The S&P500 (SPY) moved higher this week, reaching, yet again, another All-Time High today. Here is a SPY chart of the last five days of trading, with each bar representing ten minutes. The market exploded higher during the last ten minutes of trading today (see last green bar on far right).
The biggest U.S. companies, such as Disney (DIS), reported very strong earnings again this week, bolstering these market moves to the upside. Here is a five day chart of DIS. The stock remained mostly flat all week until solid earnings results came out after the close on Thursday. The stock initially jumped higher by eight points, a big move for DIS. But this price did not hold, dropping down six points from its highs, closing two points higher for the day.
However, a closer look at all companies that reported earnings this week shows a mixed picture:
335 companies BEAT earnings forecasts; 329 companies MISSED earnings forecasts; 241 companies MET earnings forecasts.
Because bigger companies carry a higher percentage of weight in the indices such as S&P500 (SPY), the SPY will still go up if only the big companies do well, even if smaller companies faulter.
How did smaller companies do this week? Let’s look at IWM, which represents the Russell index that tracks smaller companies. The story line this week for IWM shows weakness.
Is IWM reflecting signs of things to come for all the markets, or is it doing its own thing? History tells us that smaller companies tend to show signs of weakness in the market before the bigger companies. How have smaller businesses faired during the pandemic? Many have struggled. Let’s keep our eye on IWM and SPY going forward to find out.
It’s interesting to watch the stocks and hope those that we have stay up. Thanks for sharing your expertise on stocks.
Martha, thanks for commenting. Continued success to you always.
Thanks for the analysis, Marc!
What system are you using to do this analysis? Do you like it? Been using it long?
Thanks.
Paul.
Hi Paul. I use two brokers: tastyworks and TDAmeritrade’s ThinkOrSwim (TOS) platform. I like TOS for their awesome charting capabilities. I like tastyworks for trading stock options. I take screenshots of various charts and other info that go into my blog posts. I’ve been using both for a while. For my trading day, I’ll have two screens working at the same time: TOS charts on one, tastyworks trading platform on the other.
When I look at the sector performance bar graph, I wonder if it is an indicator of where the market believes people are spending their money. For example more on buying stuff and less on health care.
Hi Doug. Yes that is definitely a possibility. I’ve also noticed that money flows back and forth between these sectors at random times. It’s as though the professional trading firms are constantly moving money from one sector of stocks to another for reasons I’ll never figure out.