EB Daily Market Report - Monday, November 21, 2022
Holiday Schedule
I just want to let everyone know that we will not host Trading Places LIVE on Wednesday as we'll be traveling for the holidays. I want to wish everyone safe travels this week and don't forget about our Fall Special, if you haven't taken advantage of it yet. You can visit our website and click on the Fall Special icon for more information.
Executive Market Summary
- Futures were mixed overnight as the Dow Jones showed relative strength and the NASDAQ showed relative weakness
- This relationship has held true much of the day as well
- Expect volume to be lighter this holiday-shortened week as Thanksgiving Day approaches
- Cryptocurrencies are having another rough day, as bitcoin ($BTCUSD, -4.44%) and etherium ($ETHUSD, -6.29%) tumble
- Commodities are mostly lower as gold ($GOLD, -0.89%) drops to $1739 per ounce
- The 10-year treasury yield ($TNX) is up one basis point, with no significant economic news out
- Walt Disney (DIS, +5.84%) is a leader today after it was announced over the weekend that Robert Iger would return as CEO
- Meanwhile, Tesla (TSLA, -6.79%) continues its downward spiral, touching fresh 2-year lows.
Market Outlook
We started off weak this morning, but I suspect we're still feeling the lingering effects of max pain. I can tell you that the Monday after options-expiration Friday is the WORST day of the calendar month historically. These stats date back to 1950 on the S&P 500. Mondays generally are bad, but the one after options-expiration is particularly weak. So chalk up another rough Monday to that.
Growth-oriented areas are underperforming today, but that too could be due to options expiration. There's little excitement in trading options on value-oriented stocks as there's little volatility to benefit from. For now, I'm watching the QQQ, wanting to make sure that both the top of gap support from 10 days ago (October CPI report that morning) and the rising 20-day EMA hold as support. Here's the chart:
The 20-day EMA is currently at 278.84 and the gap open from Thursday, November 10th was 276.01. The best time to consider a leveraged ETF (QLD) on the NASDAQ 100 would be in this range from 276.01-278.84. Personally, I'd exit if both of these support levels are lost on a closing basis.
Sector/Industry Focus
Specialized consumer services ($DJUSCS), a part of consumer discretionary (XLY), is attempting a significant breakout to a multi-month high:
The DJUSCS is a clear leader relative to the benchmark S&P 500. It's certainly a bit overbought and could use a rest, but I expect we're going to see much higher prices eventually in this area of the market.
ChartLists/Strategies
I'm seeing a number of potential bottoming head & shoulders patterns among individual stocks. One telecom stock in our Raised Guidance ChartList (RGCL) is currently showing such a pattern:
NICE:
We could be forming the right shoulder now.....or maybe the stock breaks back down. This pattern is not confirmed until we see a heavy volume breakout above neckline resistance.
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.
Monday, November 21:
A, DELL, ZM, J, SJM, ZTO, DY, URBN
Tuesday, November 22:
MDT, ADI, ADSK, DLTR, BIDU, HPQ, BBY, WMG, BURL, DKS, VIPS, JWN, CSIQ, AEO, JACK, GES
Economic Reports
None
Happy trading!
Tom