EB Daily Market Report - Thursday, September 15, 2022
Executive Market Summary
- Futures were close to the flat line overnight, though the NASDAQ did show a bit of relative weakness
- Tons of economic data was released this morning, some good, some bad - you can check out the numbers below
- The key August retail sales number came in a bit higher than expected, but after stripping out autos, it was lower than expected - a mixed bag
- Options expire tomorrow, and whipsaw action can occur at ANY time because of it
- Etherium ($ETHUSD, -5.92%) is leading cryptocurrencies lower, but it's clearly the hardest hit today
- Gold ($GOLD, -2.23%) is tumbling, as our most commodities; crude oil ($WTIC, -3.74%) is back to $85 per barrel
- Health care (XLV, +0.61%) and financials (XLF, +0.60%) are the only two sectors showing strength
- Energy (XLE, -2.44%) and technology (XLK, -2.24%) are the worst-performing sectors, though utilities (XLU, -2.12%) isn't far behind
- Wynn Resorts (WYNN, +8.07%) was upgraded earlier and is the leading S&P 500 stock
Market Outlook
I believe 3900 support on the S&P 500 is a big deal. To keep things very simple in the near-term, I REALLY want to see the S&P 500 CLOSE today above 3900. I would be very cautious with any close beneath 3900, despite it being options-expiration week. Here's the hourly chart, highlighting the recent price support here:
Personally, I was stopped out on my QLD when the QQQ lost its recent support near 293. I will likely get back into the QLD if the QQQ closes back above 293.11. Otherwise, I'll sit it out for now, taking my loss.
Sector/Industry Focus
The other key for me is the 10-year treasury yield ($TNX). If we see a breakout above 3.48%, it's likely to spell short-term trouble for U.S. equities. That's been the formula all year, so until I see something different, I will continue to expect short-term market weakness from rising yields. Here's that chart:
As of right now, those are the two biggest numbers for me. S&P 500 price support at 3900 and 10-year treasury yield ($TNX) resistance at 3.48%. Do they hold?
ChartLists/Strategies
The key to whether to be long or not, in my opinion, falls squarely on how we trade later this afternoon. A strong finish could put another exclamation point on key price support, namely 3900 on the S&P 500. Failure to hold this support, however, changes the dynamics of the short-term trading landscape. I would grow MUCH more cautious near-term, if that support fails to hold.
As far as my trades, I took profits this morning in BBBY when it was at 9.15. Otherwise, I sold at a loss on my other max-pain-related trades when the QQQ lost support. If we reverse later today, I may re-enter these trades. I just don't want to turn fairly small losses into big losses.
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, September 15:
ADBE, XRAY
Friday, September 16:
None
Economic Reports
Initial jobless claims: 213,000 (actual) vs. 228,000 (estimate)
August retail sales: +0.3% (actual) vs. +0.0% (estimate)
August retail sales less autos: -0.3% (actual) vs. +0.0% (estimate)
September Philadelphia Fed manufacturing index: -9.9 (actual) vs. 3.1 (estimate)
September empire state manufacturing index: -1.5 (actual) vs. -12.8 (estimate)
August industrial production: -0.2% (actual) vs. +0.2% (estimate)
August capacity utilization: 80.0% (actual) vs. 80.3% (estimate)
July business inventories: +0.6% (actual) vs. +0.6% (estimate)
Happy trading!
Tom