EB Daily Market Report - Tuesday, March 30, 2021
Executive Market Summary
- Futures were weak overnight and we opened lower across our major indices; small caps ($SML) have been relative leaders today
- March consumer confidence soared above expectations, likely the effect of accelerating vaccinations
- Commodities are mostly lower today, led by silver ($SILVER, -3.19%)
- The U.S. Dollar (UUP, +0.40%) rose to nearly a 5 month high, pressuring energy (XLE, -0.78%) and materials (XLB, -0.44%)
- Another slight push higher in the 10-year treasury yield ($TNX) lifted banks ($DJUSBK, +1.78%) as financials (XLF, +0.63%) cruised to the top spot on the sector leaderboard
- Technology (XLK, -0.98%) is weak once again, though renewable energy ($DWCREE, +5.83%) is having an excellent day
- The financial components are helping the Dow Jones hang onto 33000 today as GS, JPM, and AXP all gain 1% or more
Market Outlook
Transportation stocks ($TRAN) have been scorching hot of late, underscoring the significant increase in economic activity we're likely to see in the second half of 2021. Stocks anticipate strong results, which is why we follow technical analysis. Check out this long-term chart of the TRAN:
I've ignored the pandemic-related low in drawing my lower trendline as it was a panic-induced low that should have never printed. We've had a huge move and the weekly PPO is quite extended, so I wouldn't rule out a period of consolidation ahead, but make no mistake about it - this is a VERY bullish signal for U.S. equities.
Sector/Industry Focus
I've been stressing lately the "return to normalcy" on many charts. I don't know if there's a clearer chart to use to illustrate than airlines ($DJUSAR):
It's taken nearly a year, but the airlines are back - at least to where the panic-induced decline began. Many groups are well above where they were a year ago, so airlines are by no means the best industry group on a relative basis. But they have been playing catch up and have now made it all the way back.
ChartLists/Strategies
I ran a scan of stocks on our SECL, SFECL, and RGCL, looking for stocks that had SCTRs above 90 33 days ago (roughly 1 1/2 months ago) and now have SCTRs below 50. I reviewed the charts to see if there were any bullish developments occurring today or recently.
BL:
CRWD:
SKLZ:
ZS:
Given the weakness in tech shares, these stocks should be viewed as quite aggressive. However, they are printing candles that look like solid reversing candles just as we head into April. And these reversals are occurring at key support levels. Tight stops could be considered beneath today's lows.
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, March 30:
LULU, CHWY, MKC, BNTX, FDS, PVH, BB, PHR
Wednesday, March 31:
MU, WBA, AYI, NG, VRNT, PLAY, GES, SPWH
Economic Reports
January Case-Shiller house price index: +1.2% (actual) vs. +1.2% (estimate)
January FHFA house price index: +1.0% (actual) vs. +1.0% (estimate)
March consumer confidence: 109.7 (actual) vs. 96.0 (estimate)
Happy trading!
Tom