EB Daily Market Report - Tuesday, December 15, 2020
Announcements
Holiday Special
Happy holidays from EarningsBeats.com! We've begun our BEST DEAL of the year that will last through Saturday, December 19th. When you sign up for an annual membership for $697, you'll get two months free! If you're already an annual member, you can use this special to extend your membership another 14 months. One HUGE benefit of this deal is that annual members WILL NOT have to pay for our ETF service that will be charged separately at a rate of $77 per month, effective January 1, 2021. There will be no charge for the ETF service until your next renewal date, whether that's in March 2021, October 2021, or December 2022. We're doing our best to provide great benefits in exchange for your long-term commitment to EarningsBeats.com. It's our way of saying THANK YOU for your support and loyalty in 2020.
For more information on our Holiday Special, CLICK HERE.
Market Vision 2021
Event: MarketVision 2021
Date: Saturday, December 19, 2020
Time: 9:00am - 2:00pm ET
I will be speaking and I'll have two other distinguished speakers joining me - David Keller, Chief Market Strategist, and Grayson Roze, VP of Operations, both from StockCharts.com. For more information, CLICK HERE!
Max Pain Webinar
The December max pain webinar is scheduled for 4:30pm ET today. You can access this webinar by using the following link:
https://us02web.zoom.us/j/82686926488
The room will open at approximately 4:00pm EST. Hope to see you there!
Executive Market Summary
- Futures were strong at the open and the buyers have remained today, unlike yesterday
- The Dow Jones is higher by more than 300 points as it once again nears another all-time high
- Utilities (XLU, +2.12%) and materials (XLB, +1.77%) are leading today, a rather odd combination
- All 11 sectors are higher as we're seeing excellent breadth on this advance
- Renewable energy ($DWCREE, +5.34%) and computer hardware ($DJUSCR, +4.07%) as technology (XLK) approaches its September high again; a breakout here would be a bullish development
- A few health care names lead the S&P 500 laggards; Pfizer (PFE) is tops, dropping 1.86%
- Meanwhile, Apple (AAPL, +4.10%) and Walt Disney (DIS, +2.26%) are leading the Dow Jones higher
Market Outlook
Today marks the end of the first half of December, or the weaker historical half. That's good news. It certainly doesn't guarantee us anything in terms of higher prices into year end. But at least history favors the bulls right now.
I tend to be very optimistic by nature, especially when it comes to the U.S. stock market. The primary reason is quite simple. The stock market goes up a whole lot more than it goes down. Yet, many market pundits are constantly looking for the next great reason why prices cannot go any higher. Ignore it. Stay focused on the Big Picture and what Wall Street is telling us. That's what really matters.
I received an email this morning, asking if we should consider building cash because utilities (XLU) are leading today's advance. While it's true that defensive groups leading the market higher can be problematic, one day doesn't make a trend. I've actually been suggesting that utilities would bounce off price support near 62. A negative divergence was present at the November high and that increased the odds of deeper selling in the sector, which is exactly what we saw for a month. Check out this negative divergence, along with the XLU relative strength vs. the S&P 500:
Note that the only relative strength we've seen in utilities was in September and October, after the S&P 500 topped and consolidated. Defensive groups usually lead on a relative basis during consolidation as profit taking takes down the more aggressive sectors.
Sector/Industry Focus
Consumer discretionary (XLY) is higher today, but near the bottom of the sector leaderboard, which is not a big deal short-term. One of its component industry groups - specialized consumer services ($DJUSCS) - has broken out again and continues to show excellent relative strength:
This type of action makes me feel quite confident about a stock like Etsy, Inc. (ETSY). It's been an incredibly strong stock in our Strong AD Portfolio, rising 40.77% over the past month.
Leading stock in a leading industry. I cannot say this enough.
ChartLists/Strategies
I thought I'd pick a chart from 3 of our ChartLists that I found interesting today. Let's start with one that's a bit on the risky side:
AKTS (Short Squeeze ChartList):
Potential breakout on a Short Squeeze stock:
MMSI (Strong Earnings ChartList):
Potential hammer:
CRDF (Strong Future Earnings ChartList):
Potential reversal off 20 day EMA test:
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, December 15:
NDSN
Wednesday, December 16:
LEN, TTC, ABM
Economic Reports
FOMC meeting begins (policy decision and statement due out Wednesday, 2:00pm ET)
December empire state manufacturing index: 4.9 (actual) vs. 5.8 (estimate)
November industrial production: +0.4% (actual) vs. +0.3% (estimate)
November capacity utilization: 73.3% (actual) vs. 73.0% (estimate)
Happy trading!
Tom