002 Weekly Market Report

ChartLists/Spreadsheets

The following ChartLists/Spreadsheets were updated over the weekend and have been updated on our website:

• Strong Earnings (SECL)
• Strong Future Earnings (SFECL)
• Strong AD (SADCL)
• Raised Guidance (RGCL)
• Bullish Trifecta (BTCL)
• Leading Stocks (LSCL)
• Matt's Hot Stocks (HTCL)
• Upcoming Earnings
• Upcoming Earnings Relative Strength
• Key Manipulation Spreadsheet

The above ChartLists and the Key Manipulation spreadsheet have been updated through Friday, July 10th. You can view and/or download these ChartLists from our website, and also read about them to gain a better understanding of how they can help in your trading success.

Weekly Market Recap

Major Indices

Sectors

Top 10 Industries Last Week

Bottom 10 Industries Last Week

Top 10 Stocks - S&P 500/NASDAQ 100

Bottom 10 Stocks - S&P 500/NASDAQ 100

Big Picture

The long-term secular bull market remains intact. One thing I'm watching is the monthly PPO, which is currently beneath 9. At many recent tops, where the S&P 500 has consolidated for extended periods, or sold off, the monthly PPO was well above 10. So based on this signal alone, it would seem as though there's still plenty of room on the PPO before we become overly extended.

Sustainability Ratios

Here's the latest look at our key intraday ratios as we follow where the money is traveling on an INTRADAY basis (ignoring gaps):

QQQ:SPY

Keep in mind that the intraday analysis provided is a "work in progress". I continue to analyze this data to see if it helps provide us clues about calling market direction. It makes common sense to me that it should help in some sense, but it'll require a much longer-term study to determine its worth.

The longer-term ratio remains in an uptrend, in my view, but I will continue to watch the more recent downtrend that has started.

IWM:QQQ

This ratio tends to struggle a bit when the 10-year treasury yield ($TNX) rises and, unfortunately, the TNX has been rising now for the past couple weeks, moving from 4.37% to 4.57%. I don't believe this trend higher extends for very long, but the Fed still must weigh its options regarding policy and its interpretation of inflationary concerns. While I expect the IWM to perform well, I doubt that it will significantly outperform the S&P 500 or NASDAQ 100, unless it becomes clearer that the Fed's next step will be a rate cut.

XLY:XLP

The red ratio resistance lines on both chart panels above are key relative levels to watch. Should the XLY:XLP ratios break above these levels, while simultaneously seeing a breakout in the S&P 500, I'd view that development bullishly. If we don't see a breakout in these relative ratios with an S&P 500 breakout, it'd be more of a cautious signal - not necessarily bearish.

Sentiment

5-day SMA ($CPCE)

Sentiment indicators are contrarian indicators. When they show extreme bullishness, we need to be a bit cautious and when they show extreme pessimism, it could be time to become much more aggressive. Major market bottoms are carved out when pessimism is at its absolute highest level.

Short-term, options traders have grown a bit more cautious with the 5-day SMA of the CPCE rising up near 0.70. Historically, any readings at .75 or higher tend to mark significant bottoms in the secular bull market.

253-day SMA ($CPCE)

This longer-term 253-day SMA of the CPCE is our "ocean-liner" signal, unlike our short-term speedboat indicator. Any significant change in direction in this 253-day CPCE, in the past, has had profound effects on the S&P 500.

I've circled the indecision in this 253-day CPCE reading from 2019, because we seem to be shaping up the same way in 2026. A definitive break to a new low would be bullish and suggest further all-time highs ahead in our major indices. A more significant rise, however, would indicate the potential for storm clouds ahead.

