower low before recovering some of the losses and ending with a 49% closing range. There were three declining stocks for every two advancing stocks.

The other major indexes retreated further. The Dow Jones Industrial Average (DJI) declined by -0.50%. The S&P 500 (SPX) lost -0.38%. The Russell 2000 (RUT) fell by -0.39%. The VIXVolatility Index retreated from its high level the previous day, declining by -3.91% today.

Two of the eleven S&P 500 sectors gained. Technology ( XLK +0.63%) and Energy ( XLE +0.19%) had the gains after steep declines yesterday. Consumer Staples ( XLP -1.18%) and Utilities ( XLU -2.53%) had the biggest declines today.

Produce Price Index data didn’t do much to reduce fears over inflation , but it didn’t add any fuel to the fire. The Core PPI came in a 0.5% month-over-month compared to the forecast of 0.6%. Total PPI, which includes food and energy, matched the expectation of a 0.8% month-over-month increase.

The US Dollar Index DXY ) continued its climb, rising by +0.26% today. The Yield curve nearly reverted from yesterday’s inversion but is still at a very narrow spread. The 30y, 10y, and 2y yields all dipped and the 2y yield dropped back below the 30y yield. High Yield ( HYG ) Corporate Bond prices rose for the day but Investment Grade ( LQD ) Corporate Bond prices continued to fall. Brent Oil is back below $120 a barrel. Timber and Copper /Aluminum Futures continue to fall.

The put/call ratio ( PCCE ) remained bearish but fell to 1.09. The CNN Fear & Greed index is in the Extreme Fear range.

Four of the big six mega-caps gained. Tesla TSLA ) had the biggest gain with a +2.39% advance today. Amazon ( AMZN ) declined by -1.31% today.

Alibaba (BABA) continues to swing up and down, finding itself at the top of the broader mega-cap list today with a +6.81% gain. Coca-Cola Company (KO) was at the bottom of the list, declining by -3.44%.

The top four gaining stocks in the Daily Update Growth List were Chinese companies. NIO Technologies ( NIO ) topped the list with a +16.70% gain. At least half of the list advanced today. RH RH ) had the biggest loss, declining by -4.91%.

Looking ahead

Several economic indicators will publish in the morning. Retail Sales and Export/Import Price Index for May are due before the market opens. Weekly Crude Oil Inventories are due after the market opens.

None of those will likely impact market direction. Investors are waiting for the Fed Interest Rate Decision which will come at 14:00. That will be followed by closely-watched remarks from Jerome Powell as he carefully lands their economic assessment and Fed strategy to control inflation without causing a recession.

Trends, Support, and Resistance

The Nasdaq set a lower low in the afternoon before recovering enough to gain for the day.

If the one-day trend line continues, it will result in a -0.13% decline for Wednesday.

The trend line from the 6/2 high points to a -1.19% decline.

Following the five-day trend lien would result in a -5.89% decline.

Wrap-up

We wait for the Fed. Then we wait for the market reaction. Some analysts see a 75 basis point increase as a good thing that the Fed is willing to follow the data instead of a pre-determined plan. Others see such a rate hike as guaranteeing a recession. So it is not clear whether the market reaction will be good or bad to a 50 basis point increase nor whether it will be good or bad with a 75 basis point increase.

Stay healthy and trade safe!

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