Summary: Worries rose this week over the Ukraine conflict's impact on inflation and driving a more hawkish response from the Fed. If you are not ok with the wild ride, hopefully you are on the sidelines.
Notes
I fat-fingered the date yesterday and then copied it through the entire publishing process. :(
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Friday, February 11, 2022
Facts: -2.78%, Volume lower, Closing Range: 11%, Body: 82% Red
Good: Nothing
Bad: Long red body, higher volume, low advance/decline, new low for the week
Highs/Lows: Lower high, Lower low
Candle: Mostly red body, short upper and lower wicks
Advance/Decline: 0.46, more than two declining for every advancing stock
Indexes: SPX (-1.90%), DJI (-1.43%), RUT (-1.02%), VIX (+14.43%)
Sector List: Energy (XLE +2.91%) and Utilities (XLU +0.06%) at the top. Consumer Discretionary (XLY -2.87%) and Technology (XLK -3.05%) at the bottom.
Expectation: Lower
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Market Overview
Worries rose this week over the Ukraine conflict's impact on inflation and driving a more hawkish response from the Fed. If you are not ok with the wild ride, hopefully, you are on the sidelines.
The Nasdaq dropped -2.78% today. Volume was higher than Thursday while consistent selling throughout the day created an 83% red body. The 11% closing range put the index just below the 13,800 support area. There were more than two declining stocks for every advancing stock.
Small-caps lost but held up better than the other indexes. The Russell 2000 (RUT) declined -by 1.02%. The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) were down -1.90% and -1.43% respectively. The VIX Volatility Index rose +14.43%. The sentiment index soared more than 50% intraday.
The one sector benefiting from the Ukraine crisis is Energy (XLE +2.91%) which stands to profit from soaring energy prices. Only one other sector gained today, the defensive sector of Utilities (XLU +0.06%). The other nine S&P 500 sectors declined. Consumer Discretionary (XLY -2.87%) and Technology (XLK -3.05%) had the most significant losses.
The Michigan Consumer Expectations and Consumer Sentiment numbers did not help with investors' worries. Consumer Sentiment was at 61.7 against a forecast of 67.5 and down from the previous month's number of 67.2.
The US Dollar index (DXY) rose. US 30y, 10y, and 2y Treasury Yields all dropped. High Yield (HYG) Corporate Bond prices dropped sharply (opposite of Treasury prices), while Investment Grade (LQD) Corporate Bond prices tracked along with Treasuries, rising today. Gold rose +1.75% to a new three-month high. Silver gained as well. Crude Oil Futures of course moved higher on the Ukraine worries. Other commodities were lower for the day.
The put/call ratio (PCCE) rose to 0.972. The CNN Fear & Greed index is in the Fear range. Note that the Put/Call Options component (which says Extreme Greed) of this index seems to have some bad data. If this component showed the real numbers, the overall index would likely be in Extreme Greed now.
All of the big six mega-caps declined sharply. Tesla (TSLA) dropped -by 4.93%. Meta (FB) bounced off its 21d EMA and ended the day with a -3.74% decline. Apple (AAPL) and Amazon (AMZN) also dropped below their 21d EMA. Alphabet (GOOG) and Microsoft (MSFT) are back below their 200d MA, dropping -3.13% and -2.43% today.
The top three mega-caps for the day were all big Energy stocks. Exxon Mobile (XOM) and Chevron (CVX) both gained over 2%, while Royal Dutch Shell (SHEL) gained +1.27%. Recent gains for energy stocks helped Shell into the mega-cap category. The biggest loser in the mega-cap list was Nvidia (NVDA) with a -7.26% loss today.
There were only three stocks that gained in the Daily Update Growth List. UP Fintech (TIGR) and FUTU Holdings (FUTU) were first and third, gaining +4.09% and +1.89%. Draft Kings (DKNG) was second in the list, rising +2.41% today. Cloudflare (NET) declined -by 9.52% to end up at the bottom of the list. The stock was up after hours yesterday thanks to a great earnings report and outlook, but the market is not able to stomach any risk right now so investors took profits.
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Looking ahead
The Fed Reserve announced a closed-door meeting for Monday under expedited procedures to discuss interest rates. An early hike of interest rates is very likely.
Advanced Auto Parts (APP) and Avis (CAR) reports earnings on Monday evening.
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Trends, Support, and Resistance
The index landed at the 13,800 support area which was prior resistance. It's not a strong support area yet, but we'll see how it goes.
If the index heads back to the trend line from the 1/24 bottom, it would require a +4.63% gain on Monday.
The five-day trend line points to a +2.79% for the start of the week.
If the one-day trend continues, it would mean another -3.82% decline.
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Wrap-up
Investors offloaded risk and moved into safe havens today as the Ukraine conflict continues to evolve. The safe-haven US Dollar rose compared to other currencies. Treasury bond prices rose (prices rise when yields drop). Riskier Corporate bond prices declined. And equities fell.
As inflation is at its highest in 40 years, it looks like it could go even higher with the Ukraine conflict. The Fed will meet for an expedited procedure on Monday, likely to start raising interest rates.
The expectation for Monday is Lower. Once the news clears from the Fed's expedited meeting, we'll have a better picture of where things head from there.
