EB Daily Market Report - January 10, 2022

Tom Bowley - January 10, 2022

Fall Special - Revisited!

On Saturday, we hosted Market Vision 2022 and it was a GREAT event! All EB.com members were invited and have access to the recording. Once logged in to EB.com, you can access the event recording on our Webinars page, which can be accessed HERE.

In connection with this event, many new members came on board. We decided to bring back the Fall Special to significantly lower the cost of membership for both new members and all of our existing members. Those members whose accounts will expire any time in 2022 should consider extending with this special. Also, $147 monthly members can significantly lower their average monthly cost (by more than 50%) by taking us up on this offer. Finally, 30-day free trial subscribers can extend using this Fall Special and will not lose any unused time on your free trial! For instance, if you signed up last week for our MV 2022 event and like our service and approach, now is the time to lock in. Whatever plan/extension you choose, your extension will be added to the end of your trial period.

CLICK HERE for more information on this Fall Special and your various options to renew! You'll need to hurry though as this deal will expire at midnight tonight!

Executive Market Summary

Futures were falling overnight and our major indices gapped lower
Currently, the NASDAQ is the weakest index
Growth stocks continue to be major underperformers vs. value stocks, but we are seeing a bounce in the past 30-40 minutes
Surprisingly, today's stock weakness and rising volatility ($VIX, +16.52%) have not resulted in strength in gold ($GOLD, -0.07%), which is fractionally lower
The 10-year treasury yield ($TNX) is up 2 basis points to 1.79% after approaching 1.81% earlier
The aggressive sectors - communication services (XLC, -2.08%), consumer discretionary (XLY, -2.06%), and technology (XLK, -1.88%) - are the primary laggards
Health care (XLV, -0.25%) is the only sector even close to breakeven on the session
Crude oil ($WTIC, -0.32%) is fractionally lower, threatening to end energy's (XLE) short-term uptrend
Internet stocks ($DJUSNS, -2.13%) are definitively breaking below triple bottom support from July, September, and December, aiding the decline in the XLC

Market Outlook

Now that the selling has begun and a downtrend is underway, it's time to look for where we might see potential rallies fizzle. I believe the onslaught of selling has everything to do with this Wednesday's December CPI report. We could be experiencing the "sell on rumor". Very aggressive traders might consider a possible "buy on news" on Wednesday. For now, the selling momentum is strong so the hourly chart is not flashing any positive divergence. That tells me that rapidly-declining 20-hour EMAs are likely to provide significant overhead resistance on rally attempts. Here's how it looks visually:

Sector/Industry Focus

Semiconductors ($DJUSSC) likely hold the key for the NASDAQ near-term, and quite possibly the entire market. This is an area of rapidly-growing companies that could be hurt significantly by a further spike in inflation. I'd expect a breakdown in this group to really spook the market, so one question is......can we hold the gap support zone shown below:

We're bouncing this morning off the top of gap support, but the day is young. And again, with the December CPI report due out on Wednesday, will buyers go aggressively long ahead of that report? I wouldn't think so, but the market can be quite unpredictable at times.

ChartLists/Strategies

Volatility ($VIX) is surging today with the early weakness and that makes trading incredibly risky in the near-term on both the long and short sides. As the VIX rises, I tend to climb into my trading shell much like you'd hunker down for a tornado warning. As a result, I'm going to pass on potential trading candidates for today.

Let's see if sellers completely engulf the market later today or if buyers are able to "weather" this initial storm. Many traders LOVE this crazy volatility. I honestly cannot stand it. I find that I make emotional trades all day long, and that typically results in losses. I'd rather keep my capital intact. Just my preference.

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.

Monday, January 10:

CMC, TLRY, ACCD, AZZ

Tuesday, January 11:

ACI, SNX

Economic Reports

None

Happy trading!

Tom