Daily Market Update for 7/23
Summary: A rally in Social media stocks helped send the major indexes to new all-time highs. The optimism spread to other big tech stocks, giving the Nasdaq a high volume advance but leaving the advance/decline ratio below 1.0.
Notes
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, July 23, 2021
Facts: +1.04%, Volume higher, Closing range: 94%, Body: 57%
Good: High closing range on higher volume
Bad: A/D still below 1.0
Highs/Lows: Higher high, higher low
Candle: Gap up at open after several green days, mostly green body in upper half of candle
Advanced/Decline: 0.69, About three declining stocks for every two advancing
Indexes: SPX (+1.01%), DJI (+0.68%), RUT (+0.46%), VIX (-2.77%)
Sectors: Communications (XLC +2.48%) and Utilities (XLU +1.28%) at the top. Financials (XLF +0.17%) and Energy (XLE -0.37%) were bottom.
Expectation: Sideways or Higher
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Market Overview
A rally in Social media stocks helped send the major indexes to new all-time highs. The optimism spread to other big tech stocks, giving the Nasdaq a high volume advance but leaving the advance/decline ratio below 1.0.
The Nasdaq finished with a +1.04% gain on higher volume to reach a new record close. The green candle caps a week of all green candles compared to the previous week's all red candles. Today's candle had a 57% green body in the upper half of the candle. The 94% closing range represents a day of bullish buying after a quick dip in the morning created the lower wick. There were almost three declining stocks for every two advancing stocks.
Both the S&P 500 (SPX) and Dow Jones Industrial Average (DJI) finished with record closes, advancing +1.01% and +0.68%. The Russell 2000 (RUT) was a bit more volatile this week but ended Friday with a +0.46% gain for the day.
The VIX volatility index declined -2.77%.
Communications (XLC +2.48%) outperformed the other sectors thanks to a greater-than 20% advance by SNAP after surprising investors with robust advertising revenue. Utilities (XLU +1.28%) was the second sector, signaling investors nervousness as the indexes reach new tops. Financials (XLF +0.17%) and Energy (XLE -0.37%) were the bottom two sectors.
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Economic Indicators
Manufacturing purchasing managers index (PMI) data was stronger than expected, while Services PMI was weaker than expected.
The US Dollar (DXY) advanced +0.08% for the day.
The US 30y Treasury Bond yield moved up slightly while the 10y and 2y Treasury Yields declined somewhat.
High Yield Corporate Bond (HYG) prices advanced. Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices advanced.
Timber (Wood) advanced.
Copper (COPPER1!) made a massive move with a +3.37% advance. That's very bullish for the global economy.
Aluminum (ALI1!) also advanced.
Bitcoin (BTCUSD) advanced +4.28%. Ethereum (ETHUSD) advanced +5.10%.
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Investor Sentiment
The put/call ratio declined to 0.702. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is in the Fear area, heading toward Neutral.
The NAAIM money manager exposure index declined to 71.04 this week.
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Market Leaders
Alphabet (GOOGL) led the mega-caps with a +3.58% gain influenced by positive earnings reports from SNAP and Twitter that showed solid growth in the advertising business. The company joined Microsoft in reaching new all-time highs this week. Microsoft (MSFT) gained +1.23%, adding to its record close yesterday. Apple (AAPL) advanced +1.20%. Amazon (AMZN) gained +0.51%.
Facebook (FB) and Alphabet (GOOGL) led the mega-cap list. Shopify (SHOP) and Mastercard (MA) were third and fourth. Each had gains greater than 3%, while Facebook rose more than 5%. Intel (INTC) lost -5.29%, ending the day at the bottom of the list. The other biggest losers for the day were Alibaba (BABA), Oracle (ORCL), and Tesla (TSLA).
Communications stocks SNAP (SNAP), Roku (ROKU), Pinterest (PINS), and Facebook (FB) dominated the top of the daily update growth list. There were still quite a few losers in the growth list, with the Chinese stocks suffering from negative news again. FUTU Holding (FUTU), Ehang Holdings (EH), and UP Fintech (TIGER) were the bottom three.
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Looking ahead
New Home Sales data will be available on Monday morning after the market opens.
Tesla (TSLA) on Monday will kick off a full week of big tech earnings.
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Trends, Support, and Resistance
The Nasdaq is closed at all-time highs today. I removed the trend-line from the 7/13 high since we have a new high now. The five-day trend line will turn into a longer-term trend-line as I start tracking the latest rally.
The five-day trend line points to a +1.06% gain for Friday.
The one-day trend line ends with a +0.98% gain.
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Wrap-up
What a difference a week makes. It seemed last week that we were heading to correction territory and Monday appeared to confirm that direction. Then support was found at the 14,200 area, and a new rally begins. Five green candles in a row to complete a bullish outside week.
Given the bullishness of today, the expectation is for sideways or higher on Monday. Investors will be looking for a pullback and may find any reason to get defensive. However, investors are rewarding positive earnings reports this quarter, and nothing indicates that we won't continue to get positive reports from big tech next week.
