Daily Market Update for 7/6

Original Chart

Notes

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

Wednesday, July 6, 2022

Facts: +0.35%, Volume lower, Closing Range: 58%, Body: 12% Green
Good: Higher high, higher low, good closing range
Bad: Indecisive finish, advance/decline ratio
Highs/Lows: Higher high, Higher low
Candle: Indecisive spinning-top candle, thing green body in middle of two long wicks
Advance/Decline: 0.54, almost two declining stocks for every advancing stock
Indexes:SPX (+0.36%), DJI (+0.23%), RUT (-0.79%), VIX (-2.94%)
Sector List: Utilities ( XLU +1.04%) and Technology ( XLK +0.86%) at the top. Consumer Discretionary ( XLY -0.33%) and Energy ( XLE -1.71%) at the bottom.

Market Overview

Investors’ reaction to the Fed’s meeting minutes from June resulted in a choppy indecisive day for the market. The US Dollar continued to climb against the Euro .

The Nasdaq rose by +0.35%, helped mostly by big tech. Volume was lower than the previous day. The candle has a thin 12% green body in the middle of equal upper and lower wicks. The candle represents a spinning top that indicates indecision in the market, a perfect way to explain today’s session. There were nearly two declining stocks for every advancing stock.

Small-caps pulled back with the Russell 2000 (RUT) declining by -0.79%. The S&P 500 (SPX) rose by +0.36% and the Dow Jones Industrial Average (DJI) gained +0.23%.

Seven of the eleven S&P sectors gained. The defensive sector of Utilities ( XLU +1.04%) was at the top, followed by the growth sector of Technology ( XLK +0.86%), another representation of the mix of sentiment in the market. Consumer Discretionary ( XLY -0.33%) and Energy ( XLE -1.71%) were at the bottom of the sector list. Energy stocks continue to fall along with oil prices.

The Services PMI for June was higher than expected. The 52.3 reading exceeded the 51.2 consensus forecast, showing more activity in Services than expected. JOLTs Job Openings were also higher than expected, coming in at 11.3 million compared to the expected 11 million.

The US Dollar Index DXY ) rose another +0.52%. The last time the index was this high was in 2002. US 30y, 10y, and 2y Treasury Yields all moved higher today. High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices declined. Brent Oil dropped to $98.73 per barrel.

The VIXVolatility Index fell by -2.94%. The put/call ratio ( PCCE ) rose to 0.840. The CNN Fear & Greed index hasn’t moved for a few days and is still in Extreme Fear.

Of the big six mega-caps, only Tesla TSLA ) declined, falling by -0.57%. Microsoft MSFT ) had the biggest gain among the group, advancing by +1.28% and closing above its 50d MA and 21d EMA . Alphabet GOOG ) also closed above the two key moving average lines, rising by +1.16% today.

Pfizer PFE ) was the top mega-cap for today, gaining +2.15%. Chevron CVX ) and Exxon Mobil XOM ) continue to be the bottom two mega-caps as the price of oil drops. They lost -1.32% and -1.80% today.

The Daily Update Growth List was mostly decliners today. The best advance was by Beyond Meat BYND ) which rose by +6.03%. The biggest declines in the list were Chinese Stocks, with Futu Holdings leading the pack, declining by -11.02% today.

Looking ahead

We’ll get more labor data tomorrow at 8:15a with the ADP Nonfarm Employment Change for June. That comes before the weekly Initial Jobless Claims at 8:30a.

Imports/Exports and the Trade Balance data for May will also be published.

Crude Oil Inventories will be available after the market opens.

Trends, Support, and Resistance

The Nasdaq rose in a choppy session to close above the 21d exponential moving average line.

If the one-day trend line continues into Thursday, we can expect a +1.02% gain.

The five-day trend line and the trend line from the 6/16 low point to a -0.47% decline.

Wrap-up

The Fed minutes from June confirmed a very hawkish Fed that wants to act quickly before inflation becomes entrenched in the outlook for the public. On one hand, it means more rate hikes into 2023 are very possible. On the other hand, we can expect inflation to top at some point and start to come down. The two sentiments caused a mix of reactions today which could continue into the next Fed meeting at the end of this month.

Stay healthy and trade safe!

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