EB Daily Market Report - Wednesday, January 11, 2023
Upcoming EB Tools Webinar This Saturday
I will be leading a virtual event on Saturday morning at 10:00am ET to discuss the EB.com platform. We've developed a large list of ChartLists designed to help our members find high quality trades and investments. On Saturday, I plan to show everyone why these ChartLists were developed, what they are, and how you can use them to find better trading opportunities. We've been mired in a a nasty bear market for most of the last year, so it's been difficult to use them for profit. Instead, we've been in a market where we've needed to remain persistent in protecting our capital. I believe that's beginning to change. We'll need to grow more aggressive and I plan to show everyone how to do that on Saturday. We'll send out room instructions later this week and we'll record the event for those unable to attend live.
MarketVision 2023 and Webinar Special
We have one day left of our annual special in connection with our MarketVision 2023 event from last Saturday. If you move from a trial member or monthly member to an annual membership, you'll get 14 months that includes 2 bonus months. You'll also receive any unused part of your 30-day trial. I also want to mention that existing annual members can also use this special to extend for 14 months. If you're interested, please write in to us at "[email protected]" and we'll get everything taken care of for you.
This special ends tomorrow, so be sure to act quickly!
Executive Market Summary
- Futures were higher overnight and our major indices began the day in positive territory
- After a bit of hesitation, buyers stepped in and we're seeing solid gains across the board with a bit of relative strength from the NASDAQ
- Microsoft (MSFT, +2.47%) is headlining the strength on the Dow Jones and helping to lift all our key indices
- Real estate (XLRE, +3.36%) and consumer discretionary (XLY, +2.45%) are the two leading sectors
- Consumer staples (XLP, -0.01%) is the only sector in negative territory
- Broadline retail ($DJUSRB, +4.27%) is getting a big lift from Amazon.com (AMZN, +5.56%) and driving the XLY higher
- Commodities are again mixed, with crude oil ($WTIC, +3.27%) having a strong day
- The S&P 500 is just 1% away from recapturing the 4000 level, but the December CPI report will be out tomorrow morning
Market Outlook
Tomorrow morning, we'll get the latest CPI news. The December CPI will be released at 8:30am ET and I'd love to give you some inside information about how this will turn out. Unfortunately, I have none. What I do know, though, is that this report can have significant consequences on the short-term direction of U.S. equities. Recently, we saw two better-than-expected reports, yet after initially gapping higher, the market moved in complete opposite directions. Check this out:
You can see that the action after the CPI report is released is different every time. I would expect that a better-than-expected CPI number will result in a gap up while a miss would have the opposite effect. But beyond the opening bell, I honestly don't know which way we'll go.
I can tell you that short-term, we're in a nice uptrend, so watch the rising 20-day EMA. Failure to hold that would be a short-term negative. I think all of you know how I feel about the longer-term. I believe we just endured a cyclical bear market in 2022, which was a counter trend move to the long-term secular bull market trend. Based on the extreme bullish sentiment at the beginning of 2022, we needed this bear market to "reset" sentiment, to turn retail traders from overwhelming bullish to overwhelmingly bearish. I believe the 2022 cyclical bear market did the trick.
Sector/Industry Focus
Internet stocks ($DJUSNS) love the month of January. They came into January 2023, looking like a beaten-down group. But seasonal strength is returning again as the DJUSNS tacks on another 2%+ today. First, check out the seasonal strength:
This is a relative chart and it shows that the DJUSNS has outperformed the S&P 500 during 10 of the last 11 Januarys (91%) and its "average" level of outperformance is 3.1%. This is a group that always needs to be considered to start the year. Meta Platforms, Inc. (META), one of the worst performing stocks of 2022, loves January and, right on cue, it's taken off again in January. Same goes for Netflix, Inc. (NFLX). Check out these two:
META:
NFLX:
In the bottom panel of both charts, you can see that the long-term relative picture of internet stocks is cloudy at best. That's a powerful relative downtrend. However, the bullish seasonality seems to be kicking in, even if only for a few weeks. While both stocks are also nearing overhead resistance, there's no doubt in my mind that NFLX is the far superior stock and I'd give that one the best chance to extend the current rally.
ChartLists/Strategies
Here are a couple interesting charts from the Strong AD ChartList (SADCL):
FND:
FND is beginning to show relative strength just as it breaks out above recent price highs - I like this one to go higher.
ERJ:
Volume is solid and I love that ERJ is trying to clear its mid-August high. The breakout, once confirmed, is important, because ERJ is part of the red-hot aerospace ($DJUSAS) group.
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.
Wednesday, January 11:
SJR, KBH
Thursday, January 12:
TSM, INFY
Economic Reports
None
Happy trading!
Tom