EB Daily Market Report - Tuesday, November 3, 2020

Tom Bowley - November 03, 2020

Introducing the EB Monthly Seasonality Report

We have been hard at work doing historical research in order to provide you what I believe will be yet another solid piece of research to help in your decision-making process. We are planning to provide a monthly report that discusses seasonal trends among our major indices, sectors, industries, and individual stocks. I'm focusing more on seasonality in today's DMR to provide you a glimpse into some of the things we'll be offering.

We will have an area on our website dedicated to this research and information and it should be completed by this weekend, perhaps sooner. I hope you enjoy it. As always, if you have feedback that you'd like to share, contact us at "[email protected]".

Executive Market Summary

Futures were very strong this morning as the Dow Jones and S&P 500 took the lead right out of the gate
NASDAQ stocks have battled back from earlier underperformance, however, and have taken a slight lead
Today marks Election Day in the U.S. where we'll not only see results in the presidential race, but also senate races across the country
One key fact politically is that the U.S. stock market has underperformed historical norms when one party - either Democrat or Republican - is in control of the White House, Senate, and House
Sector leadership is very bullish today with all 5 aggressive sectors in the Top 5; industrials (XLI, +2.45%) are leading
Automobiles ($DJUSAU, +4.91%) are among today's leading industry groups as NIO, Inc. (NIO, +6.15%) and Tesla (TSLA, +5.41%) surge
The 10-year treasury yield ($TNX) is up 2 basis points to 0.87% after approaching 0.90% for the first time since June
The U.S. Dollar (UUP) is lower, but that's had little positive impact on energy (XLE, -0.91%), which is today's laggard and only sector in negative territory

Market Outlook

Industrial stocks (XLI) LOVE the month of November, so I thought it would be a good opportunity to look at the technical nature of the chart as it currently stands:

The XLI just had a successful test of its September low, so that becomes a fairly important price support level now. From a resistance perspective, watch 82-84. Eventually, I see the XLI breaking above this resistance zone, but taking profits at or near resistance prior to the breakout makes solid technical sense.

Sector/Industry Focus

I'm seeing a number of improving, or even surging, industry groups and industrial machinery ($DJUSFE) is one of them. Check out the current chart:

The DJUSFE broke out in October and it's begun November roaring to the upside. It does, however, have price resistance to negotiate. We need to keep everything here in perspective and the market could pull back again in the near-term. I believe the DJUSFE remains in a very bullish technical position so long as price support near 680 holds.

ChartLists/Strategies

We will provide a new Seasonality ChartList that should be available over the next day or two. However, the 20 stocks below will be represented on the initial ChartList as they are all companies that have a strong seasonal track record in November (and possibly even December and January):

EQIX, SIRI, AMD, GLW, NVDA, ROK, URI, HOLX, MNST, BMRN, FFIV, ALGN, A, DE, MSCI, WDC, CNC, ANTM, TDG, MOS.

I wrote a Trading Places blog article and discussed the bullish seasonal tendency of industrials (XLI), commercial vehicles & trucks ($DJUSHR), and Deere & Co (DE). You can CLICK HERE to read that article. Tomorrow morning, I will feature another one of these 20 stocks in the EB Digest. The listing of the 20 stocks that I provided are in November performance order, strongest first.

Let me give you an example of how I would use this new Seasonality ChartList. In the Sector/Industry Watch section above, I highlighted the surging relative strength of industrial machinery ($DJUSFE). In the Market Outlook section, I provided my current technical view on industrials (XLI) given their propensity to excel during November. One of our 20 seasonally-strong stocks is Rockwell Automation (ROK), which has just broken out and is a leader in both the industrials and amongst its industrial machinery peers. The bullish historical bias simply adds another degree of confidence for me in trading ROK. Here's the technical outlook for ROK:

And here's the seasonal bullishness:

The fourth quarter is quite strong historically for ROK, averaging a gain of 12.4% per year over the past 20 years. That's great information to know, especially when you see the stock as part of a leading group and breaking to new highs.

I hope that all of our members at EarningsBeats.com find this new product to be another extremely valuable resource in directing your investments/trades.

Earnings Reports

Here are the key earnings reports for the next two days, 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 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, November 3:

HUM, ETN, EXC, TRI, EMR, RACE, WEC, JCI, ES, SYY, PRU, W, MCK, ZBRA, FOXA, EXPD, CTLT, IT, WTRG, WLK, BHC, BLD, MRCY, LPX, GWPH, LGIH, BMCH, VSH, SPR, KAR

Wednesday, November 4:

QCOM, MELI, PSA, MET, VRSK, ALL, AWK, ANSS, FNV, CTVA, HLT, SLF, PAYC, AEE, HOLX, TYL, EXR, PODD, QRVO, ET, EXPE, PXD, TRMB, GDDY, JKHY, LBTYA, KGC, MTCH, ALB, ZNGA, SMG, RGLD, HST, LNC, FROG, PRGO, CF, H, WEN, QTWO, CCJ, QLYS, FTDR, STAA, RPD, APA, MRO, SGMS, CLH, GDOT, NUS, SUN, UPWK, OUT, AXNX, FIT, TTGT, SGRY, ELF

Economic Reports

September factory orders: +1.1% (actual) vs. +0.9% (estimate)

Happy trading!

Tom