Market

Daily Market Update for 10/18 for NASDAQ:IXIC by drewby4321

Summary: Weak GDP data from China wasn’t enough to break optimism for investors after last week’s surprise Retail Sales data. Indexes started lower but recovered with steady gains throughout the day.

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, October 18, 2021

Facts: +0.84%, Volume lower, Closing Range: 97%, Body: 94% Green
Good: Bullish engulfing candle in an uptrend, close above 15,000 support
Bad: Lower volume , low advance/decline line
Highs/Lows: Higher high, Lower low
Candle: Bullish engulfing candle, very small upper and lower wicks
Advance/Decline: 0.57, almost two declining stocks for every advancing stock
Indexes: SPX (+0.34%), DJI (-0.10%), RUT (+0.10%), VIX (+0.18%)
Sector List: Consumer Discretionary ( XLY +1.22%) and Technology ( XLK +0.85%) at the top. Health ( XLV -0.68%) and Utilities ( XLU -0.96%) at the bottom.
Expectation: Sideways or Higher

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Market Overview

Weak GDP data from China wasn’t enough to break optimism for investors after last week’s surprise Retail Sales data. Indexes started lower but recovered with steady gains throughout the day.

The Nasdaq ended the day with a +0.84% gain. Volume was lower than the previous day. The candle is all green body, completely engulfing the previous day’s candle and presenting very small upper and lower wicks as the index made steady gains throughout the day. Still, there were almost two declining stocks for every advancing stock.

The S&P 500 (SPX) gained +0.34%, carried higher by big tech stocks in the Consumer Discretionary and Technology sectors. The Russell 2000 (RUT) gained only +0.10%, while the Dow Jones Industrial Average (DJI) ended the day with a -0.10% decline.

Consumer Discretionary ( XLY +1.22%) and Technology ( XLK +0.85%) were the top sectors for the day. Defensive sectors, including Health ( XLV -0.68%) and Utilities ( XLU -0.96%), were at the bottom of the sector list.

GDP growth in China was lower than expected, causing the indexes to open with losses. Industrial Production growth for the US was also lower than expected, but investors were more focused on Friday’s surprise Retail Sales data.

The US Dollar remained flat for the day, losing only -0.01% in the index ( DXY ). The US 30y Treasury Yield declined while the 10y and 2y yields advanced . High Yield ( HYG ) and Investment Grade ( LQD ) Corporate Bond prices fell. Crude Oil , Copper , and Aluminum futures remained at record highs while the Timber declined for the day.

The put/call ratio declined to 0.558. The CNN Fear & Greed index moved back to the Greed side but remained near Neutral.

Apple ( AAPL ) led the four largest mega-caps with gains for the day. The company announced new notebook products, advancing +1.18% for the day, stopping just short of the 50d MA line. The other three are trading above their key moving average lines.

Facebook ( FB ) was the top mega-cap for the day, followed by Tesla ( TSLA ). Facebook rose after revealing plans to build out the Metaverse, hiring over 10,000 works in Europe. Tesla rose on analyst predictions that they would beat revenue projections in Q3. They both gained over +3% today. Walt Disney (DIS) was at the bottom of the mega-cap list, losing more than -3% after a downgrade from Barclays.

Cloudflare (NET) rose another +7.80% today, topping the Daily Update Growth List again. The company announced a partnership with Microsoft to improve website search results. The stock is on its 12th straight positive session and has gained more than 60% in October. Upwork ( UPWK ) was at the bottom of the growth list, declining -3.14% today, pulling back from the recent rally.

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Looking ahead

Tomorrow will kick-off with Building Permits, and Housing Starts data for September. Three Fed officials (Daly, Bowman, and Bostic) are scheduled to speak tomorrow. Crude Oil Inventories will be available after the market close.

Johnson & Johnson ( JNJ ), Netflix ( NFLX ), Philip Morris (PM), Fifth Third ( FITB ), and Proctor & Gamble ( PG ) will release earnings tomorrow.

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Trends, Support, and Resistance

The Nasdaq moved above the 15,000 support/resistance area today. The next critical level is at 15,085, the previous peak in late September before the index dropped lower.

The one-day and five-day trend lines point at a +1.02% gain for Tuesday.

The trend line from the 10/4 low ends with a -0.47% decline for tomorrow.

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Wrap-up

It seems today’s bullishness among investors is a carry-over from last week’s surprise Retail Sales data. The data showed that inflation was not keeping consumers away from spending and pushed off stagflation fears, at least for now. Despite slower job growth, consumers have plenty of money to spend after record savings during the pandemic.

After four days of gains, it certainly would be OK for the index to move sideways for tomorrow, but I believe support will hold at 15,00. The expectation for tomorrow is Sideways or Higher.

Stay healthy and trade safe!

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