Summary: Markets pivoted to the upside after Jerome Powell's statements confirmed that the Fed changed its stance on inflation. Bond purchase tapering will complete in March, and we can expect three quarter-point interest rate hikes in 2022.
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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Wednesday, December 15, 2021
Facts: +2.15%, Volume lower, Closing Range: 98%, Body: 64% Green
Good: Higher close above 21d EMA on higher volume, good advance/decline ratio
Bad: Lower low
Highs/Lows: Higher high, Lower low
Candle: Bullish outside day, Large green body above a long lower wick
Advance/Decline: 1.75, more advancing than declining stocks
Indexes: SPX (+1.63%), DJI (+1.08%), RUT (+1.65%), VIX (-11.88%)
Sector List: Technology (XLK +2.65%) and Health (XLV +2.05%) at the top. Materials (XLB +0.22%) and Energy (XLE -0.49%) at the bottom.
Expectation: Higher
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Market Overview
Markets pivoted to the upside after Jerome Powell's statements confirmed that the Fed changed its stance on inflation. Bond purchase tapering will complete in March, and we can expect three quarter-point interest rate hikes in 2022.
The Nasdaq closed the day with a +2.15%. The index dipped in the morning but reversed after the FOMC released its statements. That created a bullish outside day marked by the higher high and higher low. The green body covers 64% of the candle. The closing range of 98% leaves only a tiny wick compared to the long lower wick formed in the morning. There were more than three advancing stocks for every two declining stocks.
The Russell 2000 (RUT) dipped to its 2021 support area before reversing to end the day +1.65% higher. The S&P 500 (SPX) gained +1.63%, closing just short of a record. The Dow Jones Industrial Average (DJI) climbed by +1.08%. The VIX Volatility Index (VIX) fell -11.88%.
Ten of the eleven S&P 500 sectors gained for the day. Technology (XLK +2.65%) and Health (XLV +2.05%) were at the top of the list. Energy (XLE -0.49%) was the only sector to decline.
Retail Sales for November were less than expected, growing only 0.3% month-over-month compared to 0.8% expected. The left Business Inventories and Retail Inventories higher than expected.
The NY Empire State Manufacturing Index for December came in at 31.90 compared to a forecast of 25.0.
The projection for interest rates by the end of 2022 is 0.90, which would come via three interest rate hikes to begin after bond purchase tapering completes in March.
The US Dollar Index (DXY) declined -0.24%. US 30y, 10y, and 2y Treasury Yields all rose. High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices increased.
All four largest mega-caps gained. Apple (AAPL) rose +2.85%, nearing another record close. Microsoft (MSFT) and Alphabet (GOOGL) popped above their 21d EMA with +1.92% and +1.76% gains. Amazon (AMZN) closed above its 50d MA with a +2.50% advance.
Eli Lilly (LLY) was the top mega-cap for the day, gaining +10.39% after the company updated investors, including plans for new products in the next year. Nvidia (NVDA) was the second-best mega-cap, gaining +7.49%. Alibaba (BABA) was at the bottom of the mega-cap list with a -3.25% decline.
The Daily Update Growth List had mostly gainers today. Tech companies dominate the top of the list. Zscaler (ZS) was the top performer with a +8.05% climb. At the bottom of the list is Roku (ROKU), which declined -7.95%. Morgan Stanley maintained an underweight rating for the stock.
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Looking ahead
Tomorrow morning will start with Building Permits, and Housing Starts data for November. We will also get the weekly Jobless Claims report and the December Philadelphia Fed Manufacturing Index.
Later in the morning, Manufacturing and Services Purchasing Managers Index data will be available.
Adobe (ADBE), Accenture (ACN), Rivian (RIVN), FedEx (FDX), and Jabil (JBL) will release earnings tomorrow.
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Trends, Support, and Resistance
The Nasdaq closed above its 21d EMA and below support/resistance at 15,600.
If the one-day trend line continues into Thursday, that will mean a +1.41% gain.
If the index returns to the trend line from the 11/22 high, that would be a loss of -1.96%.
The five-day trend line points to a -3.54% decline.
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Wrap-up
Can the Santa Claus Rally begin now? Now that the Fed's outlook and plan are on the table, there are fewer unknowns for the remainder of the year. Today's bullish reaction to the Fed's statements provides an optimistic outlook for the next few weeks.
