EB Daily Market Report - Wednesday, December 9, 2020
Save The Date!
Event: MarketVision 2021
Date: Saturday, December 19, 2020
Time: 9:00am - 2:00pm ET
I will be speaking and I'll have two other distinguished speakers joining me - David Keller, Chief Market Strategist, and Grayson Roze, VP of Operations, both from StockCharts.com. More details to follow!
Executive Market Summary
- Futures were bifurcated, showing strength on the Dow Jones and S&P 500 and weakness on the NASDAQ
- There are no significant economic reports out today, but bonds are selling off nonetheless; the 10-year treasury yield ($TNX) is up 4 basis points to 0.95%
- Energy (XLE, +1.24%) finds itself on top of the sector leaderboard with consumer discretionary (XLY, +0.61%) in the second spot
- Real estate (XLRE, -1.17%) continues its December woes, moving opposite its normal bullish historical ways in December
- Travel & tourism ($DJUSTT, +3.78%) is soaring as Expedia (EXPE, +3.99%) attempts a breakout
- Home improvements ($DJUSHI, +2.79%) are also strong, led by a potential Lumber Liquidators (LL, +7.53%) breakout
- The Dow Jones is being led by Walt Disney (DIS), Goldman Sachs (GS), and Home Depot (HD), all up more than 1%
Market Outlook
The S&P 600 Small Cap Index is leading the S&P 500 once again today, resulting in yet another relative breakout. Small caps have been strengthening mightily since the first positive vaccine news was released by Pfizer (PFE) on November 9th. Check out this chart:
The blue-dotted vertical line highlights the November 9th vaccine news. Check out the surge in small caps since that date. It's clear that Wall Street believes this news is much better for smaller companies than it is for larger companies. From a common sense perspective, I'd have to agree.
Sector/Industry Focus
Travel & tourism stocks ($DJUSTT) have been soaring and there's reason to believe that they're just getting started. The weekly PPO continues rising, showing accelerating bullish momentum. The group's relative strength appears to now be situated in an uptrend vs. the multi-year relative downtrend it was in for the past 3-4 years.
A stock like Expedia (EXPE) would seem to be a beneficiary:
EXPE looks as though it's beginning another leg of its current uptrend, breaking out above prior highs. It's a leading stock in an accelerating industry group - not a bad combo.
ChartLists/Strategies
From our Strong Earnings ChartList (SECL), here are two breaking out.....
BIDU:
RDFN:
......and two approaching breakout:
FLGT:
EXPI:
From a short-term trading perspective, I like owning the breakouts. However, I'd be selling stocks that are testing overhead resistance as many will not negotiate price resistance on their first attempt. And, even if they do, you can always jump back in.
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.
Wednesday, December 9:
CPB, RH, VRNT, UNFI
Thursday, December 10:
ADBE, ORCL, AVGO, COST, LULU, MTN, CIEN, PLAY
Economic Reports
None
Happy trading!
Tom