EB Daily Market Report - Thursday, November 18, 2021
Today's Top 10 Stocks "Draft" Event
Later tonight at 7:30pm ET, I'll be hosting our Portfolio "Draft", where I'll unveil the 10 equal-weighted stocks that we'll include in our 4 portfolios for the next three months. Current portfolio stocks will remain through Friday's close, at which point our latest draft stocks will replace those prior portfolios stocks. The NEW portfolio stocks will be "purchased" as of Friday's closing price. The room will open at 7:00pm ET and we'll be sure to send you a link later today.
If you can't make tonight's event, no need to worry. As always, we'll record the event and make the recording available to all members to view at your leisure. But I hope to see you later tonight!
Executive Market Summary
- Futures were slightly higher overnight and our major indices did gap higher at the open
- After initial weakness carried these key indices into negative territory, another bid has surfaced and we're mostly higher, especially on the NASDAQ, which is leading on a relative basis
- Growth (IWF) is trouncing value (IWD), a clear signal that Wall Street doesn't care a bit about all the inflation rhetoric
- The 10-year treasury yield ($TNX) is down 2 basis points, despite a very strong Philadelphia Fed Manufacturing Index number this morning
- Cryptocurrencies are under significant selling pressure again, with bitcoin ($BTCUSD) and etherium ($ETHUSD) both lower by 5-6%
- Commodities are mixed, but leaning to the downside; crude oil ($WTIC, +0.36%) is slightly higher
- Consumer discretionary (XLY, +1.22%) and technology (XLK, +0.72%) are the only two sectors showing considerable strength
- Meanwhile, consumer staples (XLP, -0.61%) and utilities (XLU, -0.56%) - two defensive groups - are lagging
- Macy's (M, +22.00%) and NVIDIA (NVDA, +10.37%) are big winners today after blowing away earnings estimates
Market Outlook
I know we still have short-term issues to negotiate, but the overwhelming signal that Wall Street sends us every day is a bullish one. We are seeing another melt up in growth stocks vs. value stocks (IWF:IWD). The EXACT OPPOSITE would be true if we were staring at a higher inflationary environment in 2022. It completely confounds me that media outlets like CNBC harp on inflation worries, when big money is literally tossing the notion of higher inflation to the side. It's a complete disservice to individuals that believe CNBC is actually providing substance.
Please listen to the money, not the perpetrators of mistruths (I'm being nice right now). THIS is what the money is saying:
Hang this on your wall. Maybe I should have it posted on billboards. Tell everyone about it at your holiday parties. Let's start spreading TRUTH. You can't cover up where the money is going. The only part of this chart that has ANY bearish characteristics is the recent drop in the copper vs. gold ratio ($COPPER:$GOLD) and I'd expect to see this turn back higher very soon.
Sector/Industry Focus
Real estate (XLRE) would really like to join this BULLFEST. It's been trading in a very lengthy handle between 47.50-48.50 after printing a bullish cup with handle continuation pattern. Check it out:
I believe real estate will break out and it will likely even show some relative strength as well. I don't believe it'll be the best performing sector, but a breakout could trigger of period of excellent strength. Bull markets are made up of rotating breakouts and wide participation and I'm seeing no signs of this changing any time soon.
ChartLists/Strategies
There's so much risk in trading right now. Please be sure to keep stops in play on any long or short trades. I'm remaining mostly in cash and just watching for now, but even with a number of signals suggesting we could see short-term weakness, the market's resiliency is obvious. Bull markets take advantage of non-believers, which is why you rarely see me with a bearish view. Even now, I don't consider myself bearish at all. I'm actually just a realist that sees this bull market for what it is. There are very short-term periods when we need to be vigilant in taking profits and potentially raising cash and I believe now is one of those times. Still, I would not be shocked at all if our major indices simply push higher and set new all-time record highs. It's in the DNA of a secular bull market.
But for short-term reasons, I'm going to pass right now on specific trading candidates. Don't worry, I'll be back! :-)
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, November 18:
BABA, INTU, AMAT, JD, PANW, ROST, NUAN, FTCH, WSM, GLOB, M, BERY, VIPS, KSS, BJ, WOOF, ATHM, BECN, CSIQ, PLCE, CAL
Friday, November 19:
FL, BKE
Economic Reports
Initial jobless claims: 268,000 (actual) vs. 269,000 (estimate)
November Philadelphia Fed Manufacturing Index: 39.0 (actual) vs. 21.4 (estimate)
October leading indicators: +0.9% (actual) vs. +0.8% (estimate)
Happy trading!
Tom