EB Daily Market Report - Thursday, April 7, 2022

Executive Market Summary

• Futures were relatively flat as we opened this morning
• After a very difficult morning session, especially on the NASDAQ, we've seen a significant rally - very good action from a bullish perspective
• Both growth (IWF, +0.78%) and value (IWD, +0.64%) are performing quite well today
• One negative is that the discretionary sector (XLY, +0.92%) still trails staples (XLP, +1.29%)
• Commodities are mostly higher today; natural gas ($NATGAS, +5.72%) is soaring
• Defensive sectors are leading today's turnaround, which is a problem the market has dealt with throughout 2022
• Health care (XLV, +2.07%) is the best-performing sector and all of its industry groups are performing well

Market Outlook

I still see a number of possibilities for the summer direction of U.S. equities and action this week isn't making things any clearer. I do like the fact that afternoons are showing strength. That typically leads to improving AD lines and with this bullish inverse head & shoulders pattern in play, the bulls do have some hope here:

A breakout above the neckline resistance and a move on the weekly PPO back above the zero line makes this chart look much more bullish, in my opinion. The black arrows mark the two shoulders with an up sloping right shoulder making this pattern more bullish if the breakout occurs.

Sector/Industry Focus

Transportation stocks ($TRAN) have had extreme difficulty finding support over the past week - at least on its daily chart. It's been somewhat of a free fall. On a weekly chart, however, I believe it's rather clear:

The reward to risk on transportation stocks continues to improve with every tick lower towards this key price support.

ChartLists/Strategies

I featured McCormick & Co (MKC) a couple weeks ago and provided a target of 104. These consumer staples stocks don't usually move very fast, but MKC has reached key price resistance and a short-term price target:

From a trading perspective, it's time to take profits. If it breaks out, we can always re-enter on any pullback to support.

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, April 7:

STZ, CAG, LW, WDFC, APOG

Friday, April 8:

None

Economic Reports

Initial jobless claims: 166,000 (actual) vs. 202,000 (estimate)

Happy trading!

Tom