EB Daily Market Report - Thursday, August 6, 2020
Executive Market Summary
- Futures were lower this morning, but U.S. equities are rallying again, especially on the NASDAQ 100
- Apple (AAPL) continues to lead, rising another 2.15%, and today's best performing Dow component
- Western Digital (WDC, -16.10%) significantly lowered revenue and EPS guidance and is the worst S&P 500 performer today
- Gold ($GOLD) and silver ($SILVER) continue their torrid hot streak, rising 0.96% and 5.54%, respectively
- Initial jobless claims were much lower than expected, 1.19 million vs. 1.44 million
- Communication services (XLC, +2.04%), led by internet ($DJUSNS, +2.14%) tops the sector leaderboard
- Primary weakness today is found in health care stocks (XLV, -1.09%)
Market Outlook
The S&P 500's all-time high was 3393.52 on February 19, 2020. Currently, we're 63 points away from that, or just under 2%. It's pretty amazing when we look back at what we endured in February and March. I believe we're heading for a test of 3393 and the 60 minute chart suggests we have further upside based on recent hourly PPO tops:
The PPO tops have been around 2, which simply tells us that the momentum we're seeing now still remains well below levels earlier during this uptrend. Moral of the story: Don't be surprised to see more upside.
I have provided two key support levels that I'd watch if we do see some near-term selling. Keep in mind that the rising 20 day EMA is currently at 3246, between both of the price support levels identified above.
Sector/Industry Focus
Internet stocks ($DJUSNS) are mounting a rally today and are nearing a critical resistance level established back on July 21st:
The short-term trading range is 2250-2400. I like the fact that the daily PPO is moving closer and closer to centerline support. That suggests that any price breakout almost certainly will be accompanied by rapidly-accelerating momentum. Internet stocks remain a Top 10 industry group, in my view.
ChartLists
I have nearly completed the updated Strong Future Earnings ChartList (SFECL) and should have that to everyone by tomorrow. In the meantime, here are two nice setups on this list currently:
AKAM:
I like the AD line here, which keeps rising and, on its most recent gap higher and breakout, AKAM began to show relative strength vs. its internet peers. While it's consolidated, however, that relative strength has disappeared. I want to make sure that AKAM holds support near 107 as a violation there would also result in loss of 50 day SMA support as well. The reward to risk here improves as the stock moves closer to that 107 level.
HALO:
Biotechs ($DJUSBT) have been struggling a bit of late, but despite that, HALO has managed to move into breakout territory today. The blue circle shows the relative breakout, in addition to the absolute price breakout.
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:
Thursday, August 6:
NVO, TMUS, BMY, BDX, ZTS, BKNG, ILMN, MELI, UBER, AEP, BCE, DDOG, RSG, ING, EOG, WCN, ED, BMO, MSI, PH, SLF, FLT, FTNT, TTD, CNQ, HLT, AEE, CCEP, ALNY, QSR, CAH, EPAM, VIAC, WIX, ZG, ABMD, PBA, NLOK, NET, PODD, NICE, LNG, OTEX, AYX, CABO, CNP, DNB, BAP, AES, XRAY, DBX, MYL, OLED, GH, HLF, PCTY, WLK, PRAH, BHC, LAMR, FSLR, PWR, SRCL, SEE, FLIR, AAXN, EVBG, NOMD, WWD, STMP, YETI, GWPH, APPN, CARG, NCLH, PZZA, RPD, PLUG, TRIP, LAUR, YELP, FLR, AXNX, GPRO
Friday, August 7:
DISH, VTR, MGA, IEP, KIM, VIRT, ESNT, CNNE, NJR, HMSY, RDN, SABR, NWN, CSIQ, UFS, VIVO
Economic Reports
Initial jobless claims: 1,186,000 (actual) vs. 1,442,000 (estimate)
Happy trading!
Tom