Daily Market Update for 4/8Trend lines drawn from the 3/5 low (24d), 4/1 (5d) and today 4/8 (1d).
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Thursday, April 8, 2021
Facts: +1.03%, Volume higher, Closing range: 99%, Body: +45%
Good: Gains all-day with few pullbacks, high closing range, higher volume
Bad: Nothing
Highs/Lows: Higher high, higher low
Candle: Longer lower wick under a green body, no upper wick
Advance/Decline: Three advancing for every two declining stocks
Indexes: SPX (+0.42%), DJI (+0.17%), RUT (+0.88%), VIX (-1.22%)
Sectors: Technology (XLK +1.44%) and Consumer Discretionary (XLY +0.47%) were top. Real Estate (XLRE -0.49%) and Energy (XLE -1.30%) were bottom.
Expectation: Higher
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Market Overview
Investors shook off early nervousness over higher jobless claims and bulls led the markets rally throughout the day. Treasury yields, the US Dollar and commodity prices all supported Technology as the leading sector of the day, carrying the Nasdaq to the leading index of the day.
The Nasdaq closed with a +1.03% gain on higher volume. The 99% closing range resulted from a 45% green body at the top of the candle which opened with a gap above yesterday's close. The lower wick was formed in the morning, but the index quickly erased the dip with gains into the afternoon that ended with a rally at close. There were three advancing stocks for every declining stock.
The Russell 2000 (RUT) rallied after a few days of declines and ended the day with a +0.88% gain. The S&P 500 advanced +0.42% and the Dow Jones Industrial average (DJI) closed with a +0.17% gain.
The VIX volatility index declined -1.22% and is now well within the pre-pandemic range of highs and lows.
Technology (XLK +1.44%) and Consumer Discretionary (XLY +0.47%) were top sectors for the day. Utilities (XLU -0.08%) opened with gains in the morning but faded to near the bottom of the list by the end of the day. Real Estate (XLRE -0.49%) and Energy (XLE -1.30%) were the worst performing sectors of the day.
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Economic Indicators
The US Dollar (DXY) declined -0.38% continues to retreat from a pivot high at the end of March.
The US 30y treasury bond and 10y and 2y note yields all declined. The yield curve continued its trend of flattening.
Both High Yield Corporate Bond (HYG) and Investment Grade Corporate Bond (LQD) prices both advanced.
Silver (SILVER) and Gold (GOLD) both advanced. Crude Oil (CRUDEOIL1!) declined just slightly. Timber (WOOD) advanced. Copper (COPPER1!) advanced while Aluminum (ALI1!) declined. All are showing strong demand and bullish for the economic recovery.
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Investor Sentiment
The put/call ratio ended the day at 0.592. 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. As it approaches 0.60 (overly bullish) and below, watch for a possible pullback in the market.
The CNN Fear & Greed index is remained about the same, on the greed side.
The NAAIM exposure index rose to 89.95 from 52.02 the previous week. The index, released on Wednesday evenings represents the amount of exposure in active investment managers portfolios.
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Market Leaders
All four big mega-caps gained for another day. Apple (AAPL) and Microsoft (MSFT) climbed +1.92% and +1.34%, helping carry the indexes into close. Amazon (AMZN) and Alphabet (GOOGL) gained +0.61% and +0.51%, but closed in the lower half of the intraday range. We are still anticipating the crossover of the 21d EMA over the 50d MA for Apple and Amazon which will signal a confident uptrend. Microsoft and Alphabet have already met that milestone.
PayPal (PYPL +3.48%), Taiwan Semiconductor (TSM +2.95%), ASML Holding (ASML +2.13%), Tesla (TSLA +1.91%) were at the top of the mega-cap list. Big communications companies Verizon (VZ) and AT&T (T) joined Nike (NIKE) at the bottom of the list, all with over 2% declines.
Today was much better for growth stocks than the previous day, with the majority of growth in the daily update list having gains. UP Fintech (TIGR), GrowGeneration (GRWG), FUTU Holdings (FUTU) topped the list with over 10% gains each. Draft Kings (DKNG) and Dr Horton (DHI) were at the bottom of the list.
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Looking ahead
On Friday, the producer price index data will be released that gives a view into inflation. Expect the US dollar and Treasury Yields to be impacted if the number is far off forecast.
There are no notable earnings reports for Thursday for the daily update.
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Trends, Support and Resistance
The index is nearing the 14,000 support/resistance area. A breakthrough of that line will be a confidence booster on the way to new all-time highs for the Nasdaq.
The five-day trend line points to a +1.16% gain on Friday. The one-day trend line points to a small gain of +0.16%.
The trend line from the 3/5 low points to a -1.85% loss.
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Wrap-up
Everything lined up nicely for big tech and growth stocks today. Yields dropped back as the yield curve continues to flatten. The US dollar weakened, benefiting big multinational companies. Commodities show high demand indicating economic activity picking back up.
Eyes will be on the produce price index data tomorrow before market opens. Higher prices would indicate more demand for products as a result of increased spending, but it may also make investors nervous about inflation. Still, Jerome Powell held firm today that inflation was unlikely, so investors will have to balance their worries with assurances from the Fed that changes in economic policy are still long off in the future. Don't fight the fed.
The resurgence of growth stocks continues to accelerate relative to value stocks. The gains were broad across the category today. Many of the charts for growth have a long way to go to get past overhead supply and reach new all-time highs. Value stocks have leveled off for the past few weeks, could be basing and may have some more growth of their own.
Stay healthy and trade safe!
