EB Daily Market Report - Friday, September 27, 2019
Executive Market Summary
- Rising U.S. Dollar ($USD) putting pressure on gold ($GOLD), down $16 today and below $1500
- Silver down more than 2%; crude oil ($WTIC) back down close to $56 per barrel
- Slight rotation away from treasuries with the 10 year treasury yield ($TNX) rising to 1.70%
- Asian markets lower overnight, but Europe trading positive today
- U.S. indices mixed with leadership from the Dow Jones
- Financials (XLF), especially banks ($DJUSBK) strong
- Micron Technology (MU) lowered guidance last night, semiconductors ($DJUSSC) lagging
- ROKU alerted as a buy today just below $100 with a tight stop
Market Outlook
Let's take a look at the NASDAQ's hourly chart for possible patterns:
Over the past week, there's been a short-term downtrend in play (annotation not shown) if you connect the recent highs each day. But since the early-August low, the NASDAQ appears to be in a nice uptrend. If the lower trendline holds, we could see a return back to the upper trendline that currently connects with roughly 8350, more than 300 points above the current level. If we lose 7925 to the downside, the odds of a possible test of the early-August would increase.
Sector/Industry Focus
I've posted the trucking index ($DJUSTK) recently and I continue to monitor this group very closely. I want to see transports ($TRAN) begin to lead the market higher and truckers have the best short-term outlook in the transportation area. Today, the group is lagging badly, down 1.82%, but it hasn't broken below price or trendline support:
810-820 is a big area of support on the daily chart. On the weekly chart (not shown), the DJUSTK looks equally bullish with the rising 20 week EMA currently at 800. I'd be okay with a 20 week EMA test at some point, even if it were to violate the support area shown above. Long-term charts take precedence over short-term charts, in my opinion.
Strong Earnings ChartList
I reviewed our SECL for stocks that are making their ways to new highs. Breakouts can be one way to play a strong market as you at least know that these stocks have no clear overhead price resistance. Here are the stocks on our ChartList making new 52 week highs this morning:
Stocks breaking to 52 week highs at 10:35am EST - 9 of 329 stocks
4 of the 9 stocks are REITs. Realty Income Corp (O) has been a tremendous performer and has offered nice capital appreciation in addition to a solid 3.52% dividend yield. For those not comfortable trading highly volatile stocks and perhaps looking for a stock that offers a bit more of a defensive posture, O could be a very nice candidate:
O is a relative leader among retail REITs and it's difficult not to like the recent ascending triangle breakout. While I'm not a big fan of trading defensive stocks as I tend to be more aggressive, it certainly makes sense for those who are looking for lesser risk while avoiding the huge volatility associated with many aggressive sectors.
Current Alerts
We are looking to add alerts as the market consolidates. This morning, we added Roku, Inc. as a trade alert as it is testing major gap support from earnings in the second week of August. We issued our alert with the stock at 99.90. ROKU opened today at 103.33 and is trading beneath that key gap support of 100.97. A close back above 100.97 with a tail beneath it would be short-term bullish in my view. So today's close will be important. We have a closing stop beneath the early July low, but a close below 100.97 could be used as a stop if you want to keep it very tight. Also, if you want to ensure that you don't get swept away in a big selloff, you could consider an intraday stop, but I'd look down to around 95 or so for that, giving ROKU a bit of room as it's quite volatile. Here's the chart:
We may issue another alert or two today, but only if we see an excellent reward to risk opportunity.
(Disclosure: I own ROKU shares)
Today's Movers
I simply looked at the list of SCTR movers on StockCharts.com and one stuck out - Akorn, Inc. (AKRX). It's a pharma, which has not been a good space in 2019, but volume has picked up over the past 2-3 weeks, as has relative strength:
Earnings Reports
Here are key earnings reports for the balance of the week:
Friday, September 27:
None
Monday, September 30:
THO
Economic Reports
August durable goods released at 8:30am EST: +0.2% (actual) vs. -1.2% (estimate)
August durable goods ex-transports released at 8:30am EST: +0.5% (actual) vs. +0.2% (estimate)
August personal income released at 8:30am EST: +0.4% (actual) vs. +0.4% (estimate)
August personal spending released at 8:30am EST: +0.1% (actual) vs. +0.3% (estimate)
September consumer sentiment released at 10:00am EST: 93.2 (actual) vs. 92.0 (estimate)
Happy trading!
Tom