EB Daily Market Report - Monday, October 28, 2019

Executive Market Summary

• Microsoft (MSFT) has won the big $10 billion cloud contract with the Pentagon over Amazon.com (AMZN)
• A french company has made a bid for Tiffany (TIF) with the latter up 31% today
• Our major indices are in breakout mode with the benchmark S&P 500 hitting an intraday all-time high; a close above 3025 would be a confirmed closing breakout
• Aggressive sectors are dominating the sector leaderboard, a very bullish signal; technology (XLK) is leading, up 1.06%
• After the bell today, Alphabet (GOOGL) reports its latest quarterly earnings and, if relative strength is any clue, look for a blowout report to lift the NASDAQ to all-time highs tomorrow
• Our two Active Trade Alerts are lower today, but remain solid technically

Market Outlook

Remember when the Volatility Index ($VIX) was in the 20s and a great big problem for the bulls? Well, things have changed, and any time I see a VIX trending lower with readings in the low teens or below, I grow quite bullish. If the VIX drops further and clears April and July support near 12, I believe it's going to be "full speed ahead" for this bull market:

The VIX is just one more reason to be bullish stocks. Most major bull market advances occur with the VIX in the 9 to 12 range. After that occurs, most short-term market bottoms will be found when the VIX "surges" to 15-17. Keep that in mind. We probably won't see a VIX back in the 20s for quite awhile.

Sector/Industry Focus

Internet stocks ($DJUSNS) are breaking out today on a short-term basis and, if I'm right about Alphabet's (GOOGL) earnings blowout after the bell today, I see a more significant breakout possible tomorrow:

The measurement from the top of the triangle to the bottom is 330 points. Adding that to the breakout level would take the DJUSNS to 2200+. There are potential catalysts for a MASSIVE surge later this quarter and internet stocks are just one. Watch that GOOGL report tonight. I believe it'll be a very big one with likely raised guidance. If you decide to own it into earnings, that's your decision. I'm simply giving you my educated guess. Earnings can be major disappointments if companies are not honest with Wall Street analysts.

Strong Earnings ChartList (SECL)

As of 11:15am EST, there were 14 SECL stocks making new 52 week highs as follows:

AMAT, BAC, BBT, DOV, FNB, FRC, GMS, JEC, JPM, KLAC, PNC, RH, SEDG, SNX.

Many of the above stocks are banks, but here are two that aren't:

GMS:

GMS reported excellent results back at the end of August and it shot higher. Since then, we've seen the stock simply consolidate. Its technical chart looks great, especially the fact that it remains a leading stock in a leading industry. Today's break to a fresh 52 week high is bullish, although more volume and a close above 31 would be better confirmation.

SEDG:

SEDG has been a tremendous performing in renewable energy ($DWCREE), despite the fact that the industry has really cooled off the past 5 weeks. I'd still look for a big upcoming earnings report here.

Active Trade Alerts

We have entered a very bullish historical period for U.S. stocks. In fact, the S&P 500's close on January 18 has been higher than its close on October 27 in 56 of the past 68 years. Unless history is proven wrong, we're going to break out to new highs throughout Q4. We have two alerts out right now and will be looking to add more this week:

ZUMZ (-1.21%) - earnings date is December 5th. ZUMZ is pulling back today, but remains in an uptrend above its 20 day EMA. A close below its 20 day EMA would suggest more of a medium-term consolidation remains in play with major support at 30. I'd like to see ZUMZ continue to trend higher and remain above its 20 day EMA, currently at 31.94.

NKE (-0.71%) - recently reported earnings so the next earnings date won't be for another couple months. NKE is drifting lower this morning and has triggered our second entry at 90.50. We like accumulation in this 90 area and believe both footwear ($DJUSFT) and NKE will head back higher.

