EB Daily Market Report - Monday, March 15, 2021

Executive Market Summary

• Futures were mixed overnight, but most of our major indices did open higher
• The NASDAQ has actually grabbed the relative strength lead, outperforming the S&P 500 throughout much of the session
• The 10-year treasury yield ($TNX) has fallen 3 basis points to 1.61%, which has triggered some mild selling in financials (XLF, -0.86%)
• Energy (XLE, -1.40%) is today's lagging sector as crude oil ($WTIC, -0.40%) is down fractionally
• Meanwhile, we're seeing strength once again in defensive sectors as utilities (XLU, +1.22%) and real estate (XLRE, +1.20%) are the only sectors gaining more than 1% today
• Airlines ($DJUSAR, +4.20%) are having a very strong day with several airlines among the S&P 500 leaders
• Vuzix Corp (VUZI, +2.31%), one of our Strong AD Portfolio stocks, reports its quarterly results after the bell today

Market Outlook

The Dow Jones ($DJI) still has that same negative divergence that I discussed on Friday, so some short-term profit taking is to be expected fairly soon. Let's also keep in mind that options expire this Friday. Given the strength in so many Dow Jones component stocks, this would be a great area to look for companies that are trading well above their "max pain" levels. I'll be discussing more of that in Tuesday afternoon's March Max Pain webinar.

Despite any short-term setback, the Dow Jones appears to be poised to make a further run higher:

There should be excellent price support near 32000 and the rising 20 day EMA is approaching 31800, so any short-term selling would unlikely be more than 2-3%.

Sector/Industry Focus

Footwear ($DJUSFT, +2.85%) is having a very strong day today and the chart is set up quite bullishly:

We've seen a beautiful rise today in the group and we're not far from a significant price breakout. In the group, our Strong AD Portfolio stock CROX is up more than 4%, but one of today's big winners is Skechers (SKX, +5.87%), which looks solid technically and seasonally:

There's A LOT to like on this chart. SKX is breaking out on excellent confirming volume and it's also now at a 10-month relative high to its footwear peers. Furthermore, it's important to note that SKX absolutely LOVES this time of year:

If you add the average monthly returns for February, March, and April of 4.8%, 3.3%, and 8.6%, respectively, you'll find that SKX has averaged gaining 16.7% during these 3 months over the past two decades. That adds to the technical bullishness, in my view. Its best month - April - lies directly ahead.

ChartLists/Strategies

I reviewed our March Seasonality ChartList, looking to see if any of these stocks that favor March are also doing something technically to be aware of. Here were 3 I found interesting:

SBAC:

After a rough start to March, SBAC has bounced back beautifully. It hasn't been very good among its peers, though it's now improving on a relative basis. If its peer group specialty REITs ($DJUSSR) can make a breakout, I could see SBAC being a major beneficiary to close out March. Note the failed breakout at 260 price resistance and the declining 20 day EMA to open March. SBAC has now cleared that level, which makes me much more bullish the stock.

CNP:

Defensive groups tend to perform well in March and CNP turned on a dime as soon as March began. It's showing very nice relative strength this month as it's cleared a key price resistance level.

TCOM:

TCOM is much stronger stock technically than the last two, but carries with it a lot more risk. Still, travel & tourism ($DJUSTT) has been a GREAT industry group of late and TCOM is now showing excellent relative strength. Volume trends are bullish as well. A pullback near 42.00 would represent a solid entry into the stock.

TMUS:

I actually bought TMUS today as it approached its 20 day EMA, but I'm keeping a very tight closing stop on it. It's not in a great industry group, but if it is beginning to trend higher, then the rising 20 day EMA, currently at 124.23, should provide solid support.

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.

Monday, March 15:

HQY, WPRT, VUZI

Tuesday, March 16:

CRWD, LEN, FUTU, COUP, SMAR, JBL, FCEL, FLNT

Economic Reports

February Empire State Manufacturing Index: 17.4 (actual) vs. 14.8 (estimate)

Happy trading!

Tom