EB Daily Market Report - Tuesday, July 20, 2021

Tom Bowley - July 20, 2021

Today's Event

Later today, at 4:30pm ET, I'll be hosting our "Q2 Earnings" event, where I'll be discussing earnings results to date, and also providing you my technical opinion on dozens of companies with upcoming earnings reports. I'll highlight those that I believe may miss estimates and also those where I expect blowout results. You can join the event by clicking on the following room link any time after 4:00pm ET today, which is when we'll open the room:

https://earningsbeats.zoom.us/j/83524276557

Hope to see you there! If you can't make it, no worries. We'll record the event and you can watch it at your leisure.

ChartLists Updated

The following ChartLists have been updated and can be downloaded/viewed from our website:

Upcoming Earnings for this week
Model ETF Portfolio (features the 6 ETFs that we announced in our webinar yesterday)
Short Squeeze ChartList (SSCL)
Raised Guidance ChartList (RGCL)

Executive Market Summary

Futures were strong this morning as Wall Street rebounded from Monday's brutal selloff
The Dow Jones and S&P 500 have just filled their gap resistance; the NASDAQ, small caps, and mid caps are well above the gaps created from Monday's open, so they're showing solid relative strength
International Business Machines (IBM, +1.04%) is higher after reporting better-than-expected results, but the early gain has been eroding for the past several hours
The 10-year treasury yield ($TNX) has also rebounded after sinking earlier today; the TNX reached just below 1.13% earlier, but is now at 1.21%, up 3 basis points
The TNX reversal has led to outperformance in financials (XLF, +2.59%) and industrials (XLI, +2.44%) as both bounce off key price support
Bitcoin ($BTCUSD, -3.87%) is on the verge of closing beneath key price support at 30000; more on this below
Commodities are mixed, though we are seeing a slight rebound in crude oil prices ($WTIC, +0.90%)

Market Outlook

Both financials and industrials are bouncing off key short-term support levels - excellent news for this secular bull market. Breakdowns would likely trigger much more choppiness, but as long as the XLF and XLI can hold the following price support levels, that would be very good news for the bulls:

The key to both sector ETFs holding price support will likely be the 10-year treasury yield ($TNX). Assuming that the TNX printed a major yield support level at 1.13% earlier today, the odds are that both the XLF and XLI will hang onto the support levels shown. If the TNX moves below that level though, I'd fully expect to see breakdowns in both ETFs.

Sector/Industry Focus

Bitcoin ($BTCUSD) is threatening a major breakdown below key price support at 30000 and etherium ($ETHUSD) is nearing a major price support level as well:

Bitcoin's momentum (PPO) is weakening once again beneath the centerline - not good. A breakdown beneath 30000 with bearish momentum accelerating could certainly lead to much lower prices. Etherium, while holding onto price support near 1750 thus far, isn't looking much better.

On a relative basis, I'd still give the edge to etherium, although bitcoin has shown some relative strength since May. Until this relative channel breaks to the upside, however, I'd favor etherium. Failure to hold support at 1750 would be bearish on an absolute basis, though.

ChartLists/Strategies

We updated our Upcoming Earnings ChartLists for this week earlier today. Most companies reporting earnings are seeing solid reactions after nearly every company beat earnings expectations. Here's the leaderboard today of those companies that reported quarterly results on Monday after the bell or this morning before the bell:

HCA has been a leader in the health care providers area ($DJUSHP) and today's earnings reaction isn't likely to change that:

I'd look for today's open of 239.10 to provide excellent support on any upcoming selloff. I'm not saying it'll get back down to that level, but if it does, it would be a great reward-to-risk entry point.

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, July 20:

NFLX, PM, ISRG, CNI, HCA, UBS, CMG, TRV, SYF, IBKR, DOV, KEY, CFG, ALLY, HAL, XM, OMC, AGR, UAL, SBNY, SNV,MAN, IRDM, SNBR, AIR

Wednesday, July 21:

JNJ, ASML, KO, VZ, NVS, SAP, TXN, ANTM, CCI, CSX, KMI, DFS, LVS, EFX, NDAQ, RCI, NTRS, BKR, STX, MTB, MKTX, WHR, GGG, IPG, ICLR, CMA, LAD, SEIC, KNX, OMF, THC, HOG, SLM, SLG, VMI, PLXS, HCSG, NTGR

Economic Reports

June housing starts: 1,643,000 (actual) vs. 1,590,000 (estimate)

June building permits: 1,598,000 (actual) vs. 1,700,000 (estimate)

Happy trading!

Tom