EB Daily Market Report - Thursday, April 8, 2021
Executive Market Summary
- Futures were strong overnight and we saw most of our major indices climb at the opening bell
- The NASDAQ continues to flex its relative musclue, more than doubling the gain of the S&P 500 today
- My favorite two sectors - technology (XLK, +1.32%) and consumer discretionary (XLY, +0.45%) - are leading today's advance
- Energy (XLE, -1.29%) is the only sector that's down significantly on the session
- Computer hardware ($DJUSCR, +1.68%) and software ($DJUSSW, +1.57%) are strong industry groups, led by Apple (AAPL, +1.75%) and Microsoft (MSFT, +1.25%)
- The 10-year treasury yield ($TNX) is threatening its first close beneath its rising 20-day EMA since late January
- Commodities are mostly higher today, though crude oil ($WTIC) is flat
- Constellation Brands (STZ, -4.30%) reported quarterly earnings and, despite beating top and bottom line estimates, is the worst S&P 500 performer today
Market Outlook
The U.S. stock market has mostly ignored short-term warning signs, such as the negative divergence that I highlighted yesterday on a few key NASDAQ stocks. That same negative divergence is present on the S&P 500 hourly chart as illustrated below:
Negative divergences do NOT provide us guarantees of selling ahead. They're simply warning signs. Long-term investors should routinely ignore them, while short-term traders should consider the possible implications of short-term market weakness.
Sector/Industry Focus
Internet stocks ($DJUSNS) have quietly become one of the strongest industry groups again - and this is very good news for those looking for growth stocks to regain their 2020 form and relative strength. Check out this week's breakout:
It was frustrating while many of these names underperformed, but the PPO is now charging higher off of centerline support and this suggests that any upcoming 20-day EMA test will likely be a successful one.
ChartLists/Strategies
I ran a scan of 20-day EMA tests across our various ChartLists and these were two charts that I found interesting:
CMA:
CMA is a part of a very strong banking group and I like this second consecutive bounce off its rising 20-day EMA. I believe CMA is prepping to finally make the breakout above the 73 level.
USCR:
USCR has been on fire of late and on excellent volume. The recent selling back to this 20-day EMA test is a potential opportunity. A tight stop on a close beneath the 20-day EMA would make sense.
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, April 8:
STZ, CAG, LEVI, WDFC
Friday, April 9:
JKS
Economic Report
Initial jobless claims: 744,000 (actual) vs. 680,000 (estimate)
Happy trading!
Tom