EB Daily Market Report - Monday, October 7, 2019
Executive Market Summary
- Major indices have just turned higher, well off their earlier lows
- No key earnings or economic reports out today
- Crude oil ($WTIC) up 1.75% to nearly $53.75 per barrel
- 10 year treasury yield higher by 3 basis points to 1.54%
- Communication services (XLC) leading 6 sectors higher; defensive sectors mostly lagging
- 5 active alerts now: ZBH, NOC, TWTR higher; ROKU and ZUMZ lower
Market Outlook
When you're bullish, you definitely want to see relative strength in key aggressive areas. Technology (XLK) certainly ranks as a key aggressive area, so last week's relative strength should be noted. The XLK is on the verge of a relative breakout:
The three areas in technology where I want to see leadership are (1) semiconductors ($DJUSSC), (2) software ($DJUSSW), and (3) computer hardware ($DJUSCR). All 3 are higher today with the DJUSCR breaking out. That group is featured in the Sector/Industry Focus section.
Sector/Industry Focus
Computer hardware ($DJUSCR), led by Apple, Inc. (AAPL) is quickly becoming one of the best industry groups to invest/trade in. Thursday's reversal took place right on the rising 20 day EMA and now, two days later, we're getting a breakout. Great action as you can see:
While it's not shown above, AAPL is leading the computer hardware group higher. I believe AAPL is setting up technically to have a blowout quarterly earnings report.
Strong Earnings ChartList (SECL)
I ran a scan this morning to see which stocks on the SECL hit new 52 week highs so far today. The scan returned 10 stocks out of 307. The stocks were AMKR, ARMK, BRX, DEA, MTH, NTRA, RH, RNG, SUI, and TER. I discussed AMKR on Friday as it had traded heavy volume and was on the verge of a breakout. If it pulls back and fails to hold the breakout, the rising 20 day EMA would be an excellent entry point. Of the others, I really like the action on NTRA:
The trendline is perfectly intact, relative strength suggests a strong quarterly earnings report ahead, and the increase in volume on Friday confirmed the new closing high. There is a negative to pay attention to, though. NTRA is in the medical supplies area, and that has not been a good area to trade in the past 3-4 months.
Current Alerts
Here are our current active trade alerts:
ROKU (-0.93%) - down fractionally today, but still well off of its late-September low near 99. I'd like to see a solid afternoon from ROKU. It's been printing higher lows each day for the past week or so. Friday's low was 104.27 as a reference.
NOC (+0.36%) - defense stocks are flat today, but NOC showing a bit of relative strength. Volume trends here remain quite strong.
ZBH (+0.37%) - upgraded today by BTIG Research from Neutral to Buy. Price target: 158.00. ZBH gapped up earlier, but failed on first attempt to clear 20 day EMA.
TWTR (+0.96%) - benefiting from renewed strength in internet stocks.
ZUMZ (-1.92%) - testing its 20 day EMA again and, thus far, holding price support near 30:
All 5 alerts remain fine technically.
Today's Movers
One of the top decliners in the S&P 500 today is Harley Davidson (HOG). It's backed off of key overhead price resistance again, but continues to trade above its 50 day SMA. Still, until we see overhead price resistance cleared, I'd probably avoid this one:
The price break above 36.50 would be a big technical development here, as would a relative breakout for HOG vs. its peers in the automobiles index ($DJUSAU).
Earnings Reports
Here are the key earnings reports for this week:
Monday, October 7:
None
Tuesday, October 8:
DPZ, LEVI, HELE, AZZ
Wednesday, October 9:
None
Thursday, October 10:
DAL
Friday, October 11:
C, FAST
Economic Reports
None
Happy trading!
Tom