Long-Term Trade Setups

Since beginning this Weekly Market Report in September 2023, I've discussed the long-term trade candidates below that I really like. Generally, these stocks have excellent long-term track records, and many pay nice dividends that mostly grow every year. Only in specific cases (exceptions) would I consider a long-term entry into a stock that has a poor or limited long-term track record and/or pays no dividends. I try to review the long-term picture once a month, and below is how I viewed each weekly chart as of the end of June: 

• JPM - just completed right side of cup; possible handle to form, bullish
• BA - trending higher off April 2025 low, would like to see 200 support hold
• FFIV - very bullish chart, but overbought as it consolidates in bull flag
• MA - downtrending, but slight positive divergence; 475 is key support
• GS - pulling back from overbought conditions, 950 solid support
• FDX - negative divergence and bearish engulfing candle suggest more selling
• AAPL - might be best Mag 7 stock right now, tested 20-week EMA last week
• CHRW - appears to be forming right side of cup - bullish
• JBHT - solid uptrend intact, rising 20-week EMA is key support
• STX - weekly RSI been hanging near 90, last week's selling not a bad thing
• HSY - eversing piercing candle printed last week, looking for recovery
• DIS - consider 93-110 as the intermediate-term trading range
• MSCI - wondered if breakout was coming; emphatic no based on June trading
• SBUX - trending higher, looking for test of 113-114 price resistance
• KRE - solid month of June resulted in bullish breakout
• ED - excellent action last week, keeping uptrend intact in the process
• AJG - breakout above 20-week EMA after positive divergence says bottom is in
• NSC - trading in narrow 299-320 trading range
• RHI - moving thru 34 price resistance from January would be very bullish
• ADM - beautiful bounce off rising 20-week EMA
• BG - triple top breakout was 110 and that's where we tested last week on selling
• CVS - chart couldn't look much better; in breakout and all-time high territory
• HRL - last week's 9.73% gain seems to be indicating long-term bottom is in
• DE - 3-month downtrend ended in June; now looking at testing 675 resistance
• LULU - nice reversal last week, but massive downtrend remains in play
• TTD - broken stock and one of the worst relative performers in software
• META - weakening with possible test of 480-520 price support range upcoming
• ADBE - failed miserably at 20-week EMA and moved below 200 for first time since 2018
• KMB - surged 14% last week to test declining 20-week EMA for first time
• ORCL - huge 34% decline last week sets up another test near 140 support
• ABBV - rode the health care rally to its new all-time high
• MCD - weekly RSI at 34, generally solid long-term entry point
• MKC - nice reversal last week, perhaps it'll move up to test its declining 20-week EMA

Keep in mind that our Weekly Market Reports favor those who are more interested in the long-term market picture. Therefore, the list of stocks above are stocks that we believe are safer (but nothing is ever 100% safe) to own with the long-term in mind. Nearly everything else we do at EarningsBeats.com favors short-term momentum trading, so I wanted to explain what we're doing with this list and why it's different.

Also, please keep in mind that I'm not a Registered Investment Advisor (and neither is EarningsBeats.com nor any of its employees) and am only providing (mostly) what I believe to be solid dividend-paying stocks for the long term. Companies periodically go through adjustments, new competition, restructuring, management changes, etc. that can have detrimental long-term impacts. Neither the stock price nor the dividend is ever guaranteed. I simply point out interesting stock candidates for longer-term investors. Do your own due diligence and please consult with your financial advisor before making any purchases or sales of securities.

Looking Ahead

Upcoming Earnings

The following list of companies is NOT a list of all companies scheduled to report quarterly earnings, however, just key reports, so please be sure to check for earnings dates of any companies that you own. Any company in BOLD represents a stock in one of our portfolios and the amount in parenthesis represents the market capitalization of each company listed: 

• Monday: None
• Tuesday: JPM ($899 billion), BAC ($420 billion), GS ($312 billion), WFC ($266 billion), C ($238 billion)
• Wednesday: ASML ($710 billion), JNJ ($624 billion), MS ($350 billion), BLK ($158 billion), PNC ($101 billion)
• Thursday: TSM ($2.27 trillion), UNH ($392 billion), GE ($375 billion), NFLX ($318 billion), ABT ($164 billion)
• Friday: TRV ($72 billion), TFC ($64 billion), FITB ($51 billion)

Key Economic Reports

• Monday: None
• Tuesday: June CPI
• Wednesday: June PPI, July empire state manufacturing survey, Fed beige book
• Thursday: Initial jobless claims, June retail sales, July Philadelphia Fed manufacturing survey, June pending home sales, May business inventories
• Friday: June housing starts & building permits, June industrial production & capacity utilization, July consumer sentiment

Historical Data

I'm a true stock market historian. I am absolutely PASSIONATE about studying stock market history to provide us more clues about likely stock market direction and potential sectors/industries/stocks to trade. While I don't use history as a primary indicator, I'm always very aware of it as a secondary indicator. I love it when history lines up with my technical signals, providing me with much more confidence to make particular trades.

