Daily Market Update for 10/15
Summary: Retail Sales jumped 0.7% in September compared to analysts' expectation for a decline. That gave a massive boost to Consumer Discretionary stocks while the Financial sector topped a week of positive earnings reports with a huge beat from Goldman Sachs.
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, October 15, 2021
Facts: +0.50%, Volume higher, Closing Range: 90% (w/gap), Body: 11% Green
Good: Move above 50d MA on higher volume, high closing range
Bad: Nothing
Highs/Lows: Higher high, Higher low
Candle: Gap up, long lower wick didn't fill gap, thin body
Advance/Decline: 0.52, two declining stocks for every advancing stock
Indexes: SPX (+0.75%), DJI (+1.09%), RUT (-0.37%), VIX (-3.32%)
Sector List: Consumer Discretionary (XLY +1.53%) and Financials (XLF +1.49%) at the top. Consumer Staples (XLP -0.24%) and Utilities (XLU -0.29%) at the bottom.
Expectation: Sideways or Higher
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Market Overview
Retail Sales jumped 0.7% in September compared to analysts' expectation for a decline. That gave a massive boost to Consumer Discretionary stocks while the Financial sector topped a week of positive earnings reports with a huge beat from Goldman Sachs.
The Nasdaq climbed above its 50d moving average with a +0.50% advance today on higher volume. The candle has a thin green body, covering just 11% in the upper half of the stick. The long lower wick wasn't enough to fill a gap at open. Despite the gain on higher volume, there were two declining stocks for every advancing stock as small-caps struggled today.
The Russell 2000 (RUT) started the day with a +1.41% gain but lost support and ended with a -0.37% decline. The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) gained +0.75% and +1.09%. The VIX Volatility Index receded -3.32% as investors relaxed from stagflation fears.
Consumer Discretionary (XLY +1.53%) and Financials (XLF +1.49%) were at the top. Consumer Discretionary got a boost from retail sales, while Financials gained on an excellent earnings week. Both sector ETFs set new all-time highs. Consumer Staples (XLP -0.24%) and Utilities (XLU -0.29%) were at the bottom of the list as investors moved to higher-risk equities in growth and cyclical sectors.
Retail Sales grew 0.7% in September compared to the forecast for a -0.2% decline. However, the impact of higher prices at the cash register has weighed on the consumer. Consumer Expectations and Consumer Sentiment data came in lower than expected, and both remain near low levels set back in August. The NY Empire State Manufacturing Index also came in lower than expected, registering 19.8 compared to a forecast of 27.0.
The US Dollar declined slightly (DXY -0.03%) while US Treasury yields moved higher. The yield curve continues to flatten as the gap between long-term and short-term yields tightens. High Yield (HYG) And Investment Grade (LQD) Corporate Bonds declined after two days of sharp increases. Gold retreated -1.62%. Copper is nearing a record high while Aluminum continues to set new records.
The put/call ratio rose to 0.684. The CNN Fear & Greed index moved back to Neutral after hitting Extreme Fear several times in October. The NAAIM money manager exposure index declined to 64.46 from 68.6 the previous week.
Amazon (AMZN) gained +3.31% on the retail sales data today, leading the four largest mega-caps higher and shooting past both the 21d EMA and 50d MA lines. All four largest mega-caps ended the day with gains. Only Apple (AAPL) remains below its 50d MA.
Mastercard (MA) was the top mega-cap for the day, matching Amazon's +3.31% and benefiting from expected higher transaction fees that go along with a rise in retail sales. Tesla (TSLA) also topped +3.02%, making a list of China's top 15 EV manufacturers by deliveries. There were not many decliners in the mega-cap list, but Facebook found itself at the bottom with a -1.15% decline as the Communications sector also declined today.
It was mixed results for the Daily Update Growth List. NIO (NIO) topped the list with a +3.94% gain. NIO did not make the list of the top 15 EV manufacturers in China but announced doubling its manufacturing capacity. FUTU Holdings and UP Fintech continued to sell-off on regulatory fears, with FUTU at the bottom of the growth list, declining -13.66% today.
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Looking ahead
Industrial Production data will be available Monday morning, and an update to the Federal Budget Balance will come in the afternoon.
Although next week will be another busy earnings week, none are significant for the Daily Update on Monday.
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Trends, Support, and Resistance
The Nasdaq rose above the 50d MA today and is approaching the 15,000 support/resistance area.
The one-day and five-day trend lines show a similar result, approximately a +0.28% gain for Monday.
If the index returns to the trend line from the 10/4 low, expect a -0.32% decline which would be a move below the 50d MA.
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Wrap-up
Friday marked the end of a constructive week for the market. Investors set aside fears of stagflation and looked at improving retail activity as an indicator consumers are getting back out and spending despite higher prices at the cash register. Key sectors are leading indexes higher.
While the Nasdaq, S&P 500, and Dow Jones heads back toward new highs, the small-caps in the Russell 2000 continue to chop up and down. That may change once the Fed begins tapering bond purchases, sending the USD higher, and weighing on valuations for large multinational corporations.
Communications was the only sector to decline for the week. Facebook continues to face scrutiny over social media policies which could turn into regulation for the sector.
With the increasing volume as the index moves higher, it's reasonable to expect more gains for next week. Resistance levels will come at 15,000, 15,085, and 15,200 before the index can attempt a new high. The expectation for Monday is Sideways or Higher.
