EB Daily Market Report - Monday, January 23, 2023

Tom Bowley - January 23, 2023

Q4 Earnings Event Today

I will be hosting a "Q4 Earnings" event later today at 4:30pm ET, providing you my favorite (and least favorite) stocks heading into the heart of earnings season over the next 2-3 weeks. Separate room instructions will be mailed out this afternoon.

For those unable to attend live, we'll have a recording available for you to review at your leisure later this evening or tomorrow.

Live Trading Room

We will be hosting our first-ever LIVE trading room on Friday. It'll all get started, however, on Thursday evening at 7:00pm ET as I show you how I prepare for the trading day ahead. If you're going to trade, you need to be prepared. Too many traders wake up in the morning, look at stocks after the open, and THEN decide where they want to invest their money. At that point, however, I believe it's too late. Emotions take over and you trade based on price action, rather than managing risk by trading ONLY at appropriate price levels.

We'll have market conditions, earnings reports, economic reports, technical breakouts/breakdowns, relative strength, and many other factors to consider on Thursday evening.

This event is FREE to all ANNUAL members of EarningsBeats.com. If you're currently a trial member or a monthly member, you can upgrade to ANNUAL membership at any time prior to Thursday's 7:00pm ET start time and join us at no additional cost. It should be an eye-opening and educational event for sure. I hope to see you there!

If you would like to upgrade and attend, be sure to write us at "[email protected]" and we'll take care of the rest!

Executive Market Summary

Futures were slightly lower overnight, but strengthened this morning
Our major indices did gap higher and money has consistently been moving into the more aggressive NASDAQ
The S&P 500 has moved back above 4000 and is potentially breaking its downtrend from 2022 - see below
Growth stocks (IWF, +1.59%) are outperforming value stocks (IWD, +0.86%)
Most commodities are higher; natural gas ($NATGAS, +5.32%) is rebounding after a brutally difficult 4-5 weeks
The 10-year treasury yield ($TNX) is up 4 basis points to 3.53%, despite leading indicators missing their estimate this morning
All 11 sectors are higher today, led by technology (XLK, +2.49%) and communication services (XLC, +1.54%)
Semiconductors ($DJUSSC, +4.36%) are leading the advance in technology, though computer hardware ($DJUSCR, +3.17%) and renewable energy ($DWCREE, +3.15%) are also quite strong
Advanced Micro Devices (AMD, +7.94%) is today's S&P 500 leader

Market Outlook

Today could turn out to be very important technically as the S&P 500 has broken above 4000 and is threatening to clear the downtrend resistance line from all the 2022 highs. Trend lines can be quite subjective, so let me give you two charts, one connecting S&P 500 intraday highs and the other connecting S&P 500 candle bodies (opens and closes):

This one suggests we're just now testing this downtrend line. But what if we connect candle bodies?

It's just a slight variation, but you can see how trend lines can be manipulated somewhat. But I believe there is absolutely no doubt about the trend line being broken if the S&P 500 can clear the 3 red arrows marking price resistance, the highest of which is at 4110.

Sector/Industry Focus

Semiconductors ($DJUSSC) are trying to make a major breakout of their own. A breakout here would really argue for the resumption of the 10-year secular bull market:

The bullish signals continue to escalate. Semiconductors are a very influential part of the stock market. We've been seeing relative strength since October and today we're seeing yet another relative breakout. The AD line is strong as well, so a price breakout simply confirms the other bullish technical indications with the group.

ChartLists/Strategies

The following discussion and charts are for those with VERY HIGH risk tolerance. Our Short Squeeze ChartList (SSCL) is finally coming into play. Many times, for long periods, heavily-shorted stocks simply drift lower and lower and lower and should be ignored. However, when they begin to show increasing levels of volume and price action clears key price resistance, prices can appreciate very, very quickly. Here are several potential short squeeze candidates. I'll be watching volume levels and how these stocks finish each day. Increasing volume and strong closes will put shorts in a box. We could begin to see significant opening gaps to the upside:

This short squeeze has already begun. Jumping in AFTER a major squeeze is underway is extremely risky. We could still see substantial upside from here, but we're now significantly higher than the breakout level (43-44), so you'd have to risk a big % loss to buy W now. W was featured in our December Short Report, but it's now begun its move. Let's instead focus on stocks that are in a position to potentially see a big move higher....

BYND:

UPST:

EVGO:

NKLA:

SPCE:

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, January 23:

BKR, BRO, SYF, LOGI, ZION, CR, FNB

Tuesday, January 24:

MSFT, JNJ, DHR, VZ, TXN, RTX, UNP, LMT, ISRG, GE, CNI, MMM, TRV, COF, HAL, PCAR, DHI, FFIV, IVZ, WAL, SLGN, GATX, NAVI, TRMK, AGYS, MRTN, VBTX, LRN, NXGN

Economic Reports

December leading indicators: -1.0% (actual) vs. -0.7% (estimate)

Happy trading!

Tom