EB Daily Market Report - Monday, April 10, 2023
The Bulls-Eye Forecast
We have scheduled a new event for this Saturday, April 15th. The event will begin at 10:00am ET and all EarningsBeats.com members will automatically be registered. There is no need for you to register individually. We will send out room instructions prior to the event.
We're holding this event as a sequel to our MarketVision 2023. I want to update everyone as to where we stand, take a look at bullish and bearish arguments and let the weight of the evidence determine where we're likely headed during the balance of Q2 and full year 2023.
Executive Market Summary
- Futures were lower overnight and weakening into the opening bell
- All of our major indices gapped down, but the NASDAQ was hit relatively hard
- Since the opening 30 minutes, however, buying has resumed - quite similar to Friday's bullish action
- Cryptocurrencies are having an excellent session, led by bitcoin's ($BTCUSD, +3.38%) move above 29,000
- Gold ($GOLD, -1.05%) is faltering as the 10-year treasury yield ($TNX) climbs; the dollar (UUP, +0.66%) is having a strong session
- Commodities are mostly lower and crude oil ($WTIC, -1.03%) is among the weak; crude has not closed above $82 per barrel since November
- Despite lower crude oil prices, energy (XLE, +0.86%) is today's best-performing sector, edging industrials (XLI, +0.72%)
- Transportation stocks ($TRAN, +1.38%) are notably higher
- Many of the FAANG stocks are lower, like Alphabet (GOOGL, -1.87%) and Apple (AAPL, -1.82%), contributing to the relative weakness in the NASDAQ index
Market Outlook
This could be a very interesting time to take a chance on small cap stocks ($SML). Relative to the S&P 500, the SML is at a critical support level. This is where we've seen rotation take place back INTO small caps. Will it happen again? I don't know, but the charts don't lie:
We've reached an area where we've seen major reversals over the past few years. Today, small and mid caps ($MID) are enjoying outperformance. And it could be the start of another significant relative uptrend. A move below 0.275 would suggest otherwise.
Sector/Industry Focus
Once again, we've seen a weak opening, early selling, and then recovery. This reeks of Wall Street manipulation and accumulation and we've been seeing it for many months. Simply check out the intraday action of the QQQ in recent days:
I only see one day of the last ten where there was little in the way of accumulation and that was on April 4th. Nearly every day we see TONS of intraday movement higher, especially in the afternoons. Friday and today, we've seen early moves lower, then buying the remainder of the day. This is NOT how distribution works, which is why I remain VERY bullish regarding the balance of 2023. Wall Street continues to accumulate. And if they're accumulating, then I'm accumulating and/or remaining long.
ChartLists/Strategies
I ran our 20-day EMA scan across our ChartLists and here are two tests that I found particularly interesting:
AOS:
I LOVE this trade setup. A huge move up with a hollow candle after earnings usually suggests that any test of the top of gap support is a great trade setup with a strong reward-to-risk. I would not be at all surprised to see a move back to 71.
TITN:
There's a positive divergence here, which suggests perhaps a rally to the 50-day SMA. However, after a big move higher today, there's a lot of risk in this one - probably too much for my liking. The AD line has really taken a drop on heavy volume the past few weeks. For these reasons, I'd probably ignore the positive divergence and pass on this trade opportunity.
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, April 10:
None
Tuesday, April 11:
ACI, KMX
Economic Reports
February wholesale inventories: +0.1% (actual) vs. +0.2% (estimate)
Happy trading!
Tom