EB Daily Market Report - Wednesday, June 2, 2021

Tom Bowley - June 02, 2021

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Executive Market Summary

Futures were slightly higher and that's the way we opened this morning - slightly higher
After a brief pause mid-day, buyers seem to be returning into the final hour
Remember, we're in the best period of June right now and it lasts through the end of this week
Next week, we'll have May CPI and then May PPI and the Fed meeting the following week
Energy (XLE, +2.25%) remains in charge right now as crude oil ($WTIC, +1.54%) nears $69 per barrel
AMC Entertainment Holdings (AMC, +110.02%) has more than doubled as Reddit traders pile on
Short squeezes abound with Bed Bath & Beyond (BBBY, +50.40%) surging as well
Materials (XLB, -0.77%) are lagging today as the dollar (UUP) hangs onto multi-month price support
Zoom Video Communications (ZM, -0.83%) beat revenue and EPS estimates, then raised guidance, but to no avail as sellers remain in control

Market Outlook

Silver ($SILVER) is in a very bullish long-term pattern, but despite its strength since the beginning of the pandemic, it's still been an underperformer vs. the benchmark S&P 500. That's the point I continue to repeat when I'm asked about metal prices like gold ($GOLD) and silver. EVERYTHING is going higher, but that doesn't mean it's a great investment. Look at the history of silver on both an absolute and relative basis:

Silver is about to break out again. I get it. But what many don't get is that bottom panel. Relative to the S&P 500, silver has been a VERY bad investment choice - for years!

So while we very well may see a breakout in silver, I'll continue to stick with U.S. equities.

Sector/Industry Focus

Consumer discretionary (XLY) is hesitating short-term, but still remains fine in the long-term. Here's a 10-year weekly chart to show the uptrend still solidly in play:

Many charts fell apart temporarily in March 2020 as the pandemic unfolded. But other than that one-off event, the XLY has remained healthy throughout this secular bull market rally. It's consolidating now, but I see nothing long-term that would suggest the run has ended.

ChartLists/Strategies

The Short Squeeze ChartList (SSCL), while extremely aggressive and volatile, is producing massive winners again, much like it did back in January. 10 stocks out of 42 have gained 10% or more today, including Bed Bath & Beyond (BBBY), which is up 44%, and PetMed Express (PETS), which has risen 42%. Others that could see further appreciation near-term include:

BLNK:

This was the stock featured in the EB Short Report for June. I was watching for a break above the downtrend line on increasing volume and we're seeing that today. Anyone trading short squeeze stocks MUST realize the aggressive and volatile nature of these stocks. They can be very big winners in a short period of time, but they can also pose considerable risk if the squeeze never materializes.

SRNE:

SRNE has broken its downtrend with increasing volume and a PPO that's just turning positive. It could be a little early, but it also could be a great short squeeze set up.

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, June 2:

SPLK, NTAP, PAGS, AAP, ESTC, GWRE, PVH, DCI, SMAR, SMTC

Thursday, June 3:

AVGO, CRWD, LULU, DOCU, WORK, COO, MDB, SJM, TTC, FIVE, CIEN, SAIC, PHR, SCWX, ZUMZ

Economic Reports

Beige report released at 2:00pm ET

Happy trading!

Tom