Today's Movers

I ran a high volume scan among all NYSE stocks and came up with the following big movers on heavier-than-normal volume:

MBT:

The volume on this move higher and its improving relative strength are both undeniable. MBT is overbought, however, and we've seen this type of high volume surge before - back in June. I like it on a 20 day EMA test for a bounce.

SPOT:

I write and discuss "character change" a lot. Well, SPOT appears to me to be undergoing a character change today off its earnings report released before the market opened today. They shocked Wall Street with a big profit, while the Street was expecting a loss. I'm not a fan of jumping on a stock that's already up 15% on the session, but this an absolute add to a Watch List. Today's open at 131.11 becomes a major price support level on any future selling.

CTB:

I know the tires industry ($DJUSTR) has been hot over the past month or two, but the longer-term downtrend remains in play, in my opinion. CTB has been a relative laggard in tires for the past two months and today is printing an ugly black candle on big volume at key gap resistance. I'd look for CTB to pull back to 26.50-27.50 to test price and 20 day EMA support. What happens from there will be technically significant.

Earnings Reports

Here are the key earnings reports for this week, featuring stocks with market caps of more than $10 billion. I also include a few select companies with market caps below $10 billion. Finally, any portfolio stocks that are reporting are highlighted in BOLD. The number of companies reporting will be significant over the next two weeks, so please make sure you check for earnings dates for any companies you own or are considering owning:

Monday, October 28:

GOOGL, T, HSBC, TMUS, EPD, WBA, WELL, NXPI, AVB, CAJ, SBAC, WCN, DTE, SPOT, ARE, QSR, RYAAY, CHKP, L, AKAM, CNA, VNO, BRO, RE. Others below $10 bil: XPO, BYND, OMF

Tuesday, October 29:

MA, MRK, PFE, BP, AMGN, PTR, SYK, MDLZ, CB, COP, SPGI, ECL, GM, MMC, HCA, PSA, SHOP, EC, ALL, ETN, AMD, OKE, IR, EA, DLR, CMI, EIX, VRSK, GLW, K, BXP, FMS, ACGL, INCY, INVH, MLM, YUMC, SGEN, AGR, MXIM, MKL, KKR, EXR, UDR, WAT, CXO, FNF, IEX, PAYC, CHRW, EXAS, LDOS, ZBRA, FMC. Others below $10 bil: ZEN, AN, MRCY, ENPH, LSCC, DENN

Wednesday, October 30:

AAPL, FB, GSK, SBUX, GE, SNE, CME, ADP, SO, VRTX, SPG, SU, EQIX, LHX, MET, MCO, CTSH, YUM, TEL, IQV, WMB, RSG, MSI, MCK, KLAC, S, ETR, BKR, RCL, APTV, AWK, HES, HCP, WDC, GRMN, MAA, MGM, TWLO, WCG, NLY, BSAC, LYFT, MAS, TAP, DRE, LNC, TS, REG, MLCO, CLR, NI, FRT, TYL. Others below $10 bil: OLED, ETSY, CREE, CRUS, TMHC, EVTC, CROX, ELY, HTLD, BOOT, DDD

Thursday, October 31:

RDS.A, SNY, AMT, BMY, MO, CELG, EL, CI, ICE, DD, EXC, MPC, BCE, KHC, TRI, PEG, SIRI, MPLX, MELI, FCAU, GPN, WLTW, PH, BLL, IDXX, ADM, AME, CTVA, CLX, MSCI, CHD, ANET, CDW, IP, TFX, XYL, LYV, MMP, PINS, FTNT, WAB, IT, SSNC, CPT, VICI, CVE, OTEX, W, WU, BIO. Others below $10 bil: DNKN, AYX, GNRC, SRCL, JCOM, YETI, X, FLWS, FNKO

Friday, November 1:

BRK.B, BABA, XOM, CVX, ABBV, HDB, D, CL, TRP, AIG, SRE, LYB, IMO, PBA, FTS, LNG, WPC, STX, CBOE. Others below $10 bil: FND, TDS

Economic Reports

None

Happy trading!

Tom