EB Daily Market Report - Friday, October 15, 2021
ChartFest 2021
I'm excited for our very first ChartFest tomorrow morning at 11:00am ET. Dave Keller and Grayson Roze, both from StockCharts.com, will be joining me as we discuss our routines and ways to leverage the robust StockCharts.com platform. If you like looking at LOTS of charts, this is the event for you! There is no charge for this event either, and we'll have free giveaways, although EarningsBeats.com giveaways will revolve around our ChartLists, which you already have access to. I might throw in a surprise though. :-)
Here is the room link (the room will likely open around 10:00am ET, an hour before the event starts):
https://earningsbeats.zoom.us/j/84883024835
I hope to see you there! If you can't make it or can't stay for the entire event, no worries. We record all of our events, so we'll make sure you receive a copy of the recording.
ChartList Update
I've updated the Short Squeeze ChartList (SSCL) and it will be available on our website later this afternoon for your viewing/downloading pleasure. In order to download ChartLists, however, you must be an Extra or Pro member at StockCharts.com.
Executive Market Summary
- Futures were strong and our major indices all gapped higher
- The 10-year treasury yield ($TNX) has been rising throughout the session and is up 5 basis points to 1.57%
- Rising yields have resulted in a bit of rotation towards value stocks today, though most stocks are higher
- 8 of 11 sectors are higher, with utilities (XLU, -0.27%) and communication services (XLC, -0.27%) lagging
- Consumer discretionary (XLY, +1.28%) is leading on the heels of a stronger-than-expected September retail sales report
- Financials (XLF, +1.18%) are performing well, given the rise in the TNX
- Meanwhile, crude oil ($WTIC, +1.09%) has moved above $82 per barrel, leading to a strong energy sector (XLE, +1.07%) as well
- Goldman Sachs (GS, +2.80%) blew away EPS estimates, $14.93 vs. $9.78, as investment services ($DJUSSB, +1.94%) are higher
Market Outlook
Consumer discretionary (XLY) is ripping to a new all-time price high as its relative strength continues to improve. This area looks very strong to me as more and more industry groups begin to aid the entire group. The retail sales report this morning won't hurt at all. We've seen the stock market struggle since early September, but one of the "under the surface" messages taking place is that money is rotating to consumer discretionary and has been throughout the past month and a half. Check out this hourly relative performance of the XLY:
Not to sound overly geeky, but relative strength is so cool. The XLY has been doing very little from an absolute price standpoint, going mostly sideways. But can you argue with relative strength? Wall Street is selling other areas and buying consumer discretionary. There's no other argument here. When Wall Street is moving its resources into an area, I generally do as well. Or at least I try to find opportunities there.
Sector/Industry Focus
Retail sales were much stronger than expected in September, but the widely-diversified retail ETF (XRT) has been consolidating for nearly all of 2021. Will this report today finally jumpstart this area of discretionary? I'm hoping so, because if I'm looking for the XLY to lead, it generally does so when retail is performing well. Here's a chart to visualize this:
There's not always positive correlation, but you can see that retail performance has a big part in the relative performance of discretionary stocks. When retail is hot, consumer discretionary typically gets on a roll. Roughly 2/3 of GDP comes from consumer spending, so the performance of retail stocks matters. An eventual break above 200 on the XRT would really add to the bullishness of the XLY.
ChartLists/Strategies
Here are two favorite retailers of mine based on looking at the charts. They both come, by the way, from our Raised Guidance ChartList (RGCL):
EYE:
I like today's breakout, but I'd like to see volume pick up this afternoon. Also, a long tail to the upside with a big reversal down by the close today could signal a trip back down to the 20-day EMA. I'd be a buyer there.
M:
M has been performing exceptionally well, despite being part of a beaten-down broadline retail group ($DJUSRB). It's a clear leader though, so if retail begins moving higher, I see further gains ahead here. M is also part of our Aggressive Portfolio, so it's obviously a favorite of ours.
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, October 15:
SCHW, GS, PLD, PNC, TFC, JBHT, SXT, BMI
Monday, October 18:
STT, ELS, ACI, STLD, PACW, HXL, FNB
Economic Reports
September retail sales: +0.7% (actual) vs. -0.1% (estimate)
September retail sales less autos: +0.8% (actual) vs. +0.4% (estimate)
October empire manufacturing index: 19.8 (actual) vs. 25.0 (estimate)
October consumer sentiment: 71.4 (actual) vs. 74.0 (estimate)
Happy trading!
Tom