EB Daily Market Report - Thursday, July 29, 2021

Tom Bowley - July 29, 2021

Reminder

You can always go to our website and pull up the current Daily Market Report if you haven't received the DMR via email by 3:00 or 3:30pm ET. Yesterday, I sent the DMR out just before 2pm ET, but for whatever reason, it wasn't delivered to many of you until well after the 4pm ET close. Again, if you haven't received the DMR by 3:30pm ET, consider logging in and getting the DMR directly from our website. I apologize for yesterday's late delivery, but some things are out of our control. Thanks!

Trading Places Blog

I just published a new article in my StockCharts.com blog, featuring breakouts in AMD and ALGN. If you'd like to read that article, CLICK HERE.

Executive Market Summary

Futures were higher today, despite high profile after-hours selloffs in Facebook (FB), PayPal (PYPL), and Lam Research (LRCX)
Communication services (XLC, -0.80%) and technology (XLK, +0.58%) are suffering the consequences, but there's been nothing damaging technically
Meanwhile, financials (XLF, +1.51%) have returned to a leadership role, something the group hasn't seen much in the past several weeks
Small caps ($SML, +1.63%) and mid cap ($MID, +1.52%) stocks are leading on a relative basis today
3 relatively weak economic reports, especially the first Q2 GDP report, came in below expectations today, supporting the notion of low interest rates in a solid growth period
The 10-year treasury yield ($TNX) is flat at 1.26%
Commodities are mostly higher, especially crude oil ($WTIC), which is jumping 1.4% to more than $73 per barrel
Align Technology (ALGN, +7.83%) is the best performing S&P 500 stock after delivering excellent quarterly results that surpassed estimates - and raising guidance

Market Outlook

The large cap growth stocks have not disappointed during this earnings season. Outside of Netflix (NFLX), most quarterly reports have been very bullish - not only in terms of beating revenue and EPS expectations, but also raising guidance. After the close today, we'll get another one of those critical quarterly reports as Amazon.com (AMZN) reports its latest results. It's hard to imagine that results will disappoint, especially with AMZN's recent price breakout ahead of its earnings report:

The following stocks represent roughly 25% of the S&P 500 and you can see they've mostly performed well the past month as we've headed into this earnings season:

Clearly, NFLX has been a laggard, along with NVDA and TSLA. TSLA, however, is having a very strong day today and NVDA has been consolidating after one of the strongest runs in technology names just prior to this past month. As long as the majority of the above companies remain technically strong, we'll remain firmly in this secular bull market advance.

Sector/Industry Focus

Any time I think "bull market", I think semiconductors ($DJUSSC). This group typically sees its profits increase significantly during periods of economic strength and that's exactly the type of period we're in now. Advanced Micro Devices (AMD, +5.49%) has soared the past two days after reporting stellar quarterly results and is starting to perform as a relative strength leader once again. Note also that the DJUSSC is turning higher with an already new high on its AD line:

The recent selling and consolidation also helped the daily PPO reset back close to centerline support. So as we move higher, the PPO is just beginning to show bullish momentum, another positive.

ChartLists/Strategies

I reviewed the Strong Earnings ChartList (SECL) today, looking for stocks that I haven't mentioned before. I wasn't scanning for anything in particular, just reviewing charts and eyeing anything that looked interesting from a technical perspective. Here are 3 charts that caught my eye:

CLPT:

Medical equipment stocks ($DJUSAM) have been showing much more strength since early June and if the group can clear its relative high from April, it'll really add much more bullishness to the group. In the meantime, CLPT was a major relative strength leader in this space when it set its high back in February. It seems to be carving out a bottom and we could be seeing the early stages of another rally, especially if we can confirm the highest close in 3 months at today's close. CLPT's earnings are due out on August 11th, so a pre-earnings advance is a definite possibility here.

ON:

ON's AD line has remained quite strong as it's been consolidating. Like CLPT, it was a recent leader among its peers until it began consolidating. But are we breaking out of a bullish wedge today? Earnings will be released on Monday morning before the open, so if you decide to take a position, just realize that earnings are coming up very fast.

BOOT:

If there's a negative on this chart, I'd love to know what it is. BOOT has been a relative leader for many months and it's breaking out again today ahead of next week's earnings report (Wednesday after the market closes). I feel exceptionally confident that BOOT will blow out earnings expectations. Will we see a "sell on news"? It's possible, but would simply result in a better buying opportunity.

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.

Thursday, July 29:

AMZN, MA, CMCSA, MRK, TMUS, RDS/A, AZN, BUD, SNY, AMT, TTE, SPGI, MO, GILD, TWLO, ICE, EW, SO, NOC, VRTX, KDP, KLAC, PINS, TRP, LYG, CARR, FTNT, DXCM, DLR, BAX, RSG, HSY, YUM, XEL, WELL, STM, TEAM, HLT, MTD, MT, NOK, SWKS, CBRE, ES, AJG, WST, LH, VLO, SGEN, FTV, IP, MLM, ESS, AVTR, EIX, FTS, BIO, TW, NVCR, TFX, CMS, ZEN, ARES, PCG, CG, CVE, CLVT, WAB, ARGX, LKQ, TXT, MAS, CPT, CTXS, HBAN, MHK, MPW, QGEN, DECK, AOS, LPLA, GLPI, TAP, MMP, PFPT, DLB, WEX, NLSN, FSLR, TPX, UPWK, TXRH, MSTR, X, CFX, POWI, ADS, WRI, MTSI, AUY, MMSI, OSTK, SWN, TEX, TMHC, WERN, SBH, VCYT, OPK, EHTH, VCRA, NXGN, BJRI, MTLS

Friday, July 30:

PG, XOM, ABBV, CVX, LIN, CHTR, CAT, ENB, ITW, CL, IDXX, AON, JCI, LYB, VFC, CHT, WY, CERN, GWW, CNHI, CHD, QSR, IMO, WPC, CBOE, BAH, NWL, HRC, CPRI, COG, HUN, LAZ, DAN, BLMN

Economic Reports

Q2 GDP (1st estimate): 6.5% (actual) vs. 8.0% (estimate)

Initial jobless claims: 400,000 (actual) vs. 390,000 (estimate)

June pending home sales: -1.9% (actual) vs. -0.8% (estimate)

Happy trading!

Tom