EB Daily Market Report - Wednesday, February 8, 2023

Tom Bowley - February 08, 2023

Upcoming March Vacation

I want to give all of our EarningsBeats.com members a lot of advanced notice. I'm planning to be out of the country for a little more than a week next month and I'm also planning on leaving my computers at home - for the first time in probably 5 years. I'll be out of the office from the early morning of Friday, March 3rd and will not be back and available until Saturday, March 11th. EarningsBeats.com will be open for business, I just won't be available for my usual daily routine. Obviously, there'll be changes in our service during that week. There'll be no formal DMRs, Trading Places shows, and I won't be around to do a Weekly Portfolio Report on March 5th. John Hopkins is planning to provide brief market updates daily throughout the week.

If you have any questions, please feel free to contact us at "[email protected]".

Sneak Preview - Top 10 Stocks

We have an event this afternoon to discuss our stock portfolio strategies. During this presentation, you'll learn many of the processes I go through in putting together our portfolios. This past quarter's portfolio performance has been mixed, but we have a strong long-term track record in beating the S&P 500, especially in our Model and Aggressive portfolios. If you're interested in learning more, or simply want another refresher, join me at 4:30pm ET this afternoon. It should be a very educational webinar.

Room instructions will be sent out in a separate e-mail this afternoon. If you cannot attend today's event live, we will record the event and you can review it at your leisure.

ChartLists Updated

I've updated two more ChartLists today and our website should be updated later today or no later than first thing tomorrow morning. Here are the two ChartLists:

Strong AD ChartList (SADCL)
Bullish Trifecta ChartList (BTCL)

Executive Market Summary

Futures were down overnight and our major indices gapped lower
Several earnings misses may have prompted some profit taking on the day as we were quite overbought recently
All 11 sectors are down, but leadership is in more value-oriented areas, while aggressive areas unwind those overbought oscillators
Health care (XLV, -0.10%) is today's best-performing sector, while the hottest sector of late, communication services (XLC, -3.00%) take the brunt of today's selling
Alphabet (GOOGL, -7.97%) hasn't helped as it tested its rising 20-day EMA earlier today
Commodities are mixed, though crude oil prices ($WTIC, +1.52%) continue its rebound
Fortinet (FTNT, +10.77%) is the top performer in the S&P 500 after reporting mixed quarterly results; revenues came in shy of expectations, but earnings beat estimates handily

Market Outlook

Today's close could provide us a few short-term clues. On the following one-month, 30-minute chart of the S&P 500, you can see a possible cup forming after the recent uptrend and a very clear uptrend:

How we close today, however, could alter this pattern. A weak finish would open up further downside possibilities, while a strong finish would keep the pattern intact and possibly lead to a strong Thursday. If we do break the uptrend, I'd watch price support from 4090-4100 quite closely. Failure there and we'd likely see a 20-day EMA test, which is currently at 4053.

Sector/Industry Focus

Communication services (XLC) is the weak link today among sectors, but we need to keep perspective in mind. The XLC has been on fire and still remains well above its 20-day EMA:

The red price resistance line could also serve as a neckline in an intermediate-term reverse head & shoulders bottoming pattern. Ultimately, a close above 60 on the XLC would be an extremely bullish development. I see it happening, but whether it happens on this upward move is the question.

ChartLists/Strategies

I ran a 20-day EMA test scan against several of our ChartLists and 28 stocks were returned. I sorted the scan results by SCTR (highest to lowest) and the stocks with SCTRs over 90 were as follows:

AEHR
GGAL
TUSK
WVE
BMA
PRTA
MUFG
HUYA
PRVB
MYOV
TITN
CNO

Of these 12 stocks, they are broken down by sector as follows:

Technology - 2
Financials - 4
Health care - 4
Consumer discretionary - 1
Energy - 1

I looked at all 12 charts and these are two that I like best:

AEHR:

Today marks the first 20-day EMA test since this rally began a month ago. AEHR also resides in the red-hot semiconductor group. Personally, I'd exit on a close beneath the 20-day EMA as open price support resides all the way back down near 29. A recovery back to 37 would be my target.

TITN:

After a period of consolidation, TITN broke out recently. This initial 20-day EMA test after the breakout will likely hold - in my opinion. A close below 42.90 would be short-term bothersome and a possible closing stop, while a move back up to 46.00-46.50 would be my short-term target.

As a side note, I took profits on FTI after watching it bounce back near short-term price resistance. A close over 13.93 would be bullish, however, if you decide to hold a bit longer. I plan to exit SPT if it closes beneath 62.00 today. I still believe it's going to have a pre-earnings run up, but I can always jump back in if I get stopped out. I really want to avoid big losses, when at all possible.

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, February 8, 2023

DIS, CVS, UBER, ETN, CME, EMR, D, ORLY, YUM, SLF, IFF, EFX, CDW, AVB, STE, MPWR, FOXA, MOH, FOX, FLT, MGM, TRMB, BG, BAM, UHAL, RE, EQH, REXR, TEVA, WYNN, CDAY, NLY, HOOD, PFGC, CPRI, MAT, REYN, LNC, UAA, AFRM, XPO, APP, ASGN, ACLS, AEIS, VSH, GT, PI, RPD, FROG, SONO, FORM, APPS, CRNC

Thursday, February 9, 2023

ABBV, PEP, AZN, PM, SPGI, PYPL, DUK, BN, TRI, MSI, APO, DXCM, HLT, TU, MT, WTW, ARES, EQR, K, BAX, VRSN, VTR, WMG, NET, EXPE, IPG, KIM, MAS, NWS, CCJ, REG, BWA, CS, BAP, TPR, BRKR, HII, G, RL, SEE, MHK, ITT, DOCS, TPX, FAF, LYFT, MDU, THC, CYBR, QLYS, NSP, CBT, LITE, ONTO, AYX, TEX, SSTK, COUR, YELP, KN, SWI, TTGT, CGC

Economic Reports

December wholesale inventories: +0.1% (actual) vs. +0.1% (estimate)

Happy trading!

Tom