EB Daily Market Report - Friday, July 23, 2021

Tom Bowley - July 23, 2021

Executive Market Summary

Futures were strong across the board and that early strength has accelerated throughout the day
The NASDAQ is showing relative strength, continuing what's been a strong relative period for NASDAQ stocks since mid May
Cryptocurrencies are flat after recent gains; we're likely seeing some profit taking
Copper ($COPPER, +2.36%) has rebounded strongly since Monday's selloff, a positive signal for global equities
Most other commodities are neutral today and not participating in the rally
The 10-year treasury yield ($TNX) is up 2 basis points to 1.29%; financials (XLF, -0.06%) are not rallying despite the move higher in yields
Communication services (XLC, +2.64%) is getting a big lift from both Snap, Inc. (SNAP, +24.95%) and Facebook (FB, +5.92%) after they blew away revenue and EPS estimates
Intel (INTC, -6.33%) is once again a drag on the market, despite beating its EPS estimate handily

Market Outlook

Despite being in one of the worst historical periods of the year, our major indices are attempting breakouts to fresh all-time closing highs. Barring an afternoon reversal, the Dow Jones, S&P 500, and NASDAQ will all close at all-time highs:

The Dow Jones is attempting to join the NASDAQ in a bullish ascending triangle breakout. Meanwhile, the S&P 500, after breaking out and retesting that last breakout level, is looking to close above 4400 for the first time in history.

Sector/Industry Focus

If the Dow Jones breaks out, I'd fully expect to see the Transportation stocks ($TRAN) begin to strengthen. The TRAN has been trending below its 20-day EMA, but it's trying to clear it today. At last check, the TRAN was trading at 14,753.25. The 20-day EMA is currently at 14,753.71. It's so close. The 20-hour EMA is beginning to show much more bullish signs, so I'd look for this 20-day EMA breakout to occur sooner rather than later:

I like the hourly PPO remaining above its zero line and I also like the bullish golden cross, with the 20-hour EMA crossing above the 50-hour SMA. Finally, on its last pullback, that rising 20-hour EMA is holding as support - another bullish development. A close above that 20-day EMA at 14,753 would be the first sign that the short-term hourly bullishness is beginning to evolve into something much more bullish on the daily chart.

ChartLists/Strategies

Earnings have been dominating the action as more and more companies report their latest results. Here are two stocks that Wall Street is LOVING after both beat top and bottom line estimates:

SNAP:

FB:

SNAP was one of the 25 companies that I liked heading into earnings, if you recall from our Q2 Earnings event on Tuesday. While FB wasn't one of the 25, it continues to strengthen vs. its internet peers ($DJUSNS). I've drawn horizontal lines that intersect today's opening prices for both stocks as I believe any pullback will likely hold as these levels in future sessions.

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.

Friday, July 23:

HON, NEE, AXP, ROP, KMB, SLB, RF, GNTX, NEP, AIMC, SXT

Monday, July 26:

TSLA, LMT, KOF, PHG, CDNS, OTIS, AMP, ARE, SUI, LOGI, CHKP, BRO, UHS, HAS, PKG, LII, RPM, FFIV, AGNC, AXTA, MEDP, AMKR, CR, HXL, SSD, AJRD, CALX, HTLF

Economic Reports

None

Happy trading!

Tom