Stay healthy and trade safe!
Notes
I fat-fingered the date yesterday and then copied it through the entire publishing process. :(
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Friday, February 11, 2022
Facts: -2.78%, Volume lower, Closing Range: 11%, Body: 82% Red
Good: Nothing
Bad: Long red body, higher volume, low advance/decline, new low for the week
Highs/Lows: Lower high, Lower low
Candle: Mostly red body, short upper and lower wicks
Advance/Decline: 0.46, more than two declining for every advancing stock
Indexes: SPX (-1.90%), DJI (-1.43%), RUT (-1.02%), VIX (+14.43%)
Sector List: Energy (XLE +2.91%) and Utilities (XLU +0.06%) at the top. Consumer Discretionary (XLY -2.87%) and Technology (XLK -3.05%) at the bottom.
Expectation: Lower
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Market Overview
Worries rose this week over the Ukraine conflict's impact on inflation and driving a more hawkish response from the Fed. If you are not ok with the wild ride, hopefully, you are on the sidelines.
The Nasdaq dropped -2.78% today. Volume was higher than Thursday while consistent selling throughout the day created an 83% red body. The 11% closing range put the index just below the 13,800 support area. There were more than two declining stocks for every advancing stock.
Small-caps lost but held up better than the other indexes. The Russell 2000 (RUT) declined -by 1.02%. The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) were down -1.90% and -1.43% respectively. The VIX Volatility Index rose +14.43%. The sentiment index soared more than 50% intraday.
The one sector benefiting from the Ukraine crisis is Energy (XLE +2.91%) which stands to profit from soaring energy prices. Only one other sector gained today, the defensive sector of Utilities (XLU +0.06%). The other nine S&P 500 sectors declined. Consumer Discretionary (XLY -2.87%) and Technology (XLK -3.05%) had the most significant losses.
The Michigan Consumer Expectations and Consumer Sentiment numbers did not help with investors' worries. Consumer Sentiment was at 61.7 against a forecast of 67.5 and down from the previous month's number of 67.2.
The US Dollar index (DXY) rose. US 30y, 10y, and 2y Treasury Yields all dropped. High Yield (HYG) Corporate Bond prices dropped sharply (opposite of Treasury prices), while Investment Grade (LQD) Corporate Bond prices tracked along with Treasuries, rising today. Gold rose +1.75% to a new three-month high. Silver gained as well. Crude Oil Futures of course moved higher on the Ukraine worries. Other commodities were lower for the day.
The put/call ratio (PCCE) rose to 0.972. The CNN Fear & Greed index is in the Fear range. Note that the Put/Call Options component (which says Extreme Greed) of this index seems to have some bad data. If this component showed the real numbers, the overall index would likely be in Extreme Greed now.
All of the big six mega-caps declined sharply. Tesla (TSLA) dropped -by 4.93%. Meta (FB) bounced off its 21d EMA and ended the day with a -3.74% decline. Apple (AAPL) and Amazon (AMZN) also dropped below their 21d EMA. Alphabet (GOOG) and Microsoft (MSFT) are back below their 200d MA, dropping -3.13% and -2.43% today.
The top three mega-caps for the day were all big Energy stocks. Exxon Mobile (XOM) and Chevron (CVX) both gained over 2%, while Royal Dutch Shell (SHEL) gained +1.27%. Recent gains for energy stocks helped Shell into the mega-cap category. The biggest loser in the mega-cap list was Nvidia (NVDA) with a -7.26% loss today.
There were only three stocks that gained in the Daily Update Growth List. UP Fintech (TIGR) and FUTU Holdings (FUTU) were first and third, gaining +4.09% and +1.89%. Draft Kings (DKNG) was second in the list, rising +2.41% today. Cloudflare (NET) declined -by 9.52% to end up at the bottom of the list. The stock was up after hours yesterday thanks to a great earnings report and outlook, but the market is not able to stomach any risk right now so investors took profits.
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Looking ahead
The Fed Reserve announced a closed-door meeting for Monday under expedited procedures to discuss interest rates. An early hike of interest rates is very likely.
Advanced Auto Parts (APP) and Avis (CAR) reports earnings on Monday evening.
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Trends, Support, and Resistance
The index landed at the 13,800 support area which was prior resistance. It's not a strong support area yet, but we'll see how it goes.
If the index heads back to the trend line from the 1/24 bottom, it would require a +4.63% gain on Monday.
The five-day trend line points to a +2.79% for the start of the week.
If the one-day trend continues, it would mean another -3.82% decline.
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Wrap-up
Investors offloaded risk and moved into safe havens today as the Ukraine conflict continues to evolve. The safe-haven US Dollar rose compared to other currencies. Treasury bond prices rose (prices rise when yields drop). Riskier Corporate bond prices declined. And equities fell.
As inflation is at its highest in 40 years, it looks like it could go even higher with the Ukraine conflict. The Fed will meet for an expedited procedure on Monday, likely to start raising interest rates.
The expectation for Monday is Lower. Once the news clears from the Fed's expedited meeting, we'll have a better picture of where things head from there.
Stay healthy and trade safe!