The expectation for Thursday is 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=-
Wednesday, December 15, 2021
Facts: +2.15%, Volume lower, Closing Range: 98%, Body: 64% Green
Good: Higher close above 21d EMA on higher volume, good advance/decline ratio
Bad: Lower low
Highs/Lows: Higher high, Lower low
Candle: Bullish outside day, Large green body above a long lower wick
Advance/Decline: 1.75, more advancing than declining stocks
Indexes: SPX (+1.63%), DJI (+1.08%), RUT (+1.65%), VIX (-11.88%)
Sector List: Technology (XLK +2.65%) and Health (XLV +2.05%) at the top. Materials (XLB +0.22%) and Energy (XLE -0.49%) at the bottom.
Expectation: Higher
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Market Overview
Markets pivoted to the upside after Jerome Powell's statements confirmed that the Fed changed its stance on inflation. Bond purchase tapering will complete in March, and we can expect three quarter-point interest rate hikes in 2022.
The Nasdaq closed the day with a +2.15%. The index dipped in the morning but reversed after the FOMC released its statements. That created a bullish outside day marked by the higher high and higher low. The green body covers 64% of the candle. The closing range of 98% leaves only a tiny wick compared to the long lower wick formed in the morning. There were more than three advancing stocks for every two declining stocks.
The Russell 2000 (RUT) dipped to its 2021 support area before reversing to end the day +1.65% higher. The S&P 500 (SPX) gained +1.63%, closing just short of a record. The Dow Jones Industrial Average (DJI) climbed by +1.08%. The VIX Volatility Index (VIX) fell -11.88%.
Ten of the eleven S&P 500 sectors gained for the day. Technology (XLK +2.65%) and Health (XLV +2.05%) were at the top of the list. Energy (XLE -0.49%) was the only sector to decline.
Retail Sales for November were less than expected, growing only 0.3% month-over-month compared to 0.8% expected. The left Business Inventories and Retail Inventories higher than expected.
The NY Empire State Manufacturing Index for December came in at 31.90 compared to a forecast of 25.0.
The projection for interest rates by the end of 2022 is 0.90, which would come via three interest rate hikes to begin after bond purchase tapering completes in March.
The US Dollar Index (DXY) declined -0.24%. US 30y, 10y, and 2y Treasury Yields all rose. High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices increased.
All four largest mega-caps gained. Apple (AAPL) rose +2.85%, nearing another record close. Microsoft (MSFT) and Alphabet (GOOGL) popped above their 21d EMA with +1.92% and +1.76% gains. Amazon (AMZN) closed above its 50d MA with a +2.50% advance.
Eli Lilly (LLY) was the top mega-cap for the day, gaining +10.39% after the company updated investors, including plans for new products in the next year. Nvidia (NVDA) was the second-best mega-cap, gaining +7.49%. Alibaba (BABA) was at the bottom of the mega-cap list with a -3.25% decline.
The Daily Update Growth List had mostly gainers today. Tech companies dominate the top of the list. Zscaler (ZS) was the top performer with a +8.05% climb. At the bottom of the list is Roku (ROKU), which declined -7.95%. Morgan Stanley maintained an underweight rating for the stock.
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Looking ahead
Tomorrow morning will start with Building Permits, and Housing Starts data for November. We will also get the weekly Jobless Claims report and the December Philadelphia Fed Manufacturing Index.
Later in the morning, Manufacturing and Services Purchasing Managers Index data will be available.
Adobe (ADBE), Accenture (ACN), Rivian (RIVN), FedEx (FDX), and Jabil (JBL) will release earnings tomorrow.
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Trends, Support, and Resistance
The Nasdaq closed above its 21d EMA and below support/resistance at 15,600.
If the one-day trend line continues into Thursday, that will mean a +1.41% gain.
If the index returns to the trend line from the 11/22 high, that would be a loss of -1.96%.
The five-day trend line points to a -3.54% decline.
-=x=-=x=-=x=-=x=-=x=-=x=-=x=-
Wrap-up
Can the Santa Claus Rally begin now? Now that the Fed's outlook and plan are on the table, there are fewer unknowns for the remainder of the year. Today's bullish reaction to the Fed's statements provides an optimistic outlook for the next few weeks.
The expectation for Thursday is Higher.
Stay healthy and trade safe!
