EB Daily Market Report - Thursday, August 25, 2022
Executive Market Summary
- Futures were higher overnight and our major indices gapped up at the opening bell
- Strength has continued throughout the day and our intraday high eclipsed yesterday's intraday high after 6 consecutive days of lower highs
- The reversal led me to run the downtrend reversal scan against our Strong Earnings ChartList (SECL) - described further below
- Most commodities are higher, though crude oil ($WTIC, -1.77%) is seeing some profit taking
- The 10-year treasury yield ($TNX) has fallen 7 basis points to 3.04%, helping to lift U.S. equities
- Materials (XLB, +1.67%) is leading all 11 sectors higher, with relative weakness shown in consumer staples (XLP, +0.13%) and utilities (XLU, +0.40%), two defensive sectors
- Semiconductors ($DJUSSC, +2.77%) are having a strong day considering that a key component, NVIDIA Corp (NVDA, +2.69%) reported a 5 cent earnings miss
- Tesla (TSLA, -1.30%) is lagging after its 3 for 1 stock split
Market Outlook
Let's quickly look at the S&P 500, along with our key sustainability ratios:
The hour-to-hour and even day-to-day analysis of these ratios can drive you crazy, because they don't follow the S&P 500 every single hour or day. I like to take a step back and look at the bigger picture and just see if these ratios are following the benchmark S&P 500 directionally. I am perfectly fine with how they're behaving, adding to my confidence that we're going to keep climbing higher.
Sector/Industry Focus
Just a quick follow up to yesterday's semiconductor ($DJUSSC) comments as the group is leading the charge higher today:
When I see a positive divergence, my minimum expected target is the 50-day SMA, which we quickly hit here. The DJUSSC shows its PPO now back slightly above its zero line AND price action is trying to clear the 50-day SMA. Should we see both, this is a group that could run higher very quickly.
ChartLists/Strategies
I ran a scan looking for stocks that had been downtrending, but are showing signs of a possible reversal. Here is the scan syntax I used:
There were 42 results, so I sorted the results in SCTR order and here were the Top 15:
Here are two I like:
TKR:
64-65 seems to be solid support and TKR bounced right off of it.
XYL:
I'd want to make sure 95 support holds, but the reversal here could lead to a quick gain back near its recent price high.
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 several 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, August 25:
TD, DG, VMW, CM, MRVL, WDAY, DLTR, DELL, ULTA, GRAB, BURL, AFRM, ESTC, XRAY, COTY, GPS, PTON, HAIN, MBUU, ANF
Friday, August 26:
JKS
Economic Reports
Initial jobless claims: 243,000 (actual) vs. 245,000 (estimate)
Q2 GDP (2nd estimate): -0.6% (actual) vs. -0.9% (estimate)
Happy trading!
Tom