Daily Summary – January 26, 2021

Daily Summary – January 26, 2021

At the outset, today looked like we might get a reversal of what we've seen for the most part the past few days which is large growth outperformance, as at the open we had the RUT leading and the NDX lagging a bit. But from the get go, RUT sold off and before the morning was through it was in solidly negative territory. While it did make a shot at green it ended up finishing at the lows and right on that bottom channel trendline, down six tenths. SPX did a mini version of that finishing down -0.15%. Naz and NDX also finished lower than where they started but in a tight range finishing basically flat. Interestingly while the style box did have a bit of a preference for large caps, there wasn't a great pattern with mid-cap boxes (core and growth) taking the bottom two spots. Large value did best.

Technically not too surprised by the RUT weakness after I mentioned y'day that it seemed to be losing momentum. As noted above it now sits on the bottom of its channel.  It's fallen out before to test its 20-day MA, and I wouldn't at all be surprised to see that. With basically flat finishes nothing to note on the other indices.

SPX sector flag deteriorated with 5 green sectors led by RE, staples, and comm's all up at least 0.78%. Energy led to the downside again today, only sector down over 2%. Materials was only other one down over 1%. Energy now sits right on its trendline, and just below its 20-day MA. It's also got a MACD crossover (sell longs) and RSI just fell below 50. Money flow also doesn't look great. Could definitely see this testing that 50-day just below. Financials and industrials also have bearish looking charts falling below their 20-day MA's.  

In key subsectors, semi's continued to consolidate, testing (and holding) y'day's lows but unlike y'day not recovering and finishing near those lows. Not a great setup technically. Transp also weak now testing its 50-day MA, as were bios. Retail, which I noted y'day was up over 6% at one point, was up that and held today with XRT finishing up almost 7% (and it's up further in the AH) as the piling into heavily shorted stocks like GME, AMC, etc., cont'd for another day.

Breadth sloppy again today with 51% of volume and 40% of issues positive NYSE, 57 and 37% Naz. I previously was impressed by the fact that Naz volume was holding up so well, but I think after further consideration that is likely due to all of this speculation on the Gamestop's of the world, making me much less positive. I wish there was a way to disentangle that, but alas I'm stuck with what I've got. Anyway, it's not terrible, just not great, and it really hasn't mattered lately. 

Outside of equities, not a lot of action. Crude, gold, copper, nat gas, VIX, dollar all mildly red; bonds were flat. 

Overnight we'll get a little more int'l data but nothing particularly important, followed by mortgage apps, durable goods, and EIA in the US. The highlight of the day will be the Fed statement and press conference in the afternoon in addition to another big day of earnings with 15 co's in excess of $50B  market cap and 7 in excess of $100B (AAPL, TSLA, FB, T, ABT, BA, NOW) reporting. So far the markets overall are holding in better than last earnings season, but we've clearly got a sell the news mentality again overall.  Plus I think the rampant speculation/call buying added on top of already relatively extended conditions in terms of positioning and sentiment has many feeling things are overdone to the point that they're waiting for a shoe to drop if not outright placing bets on it which probably isn't helping "regular" stocks. As for me, I'm doing what I always do; buying where I see value, and selling where I don't. But don't think I didn't consider a basket of heavily shorted stocks this morning. ;-)



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