EB Daily Market Report - Wednesday, January 27, 2021

Tom Bowley - January 27, 2021

Reminder: Saturday Event

We've added a ton of new products and services over the past 18 months. We also have a large number of new members. Given that, we believe it would be a great idea to have a webinar on Saturday and do a thorough walk-through of our website, discussing our entire platform. It should be a great refresher for our longer-term members, while of tremendous value for new members to shorten their learning curve. In addition to the website walk-through, I also plan to discuss the "January Effect". You need to see the impact that solid Januarys have on the performance of the balance of the year. I think you'll be impressed if you haven't seen it before.

My daughter Erin Webber will also participate and share the most frequently asked questions (FAQs) so as to hopefully minimize questions in those areas in the future. Here are the webinar details:

Date: Saturday, January 30, 2021

Event: "A Day in the Life of EarningsBeats.com"

Time: 11:00am ET

Room instructions will be sent out later this week and I'm sure will be posted on our website as well. The event will be recorded for those unable to attend live. We hope to see you there!

Executive Market Summary

Futures were lower from the very start today, ignoring mostly solid earnings reports
Small caps ($SML) have traded opposite the other major indices, gaining ground on an otherwise bearish day
Microsoft (MSFT, +1.03%) easily beat consensus estimates and currently trades higher in breakout territory
Starbucks (SBUX, -6.10%) and Advanced Micro Devices (AMD, -3.96%) are being treated rather rudely after posting better-than-expected earnings; AMD has rebounded from a much lower earlier low
Energy (XLE, +0.27%) is the only sector in positive territory
Financials (XLF, -2.31%) and health care (XLV, -2.30%) are the two sectors hardest hit
The Federal Reserve's FOMC announces its latest policy decision at 2pm ET; no interest rate change is expected, but the market will follow the wording of the policy statement
Apple (AAPL) and Tesla (TSLA) are on deck to report their latest quarterly results after the bell today

Market Outlook

Transportation stocks ($TRAN) are a very important area of the stock market as this group performing well suggests that we should expect economic improvement ahead. The TRAN has been performing exceptionally well vs. the benchmark S&P 500, but we've seen relative weakness recently as profit taking and rotation have kicked in:

We've seen a nice reversal today off of what I'd consider the best short-term price support. Loss of this support level wouldn't be a terrible thing long-term, but certainly could add to short-term bearish conditions.

Sector/Industry Focus

Railroads ($DJUSRR) are likely to provide us all the clues we need about transportation stocks. I love today's reversal:

The DJUSRR is just starting to turn up on a relative basis and the group is trying to hold 5-6 month relative support (green arrows). The success of the DJUSRR (or lack thereof) will be pivotal in determining how deep the current consolidation/selling goes.

ChartLists/Strategies

The Fed announces its latest policy decision today at 2pm ET. These announcements tend to trigger volatility and we can see significant moves in both directions. Given the 10-year treasury yield's ($TNX) test of 1.00% yield support, any positive news that the Fed shares about future economic growth could trigger a selloff in treasuries and a return to the financial sector. Here is a financial chart that looks very interesting to me:

GDOT (Strong Earnings and Raised Guidance ChartLists):

First, let me say this is TRADER'S perspective. The relative weakness suggests that I look for other stocks. But the reversal here is interesting because GDOT is one of only two stocks on our Raised Guidance ChartList (RGCL). If the Fed says anything that sends money rotating back into financials, GDOT could be a short-term beneficiary.

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, January 27:

AAPL, TSLA, FB, T, ABT, BA, NOW, SYK, LRCX, ANTM, ADP, CCI, NSC, PGR, EW, CP, GD, BX, TEL, LVS, APH, VFC, GLW, AMP, NDAQ, TER, GIB, HOLX, MKTX, URI, HES, ROL, PTC, DRE, TDY, RJF, PKG, CREE, WHR, TXT, MKSI, AZPN, SEIC, LEVI, TTEK, KNX, PB, OSK, SLM, SLG, MTH, EAT, NXGN

Thursday, January 28:

V, MA, CMCSA, DHR, MCD, MDLZ, MO, SHW, MMC, NOC, DOW, STM, TROW, XEL, MSCI, RMD, TEAM, SWK, SWKS, LUV, MKC, VLO, AJG, RCI, TSCO, DOV, NUE, ABMD, WDC, CE, FICO, PFG, EMN, PHM, WRK, FLEX, PNR, DLB, AAL, JNPR, RHI, BC, HLI, JBLU, X, MTSI, EGHT, ADS, GATX, KEX, FCFS, NTCT, FLWS, OSIS, BZH

Economic Reports

December durable goods: +0.2% (actual) vs. +1.0% (estimate)

December durable goods ex-transports: +0.7% (actual) vs. +0.5% (estimate)

FOMC meeting ends at 2:00pm ET

Happy trading!

Tom