Stay healthy and trade safe!
Notes
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, July 23, 2021
Facts: +1.04%, Volume higher, Closing range: 94%, Body: 57%
Good: High closing range on higher volume
Bad: A/D still below 1.0
Highs/Lows: Higher high, higher low
Candle: Gap up at open after several green days, mostly green body in upper half of candle
Advanced/Decline: 0.69, About three declining stocks for every two advancing
Indexes: SPX (+1.01%), DJI (+0.68%), RUT (+0.46%), VIX (-2.77%)
Sectors: Communications (XLC +2.48%) and Utilities (XLU +1.28%) at the top. Financials (XLF +0.17%) and Energy (XLE -0.37%) were bottom.
Expectation: Sideways or Higher
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Market Overview
A rally in Social media stocks helped send the major indexes to new all-time highs. The optimism spread to other big tech stocks, giving the Nasdaq a high volume advance but leaving the advance/decline ratio below 1.0.
The Nasdaq finished with a +1.04% gain on higher volume to reach a new record close. The green candle caps a week of all green candles compared to the previous week's all red candles. Today's candle had a 57% green body in the upper half of the candle. The 94% closing range represents a day of bullish buying after a quick dip in the morning created the lower wick. There were almost three declining stocks for every two advancing stocks.
Both the S&P 500 (SPX) and Dow Jones Industrial Average (DJI) finished with record closes, advancing +1.01% and +0.68%. The Russell 2000 (RUT) was a bit more volatile this week but ended Friday with a +0.46% gain for the day.
The VIX volatility index declined -2.77%.
Communications (XLC +2.48%) outperformed the other sectors thanks to a greater-than 20% advance by SNAP after surprising investors with robust advertising revenue. Utilities (XLU +1.28%) was the second sector, signaling investors nervousness as the indexes reach new tops. Financials (XLF +0.17%) and Energy (XLE -0.37%) were the bottom two sectors.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Economic Indicators
Manufacturing purchasing managers index (PMI) data was stronger than expected, while Services PMI was weaker than expected.
The US Dollar (DXY) advanced +0.08% for the day.
The US 30y Treasury Bond yield moved up slightly while the 10y and 2y Treasury Yields declined somewhat.
High Yield Corporate Bond (HYG) prices advanced. Investment Grade Corporate Bond (LQD) prices declined.
Silver (SILVER) and Gold (GOLD) declined.
Crude Oil (CRUDEOIL1!) prices advanced.
Timber (Wood) advanced.
Copper (COPPER1!) made a massive move with a +3.37% advance. That's very bullish for the global economy.
Aluminum (ALI1!) also advanced.
Bitcoin (BTCUSD) advanced +4.28%. Ethereum (ETHUSD) advanced +5.10%.
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Investor Sentiment
The put/call ratio declined to 0.702. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. The 0.7 level is considered normal. Below that level is overly bullish.
The CNN Fear & Greed index is in the Fear area, heading toward Neutral.
The NAAIM money manager exposure index declined to 71.04 this week.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Leaders
Alphabet (GOOGL) led the mega-caps with a +3.58% gain influenced by positive earnings reports from SNAP and Twitter that showed solid growth in the advertising business. The company joined Microsoft in reaching new all-time highs this week. Microsoft (MSFT) gained +1.23%, adding to its record close yesterday. Apple (AAPL) advanced +1.20%. Amazon (AMZN) gained +0.51%.
Facebook (FB) and Alphabet (GOOGL) led the mega-cap list. Shopify (SHOP) and Mastercard (MA) were third and fourth. Each had gains greater than 3%, while Facebook rose more than 5%. Intel (INTC) lost -5.29%, ending the day at the bottom of the list. The other biggest losers for the day were Alibaba (BABA), Oracle (ORCL), and Tesla (TSLA).
Communications stocks SNAP (SNAP), Roku (ROKU), Pinterest (PINS), and Facebook (FB) dominated the top of the daily update growth list. There were still quite a few losers in the growth list, with the Chinese stocks suffering from negative news again. FUTU Holding (FUTU), Ehang Holdings (EH), and UP Fintech (TIGER) were the bottom three.
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Looking ahead
New Home Sales data will be available on Monday morning after the market opens.
Tesla (TSLA) on Monday will kick off a full week of big tech earnings.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq is closed at all-time highs today. I removed the trend-line from the 7/13 high since we have a new high now. The five-day trend line will turn into a longer-term trend-line as I start tracking the latest rally.
The five-day trend line points to a +1.06% gain for Friday.
The one-day trend line ends with a +0.98% gain.
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Wrap-up
What a difference a week makes. It seemed last week that we were heading to correction territory and Monday appeared to confirm that direction. Then support was found at the 14,200 area, and a new rally begins. Five green candles in a row to complete a bullish outside week.
Given the bullishness of today, the expectation is for sideways or higher on Monday. Investors will be looking for a pullback and may find any reason to get defensive. However, investors are rewarding positive earnings reports this quarter, and nothing indicates that we won't continue to get positive reports from big tech next week.
Stay healthy and trade safe!
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