EB Daily Market Report - Tuesday, July 7, 2020

Executive Market Summary

• Futures were weak as the market opened quite weak
• The NASDAQ has maintained its relative strength, though it's testing its flat line at last check
• Most of our key indices are lower today, threatening to snap the S&P 500's 5-day winning streak
• Airlines ($DJUSAR, -3.95%) are under pressure again as Delta Airlines (DAL) gets set to report quarterly results next week
• Energy (XLE), financials (XLF), and industrials (XLI) are all down more than 1% in today's session
• Consumer staples (XLP) is the only sector to gain more than 1% today
• Biotechs ($DJUSBT) are having another strong session and breaking to a fresh all-time high
• Our Model Portfolio is looking to add to its stunning 114% cumulative return since November 2018; Shopify (SHOP) and Regeneron Pharma (REGN) are up approximately 4% each to lead today
• Walmart (WMT) is up 6.5% after announcing that it will launch a subscription service for less than $100 per month

Market Outlook

Two key components of this bull market, other than technology (XLK) and health care (XLV), have been consumer discretionary (XLY) and communication services (XLC). If this bull market rally in the NASDAQ 100 ($NDX) is to continue beyond today, it'll likely require one or both of those latter two sectors to break above prior June resistance:

The XLC broke above that prior resistance earlier today, but it has since reversed and appears to be reversing. Without these two sectors breaking out, the weight of this rally will likely fall squarely on the shoulders of technology and you just have to wonder how much gas is left in the tank there after the powerful rally that's taken place the last 4-5 weeks.

Sector/Industry Focus

Consumer staples (XLP) is among today's leading sectors and part of the reason is nondurable household products ($DJUSHN). The group is nearing a breakout that's worth keeping an eye on:

The 990 to 1005 area has stopped the bulls a half dozen times or more since October 2019. A breakout would be very bullish for the group. Clorox (CLX) has been one of the leaders in the group and is attempting to close at yet another all-time high today.

ChartLists

I ran a scan of our ChartLists, searching for 52 week highs, BUT with SCTR scores under 90. In other words, the idea is to try to uncover stocks that haven't been going up day after day. Here's what was returned from each ChartList:

Strong Earnings ChartList

ACN, KNX, BABA, SAIA, INTU, MRTN, MCO. 3 of these stocks are truckers (KNX, MRTN, SAIA). SAIA looks the best to me:

Truckers are breaking out and SAIA is showing strong relative strength on its breakout as well.

Strong Future Earnings ChartList

ABBV, CRM, EPAM, FB, JBHT, NTDOY, SNDR. 2 more trucking companies made this list - JBHT and SNDR. Let's check out JBHT:

JBHT is attempting an absolute breakout, but I'd be even more impressed to see a double top breakout above relative resistance (red arrows).

Strong AD ChartList

There were two stocks that met the criteria and were not on the other ChartLists - AMT and PZZA. Both of these attempts are coming after a period of consolidation:

AMT:

PZZA:

If I had to choose between these two, I'd likely go with PZZA simply because I'm not a fan of real estate stocks right, which is where AMT belongs.

Weak AD ChartList

None

ShortSqueeze ChartList

None

Earnings Reports

Here are the key earnings reports for today and tomorrow, 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. If you decide to hold a stock into earnings, please understand the significant short-term risk that you are taking. Please be sure to check for earnings dates for any companies you own or are considering owning:

Tuesday, July 7:

PAYX, LEVI

Wednesday, July 8:

MSM, SMPL, BBBY, AIR

Economic Reports

None

Happy trading!

Tom