EB Daily Market Report - Friday, October 29, 2021

ChartLists Updated

I have updated our Strong Earnings ChartList (SECL) through Wednesday's earnings reports. I updated the Strong Future Earnings ChartList (SFECL) as of the same date. I also updated the Short Squeeze ChartList (SSCL) for the end of October to give you the latest short % of float information. We will try to have these ChartLists updated on our website this afternoon, but we'll get them updated over the weekend at the latest.

I'm also in process of updating the Raised Guidance ChartList (RGCL) and the Strong AD ChartList (SADCL) as well. I hope to have these two completed over the weekend.

Executive Market Summary

• Futures were weak overnight after two major NASDAQ names saw poor reactions to their quarterly results
• Amazon.com (AMZN, -3.01%) missed its revenue and EPS estimates and lowered guidance, citing supply chain issues
• Apple, Inc. (AAPL, -2.30%) missed its revenue estimate, and simply matched its EPS consensus estimate
• After early selling, treasuries saw buying throughout the day and the 10-year treasury yield ($TNX) dropped a basis point to 1.56%
• Health care (XLV, +0.73%) showed leadership today, while real estate (XLRE, -1.14%) was the primary laggard, though it had competition
• 8 of the 11 sectors lost ground as of the time of this writing
• Technology (XLK, +0.12%) is the second best sector today, surprising given that AAPL's earnings didn't impress; however, both renewable energy ($DWCREE, +1.95%) and software ($DJUSSW, +1.16%) are higher

Market Outlook

Etherium ($ETHUSD) has been outperforming bitcoin ($BTCUSD) of late, but it all seems to be part of a relative continuation pattern - a symmetrical triangle. This is a very bullish development for etherium and will likely result in higher prices down the road. Here's how etherium currently stacks up against the more widely-known bitcoin:

This is a fairly wide triangle, so anything can happen short-term, but etherium certainly appears to have the better momentum right now. But before etherium can show additional relative strength, it has an absolute price resistance level to negotiate first:

It's a bit premature to assume that etherium will bust right through this price resistance level, but if it does, I'd look for it to widen its recent relative strength over bitcoin.

Sector/Industry Focus

Health care (XLV) is showing leadership today, but it may be short-lived if the rest of a bullish inverse head & shoulders continuation pattern forms. Here's what that might look like:

In a secular bull market, I look for continuation patterns to form after extended uptrends. An inverse right shoulder followed by a break above a neckline would constitute such a pattern.

ChartLists/Strategies

I've updated the Short Squeeze ChartList (SSCL) and there are 9 stocks that now have daily PPOs > 2.0. I wouldn't look at any short squeeze trade candidates with PPOs in negative territory, so I believe this is an indication that we might see several short squeezes during November. The 9 stocks with PPOs > 2.0 are:

• SPWR
• OCGN
• GOGO
• FUBO
• MSTR
• AGC
• ICPT
• SKLZ
• MQ

These are ranked in SCTR order. I mentioned OCGN a few days ago and we immediately saw a violent selloff before it climbed back to the level where it was at. I still view this as a viable short squeeze candidate, but the volatility can be extreme at times, so make sure you're comfortable with the significantly higher risk associated with trading these types of stocks. I'd certainly consider trading smaller-than-normal position sizes in order to help mitigate some of this risk.

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 29:

XOM, CVX, ABBI, CHTR, AON, PBR, CL, LHX, PSX, LYB, WY, IMO, GWW, RCL, CERN, FTS, CHD, WPC, CBOE, SJR, BAH, CCJ, NWL, HUN, LAZ, CRI, COWN

Monday, November 1:

PSA, NXPI, SPG, NTR, SBAC, WMB, MCK, ANET, O, PCG, ZI, CLX, FANG, ON, HOLX, MOS, BEN, CNA, BRKR, WTRG, CAR, NBIX, CHGG, VNO, VRNS, AMG, LEG, NSP, CRUS, FN, KMT, RMBS, RIG, SKT, HLIT

Economic Reports

September personal income: -1.0% (actual) vs. -0.1% (estimate)

September personal spending: +0.6% (actual) vs. +0.5% (estimate)

October Chicago PMI: 68.4 (actual) vs. 64.2 (estimate)

October consumer sentiment: 71.7 (actual) vs. 71.4 (estimate)

Happy trading!

Tom