Daily Market Update for 7/7

Original Chart

Notes

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

Thursday, July 7, 2022

Facts: +2.28%, Volume lower, Closing Range: 90%, Body: 86% Green
Good: Price rally all-day, high closing range, advance/decline ratio
Bad: Lower volume
Highs/Lows: Higher high, Higher low
Candle: Mostly green body, tiny upper and lower wicks.
Advance/Decline: 2.21, more than two advancing stocks for every declining stock
Indexes:SPX (+1.50%), DJI (+1.12%), RUT (+2.43%), VIX (-2.43%)
Sector List: Energy ( XLE +3.61%) and Consumer Discretionary ( XLY +2.58%) at the top. Real Estate ( XLRE +0.07%) and Utilities ( XLU -0.10%) at the bottom.

Market Overview

Markets had a fourth day of gains for July, starting off the month green as analysts continue to judge if and when a recession will hit. Wells Fargo says the recession is already here.

The Nasdaq climbed by +2.28% but on lower volume than the previous day. The 86% green body is in between two tiny wicks as the index closed the day with a 90% closing range. Prices rose throughout the day. There were more than two advancing stocks for every declining stock.

Small caps led the day. The Russell 2000 (RUT) gained +2.43%. The S&P 500 (SPX) rose by +1.50% and the Dow Jones Industrial Average (DJI) advanced by +1.12%.

Ten of the eleven S&P sectors gained. Energy ( XLE +3.61%) and Consumer Discretionary ( XLY +2.58%) were the top two sectors. Utilities ( XLU -0.10%) was the only sector to decline.

Weekly Initial Jobless Claims were at 235,000, slightly worse than the consensus forecast of 230,000. The Trade Balance for May was at -85.50 billion, worse than the expected -84.90 billion. Crude Oil Inventories were much higher than expected, with 8.2 million barrels of excess for the week compared to the expectation for a -1 million-barrel shortfall.

The US Dollar index DXY ) held its current level, declining by only -0.01% today. US 30y, 10y, and 2y Treasury Yields rose for a second day. High Yield ( HYG ) Corporate Bond prices advanced, narrowing the gap with short-term treasuries. Investment Grade ( LQD ) Corporate Bond prices were flat for the day. Brent Oil rose back above $100 a barrel.

The VIXVolatility index declined by -2.43%. The put/call ratio ( PCCE ) fell to 0.755. The CNN Fear & Greed Index moved into the Fear range. The NAAIM money manager exposure index declined to 27.85.

All big six mega-caps gained today with Tesla TSLA ) leading the pack, rising by +5.53%. All six closed above their 21d EMA and four of the six closed above their 50d MA.

Taiwan Semiconductor ( TSM ) was the best mega-cap for the day, gaining +6.74%. Verizon Communications VZ ) declined by -1.55% to end up at the bottom of the list.

In the Daily Update Growth List, it was Fastly FSLY ) with the best gain, advancing by +10.13%. The only declining stock on the list was DataDog DDOG ) which fell by -0.31%.

Looking ahead

Tomorrow is the monthly employment data Friday. Nonfarm Payrolls and the Unemployment Rate are top indicators of the health of the labor market. The data will be released before the market opens.

Trends, Support, and Resistance

The Nasdaq rose throughout the day to close just below the 50d MA.

If the one-day trend line continues, that would meet up with the five-day trend line for a +1.03% gain tomorrow and a close above the 50d MA.

If the index returns to the trend line from the 6/16 low, that would mean a -1.80% decline for Friday.

Wrap-up

Investors are likely looking for mediocre to worse labor market data for Friday. Worse-than-expected employment data could mean a more dovish fed in 2023 which is what institutions are pricing into the market now.

Stay healthy and trade safe!

Comments

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