EB Daily Market Report - Tuesday, December 10, 2019
Executive Market Summary
- Futures were lower this morning, then the U.S and China indicated that additional tariffs on Chinese goods, set to take effect December 15th, would likely be delayed
- Futures then reversed and turned green
- It's mostly a flat day across our major indices as we negotiate a historically bearish period in December
- Technology (XLK) and energy (XLE) are strong today, while real estate (XLRE) lags
- Apple (AAPL) has recovered much of yesterday's selloff to lead the Dow Jones; 3M (MMM) is today's worst performer on the Dow, simply adding to two-year-long underperformance
- Our alert TPX is down just under 1% today and nearing key 20 day EMA support
Market Outlook
The S&P 500 might just be mired in a very short-term downtrend, as reflected on the following 5 day, 10 minute chart:
A channel like the one above could take the S&P 500 back to test either gap support or most recent short-term price support. This is nothing more than an educated guess as to how things might develop based on historical trends. These trends tell us that U.S. equities tend to struggle from the 7th through the 15th. Personally, I'm not changing any of my trading strategies based on this tendency. I'll keep holding so long as my individual stocks don't break down. As for buying, I'd take it slow and easy this week.
Sector/Industry Focus
Consumer stocks are likely to be in focus over the next few weeks. Consumer staples (XLP) has broken out and looks strong on an absolute basis. It has some work to do on its relative chart. Consumer discretionary (XLY), however, hasn't broken out yet and has been very weak on a relative basis. Can the group make the following absolute breakout?
While the XLY has been consolidating, it's been badly lagging the S&P 500. I would expect that to change if the XLY can break out and forge to new highs. Relative strength will be important too.
Active Trade Alerts
We have one active trade alert currently:
TPX (-0.93%) - reports earnings on February 12. TPX is down today and testing its 20 day EMA. Short-term, this is an important test. Those of you with a very short-term mindset might consider using that 20 day EMA as your closing stop to guard against a revisit of gap support at 81.86 that we saw to open December.
Strong Earnings ChartList (SECL)
I ran a scan today of SECL stocks testing their 20 day EMA. They needed to have an open and a current price above their 20 day EMA, while their intraday low moved beneath their 20 day EMA. There were 24 results (out of 325 stocks) and here they are:
The one that looks the most promising technically to me is:
NBIX:
First of all, it's in the red-hot biotechnology industry ($DJUSBT). Next, this is the first 20 day EMA test in 6 weeks for NBIX. Finally, NBIX was extremely overbought with a daily RSI above 70 for a month. It needed some temporary relief and it's seen it.
Movers & Shakers
Here are two extremely volatile stocks that have pulled back and could present nice reward to risk trading opportunities for those with a higher risk tolerance:
PLUG:
There's been a ton of interest in PLUG the past 5-6 weeks as it surged roughly 50%. It's since pulled back and is in a price support zone with trendline support being tested as well.
TVTY:
TVTY printed a triple bottom at 15, then broke above key resistance near 19.30 in November on extremely heavy volume. It's now returning toward that price support level.
Earnings Reports
Here are the key earnings reports for this week, featuring stocks with market caps of more than $5 billion. I also include a few select companies with market caps below $5 billion. Finally, any portfolio stocks (or active trade alerts) that will be reporting results are highlighted in BOLD. Please make sure you check for earnings dates for any companies you own or are considering owning:
Tuesday, December 10:
AZO, HDS. Others below $5 bil: OLLI, CMD, PLAY
Wednesday, December 11:
LULU, NDSN. Others below $5 bil: AEO, OXM, PLCE
Thursday, December 12:
ORCL, ADBE, COST, AVGO, CIEN. Others below $5 bil: None
Friday, December 13:
None
Economic Reports
None
Happy trading!
Tom