EB Daily Market Report - Monday, July 12, 2021
Today's Event
At 4:30pm ET today, I'll be hosting a "Sneak Preview - Model ETF Portfolio" webinar. This is designed to describe our strategies in putting an ETF portfolio together. It should be quite informative, so I hope you can make it. We'll make sure that a recording is sent out to everyone in the event you're unable to attend.
Room instructions were sent out earlier via email, but here's the room link if you need it (the room will not open until 4:00pm ET):
https://earningsbeats.zoom.us/j/89947292079
ChartLists Updated
The following ChartLists have been updated:
- Strong Earnings ChartList (SECL)
- Strong Future Earnings ChartList (SFECL)
- Strong ETF ChartList (SETFCL)
- Upcoming Earnings ChartLists
As earnings season kicks off again this week, we are providing ChartLists for upcoming earnings of all companies with a market cap > $1 billion. We combine one day's after market close (AMC) earnings reports with the next day's before market open (BMO) earnings reports. This allows our members to quickly analyze the earnings movers in one ChartList. This week we have 4 Upcoming Earnings ChartLists because there were no Monday pre-market earnings today of any significance. In future weeks during earnings season, you should see 5 Upcoming Earnings ChartLists that summarizes the key earnings reports each trading day.
Enjoy!
Executive Market Summary
- Futures were higher at the opening bell on the NASDAQ, but temporarily prices were lower on both the Dow Jones and S&P 500
- That relationship has changed as both the Dow Jones and S&P 500 are now outperforming the NASDAQ, though all 3 indices are higher
- Value stocks (IWD) are drawing more interest today than their growth stock (IWF) counterparts
- Commodity prices are mostly flat, though crude oil ($WTIC) is down roughly 0.5%
- Virgin Galactic (SPCE, -17.20%) is being sold hard after announcing a $500 million secondary offering
- Walt Disney (DIS, +3.14%) is the best performing Dow Jones component stock, lifting this index above 35000 at last check
- Financials (XLF, +1.08%) is the strongest sector, benefiting from a slight tick higher in the 10-year treasury yield ($TNX)
Market Outlook
I like to follow the Volatility Index ($VIX) and its correlation to the S&P 500, because if they start to move higher together, that can provide us an excellent warning signal as a top prints. Currently, as you can see from the chart below, there's no positive correlation to worry about at this point:
The red-dotted vertical lines mark when the VIX and SPX are moving higher simultaneously. In three of these four instances, we saw at least a short-term bout of selling. A key high in September was marked when volatility unexpectedly surged. Currently, we do see the correlation rising, but we're still quite a ways from the zero line. It could become a problem later this month, but right now sentiment is not suggesting a top is imminent.
Sector/Industry Focus
Broadcasting & entertainment ($DJUSBC, +0.72%) is starting to show more bullish technical tendencies, aided by a very strong day in Walt Disney (DIS, +3.14%), which is featured below in ChartLists/Strategies. 2050 seemed to be a fairly strong resistance level on the DJUSBC, but we're now breaking above that. Also, the last 20-day EMA test was successful. I see another 6-7% rise here to test the March high as we move into earnings season:
In addition to absolute strength, we want to see relative strength (bottom panel). Watch to see if that red-dotted downtrend line is broken.
ChartLists/Strategies
Today I want to focus on improving stocks that we should be watching (or buying). I looked for companies where RSIs were moving back above 60 today AND their RSIs were below 60 one month ago, two months ago, and three months ago. These companies could be starting significant uptrends if they're breaking out. If they're not, watch for the breakout - it may be coming soon:
DIS:
ALGN:
BMY:
LAC:
QCOM:
SBRA:
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, July 12:
SLP
Tuesday, July 13:
JPM, PEP, GS, FRC, FAST, CAG, ANGO
Economic Reports
None
Happy trading!
Tom