EB Daily Market Report - Monday, July 26, 2021

Tom Bowley - July 26, 2021

ChartLists Updated

I updated several ChartLists over the weekend, including the following:

Upcoming Earnings ChartLists
Strong Earnings ChartList (SECL)
Strong Future Earnings ChartList (SFECL)

You can download them into your StockCharts (or view them) from links provided on our website. If you ever have any questions, feel free to reach out to us at [email protected].

Executive Market Summary

Futures were down slightly as we headed towards a new trading week
The Dow Jones is attempting to tack onto gains from last week and close above 35000 for the second consecutive day
Small caps ($SML, +0.58%) are showing relative strength on the session
Hasbro (HAS, +12.69%) is the best performing S&P 500 company after HAS posted results that far exceeded expectations
Cryptocurrencies have held key support levels and bitcoin ($BTCUSD), which is up 16% today, has climbed from below 30000 to nearly 40000 in one week
Copper ($COPPER, +4.32%) has surged over the past week as well, gaining close to 10% in the past 5 sessions
Leadership today is coming from two beaten-down sectors, energy (XLE, +2.16%) and materials (XLB, +0.83%)
Health care (XLV, -0.73%), one of the strongest sectors in July, is struggling today on a relative basis

Market Outlook

The last time the NASDAQ saw its hourly PPO reach this level and begin to roll over was in late May. It took about a week for a bit of selling to kick in:

One difference this time is that the hourly AD line has continued to push higher and higher. There appears to be some serious accumulation that's taking place in the tech-laden NASDAQ.

Sector/Industry Focus

If we look at another hourly chart, it appears there are key levels that need to be cleared on both the financials (XLF) and industrials (XLI):

The 10-year treasury yield ($TNX) will have something to say about whether we see breakouts on these two charts as well, but I'll definitely be following along to see if the XLF and XLI can forge ahead and clear key resistance. It would certainly benefit the current secular bull market advance.

ChartLists/Strategies

First, I want to correct an error from my Friday DMR. I reported that Facebook (FB) had beaten top and bottom line estimates. FB did gap higher to an all-time high, but it was not due to its earnings report. Earnings are slated to be reported on Wednesday, July 28th after the closing bell. I apologize for any inconvenience.

Next, I ran a scan of all stocks that are on BOTH our Strong Earnings ChartList (SECL) and our Raised Guidance ChartList (RGCL). There are currently 162 companies on both. Trading these companies provides you some comfort in knowing that not only did these companies beat estimates when they last reported results, but they've also raised future guidance. I like to trade companies like these that have pulled back, so I then ran an RSI scan against these companies - RSI < 50. That narrowed the list of 162 down to 60. From there, I reviewed only those companies with SCTR scores > 70 (solid relative strength). Now the list is down to 17. The companies are:

BBW, SIG, LGIH, FNKO, VSTO, CNR, KFY, ARNC, SEM, IRM, PRTY, STX, SPG, ORGO, MOD, LEVI, GPS

I'd like to see KFY break above its 20-day EMA:

I'm expecting to see another run in KFY shares, but it can't run until it clears that downtrending 20-day EMA.

A company reporting earnings after today's close is Logitech (LOGI). It's in the computer hardware space and is a company that I believe could resume its upward trajectory with a better-than-expected report:

I wrote about this one recently in the EB Digest. It's always risky to hold any stock into earnings, but I like the probability here for a gap higher. We'll find out shortly.

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 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

Tuesday, July 27:

AAPL, MSFT, GOOGL, V, UPS, SBUX, RTX, MMM, GE, AMD, SYK, MDLZ, CB, SHW, FISV, BSX, ECL, WM, MSCI, IQV, CNC, CSGP, ROK, GLW, SWK, ADM, EQR, PCAR, SIRI, MXIM, ENPH, TDOC, EXR, DTE, TRU, TER, MPWR, BXP, IEX, PFG, ENTG, NLOK, MASI, PHM, VIV, CHRW, SID, IVZ, PNR, RGEN, TECK, LW, HUBB, QS, MANH, JNPR, PII, EHC, MLCO, BYD, JBLU, TENB, XRX, SSTK, FELE, MTDR, CVLT, NAVI, CAKE, LBRT, AUDC, IMAX

Economic Reports

June new housing starts: 676,000 (actual) vs. 800,000 (estimate)

Happy trading!

Tom