EB Daily Market Report - Tuesday, January 28, 2020
Executive Market Summary
- U.S. stocks are back on the rise again, led by the NASDAQ's 1.36% gain
- The Tokyo Nikkei ($NIKK) fell another 0.55% overnight, while German stocks ($DAX) rebound today
- The 10 year treasury yield ($TNX) has jumped 4 basis points today to 1.65% after a strong durable goods report
- Technology (XLK) and financials (XLF) are leading today's rally, while defensive sectors lag - a good sign
- Banks ($DJUSBK) are strong today with the rebound in the TNX, helping to lead financials
- Apple (AAPL) will report its latest quarterly results after the bell today; I'm expecting a powerful report
- The FOMC has begun a 2-day meeting with its latest policy statement due out Wednesday at 2pm EST
- We currently have no active trade alerts
Market Outlook
As a reminder of the chart I posted yesterday, the S&P 500 thus far is bouncing off trendline support, holding its current 3-4 month uptrend in place:
The other technical item of note, however, is that the S&P 500 has just reached its first critical line of resistance at the 20 hour EMA, which is 3278, one point above current price. If we've truly begun a short-term downtrend, this moving average test is likely to fail. If we can break above it (and close above it), I'd feel a little bit better about yesterday's low being the bottom for now.
Sector/Industry Focus
Medical equipment stocks ($DJUSAM) continue to perform extremely well on both an absolute basis and a relative basis. That suggests that trading stocks within this space makes very good sense and it also suggests we'll see some very strong quarterly earnings reports within this group over the next few weeks. Here's the current chart:
The consistent support at the rising 20 day EMA underscores the strength of the medical equipment industry. In the SECL section below, I analyze two stocks in this industry that are breaking to fresh 52 week highs.
Active Trade Alerts
We have no active alerts right now.
Strong Earnings ChartList (SECL)
I still need to annotate charts being added to the SECL, so the list isn't ready to be sent to everyone. I hope to do that later today. In the meantime, I ran a 52 week high scan of the SECL, searching for candidates that have broken out to fresh new highs despite the recent turbulence in the market. Here's the current list, ranked in SCTR score order (highest to lowest):
Two of the top three SCTR-ranked stocks are in medical equipment. I highlighted the group in the Sector/Industry Watch section above and pointed out how strong it looks. Here's a brief glance at the two medical equipment stocks listed above that are breaking to fresh 52 week highs:
PODD:
Broken price resistance becomes price support. That's on display above. The one problem I have right now is that January volume on this breakout has been light. I'd rather trade PODD off a 20 day EMA test.
NVRO:
It's another great looking chart, but if I connect the highs from the past few months, you can see that current price is challenging the upper channel line. This line will keep moving up so NVRO could keep moving up with the line, but the reward to risk would definitely improve if we at least saw a mild pullback. Unlike PODD, NVRO doesn't have any current volume issues.
Movers & Shakers
I always say to wait for stocks that are downtrending and performing horribly on a relative basis to begin to turn higher. There's no need to put your money to work too early and watch it waste away in a downtrending stock, no matter how much you might like it. Well, UBER is a great example of a stock that simply wasn't performing well. We needed to stay away. Well, that's changing as UBER is beginning to display characteristics of an uptrending stock:
The RSI has moved above 70, which doesn't happen during downtrends. We've also seen a successful rising 20 day EMA test. Volume trends have turned more bullish and relative strength now favors UBER.
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 (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, January 28:
AAPL, PFE, SAP, UTX, LMT, SBUX, MMM, SYK, CNI, AMD, HCA, EQR, EBAY, PCAR, XLNX, MKC, BXP, MXIM, NUE, PFG, WRB, PHM, CHRW. Others less than $10 bil: MKSI, PII
Wednesday, January 29:
MSFT, FB, MA, T, NVS, BA, MCD, PYPL, TSLA, GE, MDLZ, ANTM, ADP, BBD, NOW, NSC, GD, LVS, ILMN, IBN, LRCX, PGR, BSBR, DOW, MPC, CP, TEL, IR, TROW, RCL, MPLX, SWK, ADM, ROK, GIB, GLW, AMP, ALGN, ESS, HES, NDAQ, MAA, WYNN, HOLX, MKTX, QRVO, VAR, DRE, IEX, ROL, URI, AVY, BSAC, TXT, PKG. Others less than $10 bil: DLB, KNX, CREE, SLAB, CRUS
Thursday, January 30:
AMZN, V, VZ, KO, RDS.A, AMGN, LLY, TMO, DHR, UPS, MO, NOC, RTN, EPD, VRTX, MMC, SHW, BIIB, EW, DD, TFC, BX, ROP, TOELY, VLO, XEL, EA, HSY, WEC, PH, ALXN, MSCI, APTV, RMD, NOK, CTVA, WDC, CMS, ABC, AJG, GWW, IP, AMCR, DOV, MMP, DGX, CE, BEN, OTEX, FICO, APO, TSCO, WRK, CPT, EMN. Others less than $10 bil: CY, RHI, PFPT, DECK, MUR
Friday, January 31:
XOM, CVX, HON, CHTR, CAT, CL, ITW, AON, PSX, JCI, LYB, IDXX, WY, IMO, CHD, KKR, BR, PSXP, BAH. Others less than $10 bil: GNTX, BERY, MAN
Economic Reports
December durable goods: +2.4% (actual) vs. +0.5% (estimate)
December durable goods ex-transports: -0.1% (actual) vs. +0.2% (estimate)
November Case Shiller HPI: +0.5% (actual) vs. +0.4% (estimate)
January consumer confidence: 131.6 (actual) vs. 127.8 (estimate)
FOMC meeting begins
Happy trading!
Tom