EB Daily Market Report - Wednesday, March 15, 2023

Tom Bowley - March 15, 2023

Executive Market Summary

Futures turned extremely negative overnight as more problems surfaced in the banking area
Dow Jones futures fell more than 600 points, but the Dow improved into the opening bell, gapping lower by roughly 400 points
Banks ($DJUSBK, -4.55%) are taking another big hit as Credit Suisse (CS, -14.75%) is under further scrutiny
Money continues to rotate towards the aggressive NASDAQ 100 stocks - more on this below
Bitcoin ($BTCUSD, -1.39%) tumbled late yesterday and is down 2000 in roughly 24 hours
Gold (GLD, +0.79%) is up as Volatility ($VIX) is up nearly 12%
Crude oil ($WTIC, -3.87%) is now trading below $69 per barrel for the first time since December 2021
Energy (XLE, -5.75%) is easily the worst-performing sector, with materials (XLB, -3.80%) next in line
Utilities (XLU, +0.97%) continues to flex its March muscle, leading all sectors and only 1 of 2 sectors higher on the session
First Republic Bank of San Francisco (FRC, -19.15%) is having another very difficult day and leads the S&P 500 to the downside

Market Outlook

Yesterday, I provided a chart that showed intraday rotation continues from the SPY to the QQQ. I want to follow that up with today's action, so that you can see the intraday rotation quite clearly once again:

I don't know why money would rotate so heavily into aggressive NASDAQ 100 stocks, if we're about to have a big recession ahead. I think what's happening is the market's realization that interest rates are coming down. That development adds tons of market value to growth stocks. The 10-year treasury yield ($TNX) is down 15 basis points to 3.49%, hitting a low of 3.39% earlier in the session.

Sector/Industry Focus

Over the past week, one of the best industry groups has been precious metals ($DJUSPM). While it's certainly a safe haven, I've said plenty of times in the past that this group outperforms when volatility ($VIX) rises. Check out this chart:

Once the VIX began pushing higher, money rotated to gold and other precious metals. It's the only time I'm interested in owning gold. Some believe gold rises when the dollar falls. That is generally true, but it OUTPERFORMS the benchmark S&P 500 during volatile periods, not when the dollar falls.

ChartLists/Strategies

Given the extreme back-and-forth action AND options expiring on Friday, I think it's best to continue trading with a bit more safety, or ETFs. Therefore, I'll pass today on looking at individual charts.

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, March 15:

ADBE, FNV, ZTO, FIVE, PATH, ARRY, PD, CPRX, OTLY

Thursday, March 16:

FDX, DG, BEKE, JBL, WSM, ASO, SIG, MOMO

Economic Reports

February PPI: -0.1% (actual) vs. +0.3% (estimate)

February Core PPI: +0.0% (actual) vs. +0.4% (estimate)

February retail sales: -0.4% (actual) vs. -0.3% (estimate)

February retail sales less autos: -0.1% (actual) vs. +0.2% (estimate)

March empire state manufacturing index: -24.5 (actual) vs. -7.7 (estimate)

January business inventories: -0.1% (actual) vs. +0.0% (estimate)

March housing market index: 44 (actual) vs. 41 (estimate)

Happy trading!

Tom