Daily Market Update for 11/8Summary: The materials sector led stocks higher after the House passed a massive Infrastructure Bill late Friday night. Tesla weighed down the major indexes thanks to new tweets from Elon Musk over the weekend.
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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Monday, November 8, 2021
Facts: +0.07%, Volume lower, Closing Range: 27%, Body: 17% Red
Good: Higher low for the day, higher volume
Bad: Couldn't hold high above 16,000
Highs/Lows: Lower high, Higher low
Candle: Inside day, indecisive candle with thing red body
Advance/Decline: 0.86, more declining than advancing stocks
Indexes: SPX (+0.09%), DJI (+0.29%), RUT (+0.23%), VIX (+4.49%)
Sector List: Materials (XLB +1.25%) and Energy (XLE +0.91%) at the top. Consumer Discretionary (XLY -1.42%) and Utilities (XLU -1.49%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
The materials sector led stocks higher after the House passed a massive Infrastructure Bill late Friday night. Tesla weighed down the major indexes thanks to new tweets from Elon Musk over the weekend.
The Nasdaq finished the day slightly higher with a +0.07% gain. Volume was higher than Friday. The candle represents an inside day where the high is lower than the previous high, and the low is higher than the previous low. The candle on Friday already showed indecision among investors, and the small 17% red body today signals more uncertainty with a leaning toward bearish with the 27% closing range. There were more declining stocks than advancing stocks.
The Dow Jones Industrial Average (DJI) was the best performing major index, hitting another all-time high and record close after a +0.29% gain for the day. The Russell 2000 (RUT) held onto a +0.23% advance, but that was down from a +0.89% rally in the morning. The S&P 500 (SPX) rose just +0.09% for the day. The VIX Volatility Index was up +4.49%.
Materials (XLB +1.25%) and Energy (XLE +0.91%) were the top sectors for the day, benefiting from the infrastructure bill. Consumer Discretionary (XLY -1.42%) and Utilities (XLU -1.49%) were at the bottom of the sector list. Tesla weighed down the Consumer Discretionary sector.
The US Dollar index (DXY) declined -0.17%. The US 30y Treasury yield fell while the 10y and 2y yields rose. Both High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices declined for the day. Commodity futures, including Timber, Copper, and Aluminum, did not move much on the Infrastructure Bill news.
The put/call ratio (PCCE) dropped to 0.463, the lowest level since June. The CNN Fear & Greed Index moved further into Extreme Fear.
Despite a news narrative over the weekend about investors diversifying away from big tech, the largest four mega-caps did not sell off. Apple (AAPL) and Amazon (AMZN) declined today but are still forming a base after recent rallies. Microsoft (MSFT) and Alphabet (GOOGL) held onto gains for the day.
Nvidia (NVDA) was the top mega-cap for the day, gaining +3.54%. Tesla (TSLA) dropped to the bottom of the mega-cap list, declining -4.84% after CEO Elon Musk signaled in a Twitter poll that he might sell 10% of his holdings, worth about $20 billion dollars.
GrowGeneration (GRWG) was the top stock in the Daily Update Growth List, gaining +14.90% today. CloudFlare (NET) was the next best, climbing +6.46%. Most stocks in the list gained for the day. Peloton (PTON) was the worst performer, declining another -7.89% after Friday's 35% fall. The stock is down nearly 70% year-to-date.
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Looking ahead
Producer Price Index data for October will be available before the market opens on Tuesday. Jerome Powell will speak at 9 am. In the afternoon, there will be a 10y note auction.
Coinbase (COIN), DoorDash (DASH), BioNTech (BNTX), Palantir (PLTR), Unity (U), DR Horton (DHI), Upstart (UPST), and Plug Power (PLUG) are among the companies releasing earnings reports tomorrow.
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Trends, Support, and Resistance
The Nasdaq topped 16,000 again mid-day but could not hold the level, dropping back below the resistance area before close.
If the index can break resistance and work back to the five-day trend line, that would mean a +1.36% gain for tomorrow.
The one-day trend line and the trend line from the 10/4 low point to a +0.13% gain.
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Wrap-up
The infrastructure bill gave a boost to cyclical sectors and small-caps today. The rotation did not impact the growth sectors as much as expected (removing the impact of Tesla on Consumer Discretionary). There may still be some pressure on those sectors as investors continue placing bets on the deployment of $1 trillion in the Infrastructure Bill.
The indecisive candle on Friday and the inside day today indicate a top for now. That doesn't mean a considerable correction is needed, but some pause or pullback for the Nasdaq is due. The expectation for tomorrow is Sideways or Lower.
Stay healthy and trade safe!