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.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Friday, October 15, 2021
Facts: +0.50%, Volume higher, Closing Range: 90% (w/gap), Body: 11% Green
Good: Move above 50d MA on higher volume, high closing range
Bad: Nothing
Highs/Lows: Higher high, Higher low
Candle: Gap up, long lower wick didn't fill gap, thin body
Advance/Decline: 0.52, two declining stocks for every advancing stock
Indexes: SPX (+0.75%), DJI (+1.09%), RUT (-0.37%), VIX (-3.32%)
Sector List: Consumer Discretionary (XLY +1.53%) and Financials (XLF +1.49%) at the top. Consumer Staples (XLP -0.24%) and Utilities (XLU -0.29%) at the bottom.
Expectation: Sideways or Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Retail Sales jumped 0.7% in September compared to analysts' expectation for a decline. That gave a massive boost to Consumer Discretionary stocks while the Financial sector topped a week of positive earnings reports with a huge beat from Goldman Sachs.
The Nasdaq climbed above its 50d moving average with a +0.50% advance today on higher volume. The candle has a thin green body, covering just 11% in the upper half of the stick. The long lower wick wasn't enough to fill a gap at open. Despite the gain on higher volume, there were two declining stocks for every advancing stock as small-caps struggled today.
The Russell 2000 (RUT) started the day with a +1.41% gain but lost support and ended with a -0.37% decline. The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) gained +0.75% and +1.09%. The VIX Volatility Index receded -3.32% as investors relaxed from stagflation fears.
Consumer Discretionary (XLY +1.53%) and Financials (XLF +1.49%) were at the top. Consumer Discretionary got a boost from retail sales, while Financials gained on an excellent earnings week. Both sector ETFs set new all-time highs. Consumer Staples (XLP -0.24%) and Utilities (XLU -0.29%) were at the bottom of the list as investors moved to higher-risk equities in growth and cyclical sectors.
Retail Sales grew 0.7% in September compared to the forecast for a -0.2% decline. However, the impact of higher prices at the cash register has weighed on the consumer. Consumer Expectations and Consumer Sentiment data came in lower than expected, and both remain near low levels set back in August. The NY Empire State Manufacturing Index also came in lower than expected, registering 19.8 compared to a forecast of 27.0.
The US Dollar declined slightly (DXY -0.03%) while US Treasury yields moved higher. The yield curve continues to flatten as the gap between long-term and short-term yields tightens. High Yield (HYG) And Investment Grade (LQD) Corporate Bonds declined after two days of sharp increases. Gold retreated -1.62%. Copper is nearing a record high while Aluminum continues to set new records.
The put/call ratio rose to 0.684. The CNN Fear & Greed index moved back to Neutral after hitting Extreme Fear several times in October. The NAAIM money manager exposure index declined to 64.46 from 68.6 the previous week.
Amazon (AMZN) gained +3.31% on the retail sales data today, leading the four largest mega-caps higher and shooting past both the 21d EMA and 50d MA lines. All four largest mega-caps ended the day with gains. Only Apple (AAPL) remains below its 50d MA.
Mastercard (MA) was the top mega-cap for the day, matching Amazon's +3.31% and benefiting from expected higher transaction fees that go along with a rise in retail sales. Tesla (TSLA) also topped +3.02%, making a list of China's top 15 EV manufacturers by deliveries. There were not many decliners in the mega-cap list, but Facebook found itself at the bottom with a -1.15% decline as the Communications sector also declined today.
It was mixed results for the Daily Update Growth List. NIO (NIO) topped the list with a +3.94% gain. NIO did not make the list of the top 15 EV manufacturers in China but announced doubling its manufacturing capacity. FUTU Holdings and UP Fintech continued to sell-off on regulatory fears, with FUTU at the bottom of the growth list, declining -13.66% today.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Looking ahead
Industrial Production data will be available Monday morning, and an update to the Federal Budget Balance will come in the afternoon.
Although next week will be another busy earnings week, none are significant for the Daily Update on Monday.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Trends, Support, and Resistance
The Nasdaq rose above the 50d MA today and is approaching the 15,000 support/resistance area.
The one-day and five-day trend lines show a similar result, approximately a +0.28% gain for Monday.
If the index returns to the trend line from the 10/4 low, expect a -0.32% decline which would be a move below the 50d MA.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Friday marked the end of a constructive week for the market. Investors set aside fears of stagflation and looked at improving retail activity as an indicator consumers are getting back out and spending despite higher prices at the cash register. Key sectors are leading indexes higher.
While the Nasdaq, S&P 500, and Dow Jones heads back toward new highs, the small-caps in the Russell 2000 continue to chop up and down. That may change once the Fed begins tapering bond purchases, sending the USD higher, and weighing on valuations for large multinational corporations.
Communications was the only sector to decline for the week. Facebook continues to face scrutiny over social media policies which could turn into regulation for the sector.
With the increasing volume as the index moves higher, it's reasonable to expect more gains for next week. Resistance levels will come at 15,000, 15,085, and 15,200 before the index can attempt a new high. The expectation for Monday is Sideways or Higher.
Stay healthy and trade safe!
Website: drewby.com
Twitter: twitter.com/drewrobbins
All ideas are for information purposes only. I may or may not invest in the stocks discussed. Before investing in any stock, do your research and trade using your rules.
Twitter: twitter.com/drewrobbins
All ideas are for information purposes only. I may or may not invest in the stocks discussed. Before investing in any stock, do your research and trade using your rules.
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