Daily Market Update for 6/15

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 15, 2022

Facts: +2.50%, Volume higher, Closing Range: 62%, Body: 35% Green
Good: Advance on higher volume , closing range, A/D ratio
Bad: Long upper wick after buying slowed
Highs/Lows: Higher high, Higher low
Candle: Medium body in center of candle, longer upper wick
Advance/Decline: 1.98, two advancing for every one declining stock
Indexes:SPX (+1.46%), DJI (+1.00%), RUT (+1.36%), VIX (-9.39%)
Sector List: Consumer Discretionary ( XLY +2.81%) and Real Estate ( XLRE +2.29%) at the top. Materials ( XLB -0.03%) and Energy ( XLE -2.21%) at the bottom.

Market Overview

The Fed increased interest rates by 75 basis points as many expected after last week’s inflation data. Initially, the market dipped, but then a rally came after Jerome Powel’s comments following the rate hike.

The Nasdaq advanced +2.50% on higher volume than the previous session. The candle has a 35% green body underneath a longer upper wick and a 62% closing range. Both the lower wick and upper wick came after the Fed’s interest rate decision. The lower wick formed on the decision and the upper wick formed after public comments by Jerome Powell. There were two advancing stocks for every declining stock.

The S&P 500 (SPX) was the second-best index, rising by +1.46% today. The Russell 2000 (RUT) advanced by +1.36%. The Dow Jones Industrial Average (DJI) rose by +1.00%. The VIXVolatility Index declined by -9.39%.

Nine of the eleven S&P 500 sectors gained. Consumer Discretionary ( XLY +2.81%) and Real Estate ( XLRE +2.29%) were at the top. Materials ( XLB -0.03%) and Energy ( XLE -2.21%) were the two losing sectors. The decline in Energy was likely related ot the decline in Brent Oil prices.

Core Retail Sales, which excludes automobiles, grew by 0.5% in May compared to the expectation of 0.8%. Including automobiles, total Retail Sales declined by -0.3% . The Export Price Index rose by 2.8% while the Import Price Index declined by -0.6%, the impact coming from the strong US Dollar Crude Oil Inventories were higher than expected, rising by 1.96 million barrels. The forecast was for a -1.314 million barrel shortage.

The US Dollar Index DXY ) declined by -0.6%. The US 30y, 10y, and 2y Treasury Yields all declined as the yield curve continues to recover from its inversion earlier this week. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices both followed Treasury bond prices higher and the spread between corporate junk bonds and short-term treasuries narrowed.

Brent Oil dropped to $116 a barrel. Timber, Copper , and Aluminum prices rose after selling off sharply for several days.

The put/call ratio dipped below 0.7 but then ended the day at 0.933. The CNN Fear & Greed index remained in the Extreme Fear range.

All big six mega-caps gained. Tesla TSLA ) led the gains with a +5.48% advance, followed closely by Amazon ( AMZN ) which gained by +5.24%. All six charts showed good gains on higher volume , but there is still much work to do before showing any strength.

Tesla and Amazon were also the top stocks in the broader mega-cap list, followed by Nvidia NVDA ) which gained by +4.36%. The big energy companies of Exxon Mobil XOM ) and Chevron CVX ) were at the bottom of the list, declining by -1.26% and -1.96% respectively. There were only five declining stocks on the list.

All but two stocks in the Daily Update Growth List gained today. Beyond Meat BYND ) was the top stock on the list, soaring by +13.95%. Many of the top gainers in the list today were stocks that were the most beaten down in recent months. RobinHood (HOOD) was at the bottom of the list, declining by -2.49%.

Looking ahead

Building Permits and Housing Starts for May will be published tomorrow morning. We will also get the weekly Initial Jobless Claims and the Philadelphia Fed Manufacturing Index for June.

Adobe ( ADBE ), Kroger KR ), and Jabil ( JBL ) will release their earnings on Thursday.

Trends, Support, and Resistance

The Nasdaq opened with a gap-up but filled the gap after the interest rate decision. The index then had a quick rally after the public statement by Jerome Powell.

If the one-day trend line continued into Thursday, that would mean a +1.13% gain.

The steep five-day trend line points to a -4.35% decline.

The trend line from the 6/2 high is even steeper, pointing to a -6.33% decline for Thursday.

Wrap-up

Is the rally after the Fed interest rate hike good news for investors? Let’s wait and see. Last month, the market rallied in the afternoon following the Fed’s interest rate decision. And then it dumped for two days.

Daily Market Update for 5/6

Stay healthy and trade safe!

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