EB Daily Market Report - Monday, March 28, 2022
Executive Market Summary
- Futures were mostly lower overnight, but improved into the opening bell
- Our major indices did move negative in the morning session, but has bounced back nicely
- Crude oil prices ($WTIC, -7.16%) have dropped more than $8 per barrel and are back beneath $106
- Meanwhile, gold ($GOLD, -1.29%) has tumbled $25 per ounce and currently trades at $1928
- The 10-year treasury yield ($TNX) is down 2 basis points, but has rallied 6 basis points off the morning low
- Consumer discretionary (XLY, +2.32%) is leading today's advance as autos rally ($DJUSAU, +7.09%)
- Tesla (TSLA, +8.23%) announced plans to split its stock again, though it first will seek board approval to increase its authorized number of shares; it's the top performing S&P 500 company today
- Weakness is mostly seen in energy (XLE, -2.68%) and materials (XLB, -0.87%) as the dollar (UUP, +0.28%) rises to challenge its early-March high
Market Outlook
U.S. equities are continuing their bullish afternoon habit. Over the past two weeks, we've seen our key indices mostly finish at or near their daily highs. That's what's been driving the AD lines (accumulation/distibution lines) to new highs. Today is no exception. Barring a final hour selloff, it appears as if we'll once again close strongly. Many times, tops form when we see long tails to the upside, particularly when a false intraday breakout above key resistance is involved. A "long tail" means intraday highs that rocket past former price resistance, only to see that breakout fail in the afternoon as prices gravitate back towards the low of the day. That's one "sign" that a top could be at hand, so keep this in mind as we approach major intermediate-term price resistance on the S&P 500 near 4600:
The NASDAQ Composite is shown in the bottom panel with its key highs and lows illustrated as well. If the S&P 500 and NASDAQ can both negotiate this intermediate-term price resistance, I will make the call that the bottom is in. If we see a "long tail" above these resistance levels and failures in the afternoon, it could very well be the start of another leg lower. That's why seeing how the market reacts at these levels is so important.
Sector/Industry Focus
Bitcoin ($BTCUSD) is making a significant breakout above key price resistance today. It's now up year-to-date in 2022 and technically appears poised for further gains ahead:
While the short-term breakout is quite clear, what's not clear is whether you want to be in bitcoin vs. ethereum ($ETHUSD). Bitcoin appears to be losing relative momentum vs. etherium as the trendline break above would suggest.
ChartLists/Strategies
Lowes Companies (LOW) is one of our Strong Earnings ChartList (SECL) stocks that has not been soaring. It is, however, testing a major price support level and attempting to print a hammer:
Home improvement stocks have been weak, but LOW remains a relative leader in the group. So considering entry in a leading stock at critical price support is typically a wise reward-to-risk move. We'll see how this one pans out.
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, March 28:
XPEV, TPG, JEF, SAIC, PLAY
Tuesday, March 29:
MU, LULU, MKC, CHWY, CNXC, ESLT, RH, PVH, VRNT, ASO, CALM, PRGS
Economic Reports
None
Happy trading!
Tom