Below you'll find the next two weeks of historical data and tendencies across the three key indices that I follow most closely. The percentage for each calendar day represents the annualized return for that day. An example of how this is calculated is reflected next to the first day under the S&P 500 and in parenthesis:

S&P 500 (since 1950)

• Jul 13: -5.67% (Ex: cumulative gains =
  -1.21% over 54 trading days since 1950. -1.21% x 253/54 = -5.67%)
• Jul 14: +60.27%
• Jul 15: +15.66%
• Jul 16: +10.16%
• Jul 17: +17.09%
• Jul 18: -30.14%
• Jul 19: +2.72%
• Jul 20: -3.71%
• Jul 21: -27.81%
• Jul 22: -9.16%
• Jul 23: -25.38%
• Jul 24: -4.25%
• Jul 25: +19.06%
• Jul 26: +30.43%

NASDAQ (since 1971)

• Jul 13: +61.52%
• Jul 14: +72.33%
• Jul 15: +47.81%
• Jul 16: -15.09%
• Jul 17: +53.00%
• Jul 18: -54.75%
• Jul 19: -13.47%
• Jul 20: +22.38%
• Jul 21: -54.01%
• Jul 22: -2.53%
• Jul 23: -86.23%
• Jul 24: -47.40%
• Jul 25: +32.54%
• Jul 26: +18.91%

Russell 2000 (since 1987)

• Jul 13: +63.13%
• Jul 14: -1.02%
• Jul 15: +88.41%
• Jul 16: -53.53%
• Jul 17: +6.57%
• Jul 18: -49.23%
• Jul 19: +20.86%
• Jul 20: +25.11%
• Jul 21: -95.09%
• Jul 22: +42.13%
• Jul 23: -71.17%
• Jul 24: -91.83%
• Jul 25: +46.35%
• Jul 26: +56.13%

The S&P 500 data dates back to 1950, while the NASDAQ and Russell 2000 information date back to 1971 and 1987, respectively.

Final Thoughts

Well, it's earnings season once again. It's hard to believe that the big banks are set to kick things off, but that's exactly what's going to happen on Tuesday morning. Earnings are expected to be strong and banks ($DJUSBK), in particular, have been trading bullishly as we approach their quarterly results. That's the good news. During this secular bull market advance, banks have tended to outperform the S&P 500 during July as earnings are reported. It's worth mentioning, however, that the DJUSBK performs its worst, at least historically, during the month of August and once July earnings reports dry up. The group also shows a negative divergence on its daily chart, so if that's not eliminated with a solid surge after earnings reports are released, that could add to the August selling pressure.

Here's what I'll be thinking about this week:

Pre-Earnings Run Up? I mentioned this last week. We normally see prices rise the 2-3 weeks heading into earnings season. That's been the historical norm for more than seven decades. We did finally see the S&P 500 begin to rally last week and it's now roughly 0.5% away from a new all-time high.

Seasonality. While July tends to be a bullish month for U.S. equities, the period from the July 17th close through the July 24th close is one of the worst weeks of the year historically. That doesn't mean we see crashes, just that the tendencies tend to favor the bears a bit more throughout that week.

Inflation. The June CPI and PPI reports will be released on Tuesday morning and Wednesday morning, respectively. Consensus estimates point to be a big drop in the Core CPI and Core PPI from the May readings. If that holds true, or we see an even bigger drop than expected, interest-rate-sensitive areas like banks, homebuilders, and small caps could see a solid bump to the upside, while the 10-year treasury yield ($TNX) falters. We have to also be alert for the opposite reaction if the number is hotter than expected, especially the Core CPI number.

Technical Conditions. Negative divergences on daily charts have mostly played out, meaning that price action is now free to move in either direction, as momentum issues have been resolved. The weekly charts remain extremely bullish in my view, with 20-week EMAs rising and potentially offering solid support on any further short-term weakness.

Happy trading!

Tom