EB Daily Market Report - Wednesday, January 29, 2020
Executive Market Summary
- Our major indices are higher once again, led by the Dow Jones
- Apple (AAPL) blew away estimates, both revenue and EPS, and are higher by nearly 3%
- Advanced Micro Devices (AMD) and Xilinx (XLNX) both disappointed, weighing on semiconductors
- General Electric (GE) provided a very solid earnings report and is the most active stock in the S&P 500, and is its 2nd best performer
- Internet shares are rebounding today, ahead of Facebook's (FB) latest quarterly earnings report; Microsoft (MSFT) and Tesla (TSLA) also report after the bell
- The FOMC is concluding its 2-day meeting with its latest policy statement due out at 2pm EST; it's widely expect that the Fed will keep rates steady for now
- We currently have no active trade alerts
Market Outlook
The FOMC announcement is due out shortly (2pm EST). Interest-sensitive stocks are normally most impacted after a Fed announcement. Also, the announcement usually drives interest one way or the other for the U.S. Dollar Index ($USD). I believe the Fed will remain very dovish, especially with the coronavirus outbreak adding to economic worries. Personally, I believe the Fed should lower as inflation remains below their target levels. Another cut would be a shocker to many, but would likely serve as a springboard for U.S. equities to jump higher as future earnings growth would become even more valuable with lower discount rates.
Here's a current look at the USD:
Those blue circles all mark tops with long tails to the upside. The USD is currently challenging a critical level of channel resistance. A big reversal today and move lower after the Fed announcement could mark a significant top in the dollar. That would help materials (XLB) and energy (XLE) in the very near-term, and they both could use some help, especially the XLE.
Sector/Industry Focus
For the second straight day, aggressive sectors are performing best as you can see below:
If you look at the SCTR scores above, you'll see just how bad energy (XLE) has been. Its SCTR is at 2.4.
Active Trade Alerts
We have no active alerts right now.
Strong Earnings ChartList (SECL)
Ok, I've updated the SECL as follows:
I deleted nearly 200 companies that have begun to report quarterly earnings or will be reporting quarterly results over the next couple weeks. I've added 43 companies that reported better-than-expected results in January thus far, and I'm sure I will be adding a couple hundred more over the next 2-3 weeks. Given the early earnings results, I wouldn't be surprised if we reach 400 stocks on our SECL by the end of February. Earnings have been very strong so far, and in a historically-low interest rate environment, that usually adds up to very bullish market action. I'm convinced U.S. equities (and most global equities) will be much higher at the end of 2020 than they are now.
Here's the link and password for the updated SECL:
LINK:
https://stockcharts.com/articles/sharedcharts.php?cc=1002951&listNum=105
PASSWORD:
NewCharts
The password above has to be entered EXACTLY as shown.
Also, we will be updating our website later today for the changes to the SECL.
Movers & Shakers
I reviewed NASDAQ stocks hitting 52 week highs today with SCTR scores under 95 and found the following interesting charts:
LAUR:
LAUR is breaking out on big volume to a fresh new all-time high. It's also hitting its highest relative level vs. its peers since 2017.
RMBS:
RMBS always seems to disappoint and its relative strength lines above tell us to at least be wary this breakout. However, it IS a breakout and it's a multi-year breakout on very nice volume. Failure to hold the breakout level would be reason for concern because of its lack of relative strength.
TEAM:
TEAM has been a top performer in software before, so we shouldn't ignore the current breakout and the increase in recent volume.
TNDM:
I'm a big fan of lengthy consolidation periods, followed by a heavy volume breakout in a strengthening industry group . Check. Check. Check. My only concern here is an intraday one. TNDM did not breakout on the open, so what we DON'T want to see is a long tail to the top today with a failed breakout. If we hold the breakout into today's close, I'd use the rising 20 day EMA as the key support level on future pullbacks.
NDAQ:
Investment services have been on the improve and NDAQ is attempting to break out vs. the group. That's a big positive. The absolute price action has already seen a breakout. NDAQ looks strong.
MSTR:
MSTR is attempting a key breakout, but we MUST recognize the poor relative strength. I do not like holding stocks with weak relative strength that fail on attempted breakouts as that's one way that market makers can find buyers for their institutional clients looking to exit a position. Today's close will be important. You can see above that MSTR is already pulling back from its earlier high.
HOLX:
HOLX was one of my Top 15 stocks of 2020 based upon its recent history of sideways consolidation and breakout. Today's action is adding to the bullish technical conditions.
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:
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 pending home sales: -4.9% (actual) vs. +0.4% (estimate)
FOMC meeting end, policy statement to be released at 2:00pm EST
Happy trading!
Tom