EB Daily Market Report - Thursday, February 25, 2021
Note
I will be unavailable most of the day today, so I wanted to send out an early DMR this morning.
Executive Market Summary
- Futures were a tad higher on the Dow Jones, but lower on both the S&P 500 and NASDAQ
- Small caps are continuing to show leadership as well, as are value stocks (IWD) vs. growth stocks (IWF)
- The 10-year treasury yield ($TNX) is up another 7 basis points to 1.46% after jobless claims were reported well below expectations
- Crude oil ($WTIC) is pausing, down about 0.50% early in today's session
- Real estate (XLRE, +0.54%) and financials (XLF, +0.48%) are the early sector leaders
- Technology (XLK, -1.04%) and consumer discretionary (XLY, -0.91%) are again the short-term laggards
- Pending home sales were well below expectations, weighing on home construction ($DJUSHB, -2.51%)
- Twitter (TWTR, +7.51%) announced an aggressive plan to double revenues by 2023
Market Outlook
Transportation ($TRAN) is making one of its best moves since the pandemic began. The AD line is moving straight up and the group is crushing the defensive utilities ($UTIL) area:
The Andrews Pitchfork tool can be used to define a trend like the one above on transportation stocks. We see a few returns to the mean (middle trend line). Given the recent price breakout, there's a solid chance that this index could return to the top end of the pitchfork, which would likely coincide with a big move higher in the S&P 500.
Sector/Industry Focus
The selling today has taken the home construction area ($DJUSHB, -2.51%) to an interesting retest of price support on its chart:
ChartLists/Strategies
We're moving closer to the end of this calendar month "bearish" period that ends February 25th. Here are the annualized returns on the S&P 500 (since 1950) for the next several days:
February 26th (Friday): +21.05%
March 1st (Monday): +78.65%
March 2nd (Tuesday): +9.67%
March 3rd (Wednesday): +27.80%
March 4th (Thursday): +43.81%
March 5th (Friday): +32.21%
Here are 3 "Downtrend Reversal" trade candidates where we've seen recent weakness that could be setting up a great short-term trading opportunity:
LULU:
This is not exactly the best looking chart, but LULU is at a critical support level where we've seen multiple bounces.
RBBN:
RBBN looks much better technically. It saw tremendous volume on its move up from 9.00. A close beneath 9.00 could be a problem short-term, but this is a level where I'd expect to see support hold.
TTGT:
This one is also much stronger than LULU technically. We saw buyers step in on Tuesday at 78.27. I doubt it goes back that low, but building a position slowly from the current price down to that level might make sense. A break back above the 20 day EMA would be a bullish short-term signal.
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.
Thursday, February 25:
CRM, ABNB, TD, AMT, ADSK, WDAY, MRNA, DELL, VMW, DASH, CVNA, MNST, KDP, CM, RKT, EOG, AEP, SRE, HPQ, BBY, ZS, ETSY, W, LI, VIPS, FTCH, PLUG, PCG, EIX, DEN, LYV, NVCR, TFX, AES, CLVT, CZR, PBA, BMRN, DPZ, SJM, PLTK, RUN, CABO, ERIE, PLAN, CNP, UHS, SPCE, PWR, AXON, FND, KL, NTRA, BYND, FSLR, MLCO, VIR, NLSN, CLF, NKLA, NCLH, DCI, ADT, FLIR, SRCL, QRTEA, GIL, SAIL, SHAK, SWI, ALRM, IRTC, TREE, LPSN, BAND, GKOS, INSM, NKTR, REGI, KTOS, REZI, OUT, NUVA, MDRX, AXNX, EB, ACMR, GNMK, MNKD, DRQ, GRPN, IHRT
Friday, February 26:
PEG, DKNG, IEP, EVRG, VST, LAMR, FL, BLDR, CRI, CRON, FLR
Economic Reports
January durable goods: +3.4% (actual) vs. +1.1% (estimate)
January durable goods ex-transports: +1.4% (actual) vs. +0.6% (estimate)
Q4 GDP (2nd estimate): 4.1% (actual) vs. 4.1% (estimate)
Initial jobless claims: 730,000 (actual) vs. 815,000 (estimate)
January pending home sales: -2.8% (actual) vs. +0.0% (estimate)
Happy trading!
Tom