EB Daily Market Report - Friday, April 21, 2023

Tom Bowley - April 21, 2023

Guest Hosting The Final Bar

I wanted to let you know that I'll be filling in for David Keller next Monday through Thursday as host of The Final Bar, the prime afternoon show on StockCharts TV. The show airs from 4:00pm-4:30pm ET every Monday through Friday. Plan to join me if you can!

Executive Market Summary

Futures were mixed overnight and we saw bifurcated action at the opening bell
We've seen some back and forth action, with most of our key indices near the flat line
Consumer stocks are leading today as both consumer discretionary (XLY, +1.14%) and consumer staples (XLP, +0.75) are up nicely
Materials (XLB, -1.02%) and energy (XLE, -0.81%) are the primary laggards
After spiking yesterday, the Volatility Index ($VIX, -2.50%) has moved back beneath 17
Cryptocurrencies are having a rough session with etherium ($ETHUSD, -4.85%) moving back down near its rising 50-day SMA
Commodities are mixed, though gold ($GOLD, -1.30%) has fallen slightly below $2000 per ounce
Proctor & Gamble (PG, +3.57%) has broken out of its recent trading range and is rapidly approaching its all-time high after reported excellent quarterly results

Market Outlook

Earlier this week on Tuesday, I showed a chart of the QQQ that highlighted a potential top at price resistance and pointed out the 20-day EMA as one possible support level, given that it was options-expiration week and there was a TON of net in-the-money call premium. Well today, three days later, we've seen a test of that 20-day EMA. While we haven't reached max pain, or even gotten close to it, options expiration once again gave us a pretty strong signal of short-term direction. Here's the QQQ chart and that 20-day EMA test:

It took a few days, but we did retreat to the 20-day EMA. Now, will that hold today and into early next week? If it doesn't, we could certainly see further short-term selling next week. Also, check out those hollow candles. We've seen 2.75 drop in the QQQ and opening gap downs these last three days have totaled 5.84. There's been intraday BUYING, not selling. Prices are being orchestrated lower. Manipulation much?

Sector/Industry Focus

Communication services (XLC) has been the best performing sector in 2023, so it makes sense that it would be one sector with manipulation this week as market makers wring out some of that net in-the-money call premium. I'll show you the recent "drop" in the XLC that features nothing but hollow candles (closing price above opening price):

Does this not reek of manipulation? Of the past 6 days, only one day shows a close beneath its open. So while the XLC continues "selling", is it really selling or just manipulation of opening gaps to the downside, followed by more accumulation? The AD line has barely budged to the downside.

ChartLists/Strategies

We could see more manipulation over the next few days, so I'm content waiting to see if we can get lower prices on some leading stocks. Let's revisit this on Monday afternoon. Keep in mind that the Monday that follows options-expiration Friday is THE WORST DAY for the stock market historically. Since 1950, the S&P 500 goes down 63% of such days, as opposed to 53% on all Mondays, and 47% on all days.

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.

Friday, April 21:

PG, SAP, HCA, SLB, FCX, RF, ALV

Monday, April 24:

KO, CNI, CDNS, AMP, ARE, BRO, PHG, PKG, CCK, CLF, WHR, RRC, MEDP, HXL, AGNC, CHX, TENB, SSD, CR, PCH, FRC, HLX, NBR

Economic Reports

April PMI composite - manufacturing: 50.4 (actual) vs. 49.2 (estimate)

April PMI composite - services: 53.7 (actual) vs. 51.5 (estimate)

Happy trading!

Tom