EB Daily Market Report - Thursday, December 24, 2021
Upcoming Schedule
Just a couple thoughts and reminders as we move into the holiday season. First, thanks to all of you for making this the best year ever for EarningsBeats.com. We certainly couldn't have enjoyed this year without the support of all of our members, so THANK YOU!
The stock market will be closed tomorrow, December 24th, in observance of Christmas Day, which falls on Saturday this year. I previously mentioned that the stock market would be closed next Friday (New Years Eve) as well, but that was INCORRECT. The stock market will be open that day. We'd also like to wish all of you much happiness throughout this holiday season. Please be safe as we move into yet another year - 2022 will be our best year yet!
We will be hosting our 3rd annual market forecasting event, MarketVision 2022, on Saturday, January 8, 2022. We should have more information for you over the next few days, so be on the lookout for that. David Keller, Grayson Roze, and Bill Shelby - all from StockCharts.com - will be joining me for a day of market analysis and predictions for the year ahead. Want the best news yet? It will be a FREE event for ALL EarningsBeats.com members. Feel free to pass that along to friends and family members. A free 30-day trial subscription is all it will take to claim a seat to the event!
Finally, our schedule during the holidays will be cut back significantly. We will monitor our customer service email periodically throughout next week, but we may not be as prompt as usual with responses. There will be no Trading Places LIVE shows from Monday through Thursday of next week. I'll likely publish a few articles throughout the holidays at StockCharts.com and also will likely send out one Daily Market Report to our members. I might send two, but no promises there as I'll be traveling quite a bit. I will, however, be watching the market action closely and will report anything that I see of significance.
Again, thanks for your support, be safe, and let's ring in a Happy New Year!
Executive Market Summary
- Futures were strong overnight and our major indices gapped higher at the open
- There's been consistent buying throughout the session with relative strength in NASDAQ shares
- Cryptocurrencies are enjoying another solid day; bitcoin ($BTCUSD, +5.41%) has surged in the last few hours and is up more than 10% this week
- Commodities are having another solid day, with crude oil ($WTIC, +1.42%) nearing $74 per barrel, its highest level since the huge selloff on November 26th
- Consumer discretionary (XLY, +1.44%) is leading today's advance, once again being propelled higher by automobiles ($DJUSAU, +4.24%)
- Tesla (TSLA, +5.16%), for the second day in a row, is the leading S&P 500 stock
- The 10-year treasury yield ($TNX) is up 3 basis points to 1.49%, but that hasn't led to outperformance in financials (XLF, +0.74%), which is up roughly the same as the S&P 500
- Please check out the Market Outlook section below - sometimes market performance isn't what it seems; there are dangers ahead, in my opinion, as this rally doesn't appear sustainable
Market Outlook
Barring a final hour collapse, it appears as though the S&P 500 will set a new all-time high close today:
The PPO was very stretched in November at a prior S&P 500 high, but the recent consolidation has enabled the PPO to fall back and test centerline support. Therefore, this breakout appears to have legs to the upside, given the now-accelerating price momentum.
NOW THE BAD NEWS:
The S&P 500 has rallied back to new highs - with little to no support from our 5 aggressive groups. That is a big red flag for me and it's a reason to be sure to take profits along the way. I would not look at this rally and think "I better put all my capital to work".
I remain EXTREMELY bullish the long-term, but the short- to intermediate-term is looking very risky. When Wall Street begins to position itself in more defensive areas, I take notice. So while this rally may feel really good right now, don't be shocked if things change next week or into the new year. I'll talk much more about my feelings about how 2022 is likely to play out at MarketVision 2022 on Saturday, January 8th, but I'm growing more concerned short-term.
If you're trading, be careful. Consider either building more cash on this rally, or at the very least, make sure you keep trailing stops in play.
I would continue to watch this chart closely. If the S&P 500 continues rising and aggressive sectors are not leading the charge, then I would maintain my very cautious approach. If aggressive sectors begin outperforming during a continuing advance in the S&P 500, then we'll have a different story. But right now, be very careful.
Sector/Industry Focus
Commodities have seen a nice surge lately as the uptrend in the U.S. Dollar (UUP) has been followed up by consolidation in the form of a possible symmetrical triangle:
The direction of the dollar will heavily influence the performance of materials (XLB) and energy (XLE). History tells us this, so if you're trading stocks in the materials and energy spaces, just be sure to keep a close eye on the UUP. If the UUP were to fall to a new 1-month low, eclipsing the late-November low, I'd certainly expect that environment to set up nicely for materials and energy trades.
ChartLists/Strategies
I don't like the "under the surface" signals associated with this current advance, so I don't feel compelled to trade right now. I'm using the current market strength to begin to wind down my short-term long positions. Accordingly, I'm not going to feature potential trade candidates today.
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, December 23:
None
Friday, December 24:
None - Market closed in observance of Christmas Day
Monday, December 27:
None
Economic Reports
Initial jobless claims: 205,000 (actual) vs. 205,000 (estimate)
November durable goods: +2.5% (actual) vs. +1.5% (estimate)
November durable goods ex-transports: +0.8% (actual) vs. +0.6% (estimate)
November personal income: +0.4% (actual) vs. +0.5% (estimate)
November personal spending: +0.6% (actual) vs. +0.6% (estimate)
November new home sales: 744,000 (actual) vs. 770,000 (estimate)
December consumer sentiment: 70.6 (actual) vs. 70.4 (estimate)
Happy trading!
Tom