EB Daily Market Report - Thursday, April 27, 2023
Guest Hosting The Final Bar
I will be guest hosting The Final Bar one final time today, subbing for David Keller, who normally hosts StockCharts TV's flagship show. The show will air today from 4:00pm-4:30pm ET. Erin Swenlin will join me as my guest for today's show. Many of you may recall that Erin was my co-host of MarketWatchers LIVE, the very first show on StockCharts TV and their flagship show at that time. It'll be a great reunion today, so I hope you all can join us!
Executive Market Summary
- Futures were higher overnight and that translated into a very strong start for stocks, especially the NASDAQ
- Q1 GDP came in below expectations, but the 10-year treasury yield ($TNX) popped 10 basis points to 3.53%
- The personal consumption expenditures (PCE) was much higher than expected, which is a key inflationary measure that the Federal Reserve monitors
- Crude oil prices ($WTIC, +0.58%) rebounded slightly after a recent string of lower prices
- Energy (XLE, -0.23%) is the only sector in negative territory today
- Meanwhile, the communications services (XLC, +5.86%) sector has exploded higher on the back of Meta Platforms (META, +15.05%) strong quarterly report
- Internet stocks ($DJUSNS, +6.79%) are soaring, also benefiting from META's big report
- Broadline retailers ($DJUSRB, +4.12%) are a strong part of consumer discretionary (XLY, +2.53%), as Amazon.com (AMZN, +5.14%) powers past $110 and approaches its February high
- Overall, great action, especially after considering the selling that took place the last two days
Market Outlook
How are those growth vs. value ratios holding up? Well, let's take a look and compare them to the S&P 500 direction:
While the recent underperformance of growth adds just a tad of skepticism in the short-term, we cannot ignore the massive rally taking place today as the S&P 500 storms back above its 20-day EMA. If the S&P 500 continues to push higher in the coming days, I really would like to see growth rebound and one area that I'll be watching closely is semiconductors ($DJUSSC), whose recent weakness has coincided with the issue with growth stocks.
Sector/Industry Focus
Let's look at those semiconductors:
Will the stock market make its next breakout or will we have to deal with more consolidation and selling? Well, I'd argue that the above DJUSSC chart is as big as any in answering that question. Will trendline support hold? I LOVE the reversal today right at trendline support. Also notice how many times the DJUSSC traded up to 7200-7400 without breaking above it. Once that wall of resistance was cleared, it became support - support that was successfully tested today. Should the DJUSSC move back down beneath 7200 and trend lower, then all short-term bets are off. But a rebound in the DJUSSC over the next week to ten days would likely provide the bulls all the ammunition it needs to secure an upcoming breakout.
ChartLists/Strategies
I'd like to get a bit more clarity on the short-term direction of the stock market before committing any further to individual stock trades. If I did trade such stocks, I'd continue to live by bull market rules - buy on gap, price, or moving average support and keep tight stops. Don't be afraid to bank quick, short-term profits. I still prefer, however, to stick with ETFs. The long-term bear market downtrend isn't officially broken, in my view, until we see the August high cleared on both the S&P 500 and NASDAQ. It could be very difficult sledding as bears are likely to dig their heels in the closer that we get to those August highs. Whipsaw action can be felt particularly hard if you're trading individual stocks.
That's why I'm sticking primarily with the major index ETFs like the QQQ, with a bit of leverage tossed in occasionally. I just captured profits on the leverage portion of my account. I did so, because the QQQ has made a massive surge today and is up against that key wall of resistance near 321 (roughly a buck away as I write this). Remember, I don't want to hold a leveraged ETF if we don't get overhead clearance. So I sold my TQQQ and immediately reinvested it back into the QQQ. The leverage provided me added return during this advance and I'm fine now to move back into the QQQ and await the results of this upcoming price resistance test:
If we make the breakout, I'll consider jumping back into a bit of the leveraged ETF. I might choose the QLD, not really sure just yet. It all boils down to how much risk you're willing to take. But for now, I'll simply ride the QQQ.
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.
Thursday, April 27:
AMZN, LLY, MA, MRK, ABBV, AZN, LIN, TMUS, CMCSA, BMY, SNY, HON, AMGN, INTC, CAT, SPGI, GILD, MDLZ, MO, SO, NOC, HSY, KDP, DXCM, ROP, VLO, AJG, RSG, STM, XEL, LHX, NEM, SGEN, IQV, COF, MBLY, GWW, RMD, FIS, ROK, DLR, AEM, WST, TSCO, WTW, WIT, DTE, FE, BAX, VRSN, WY, FSLR, CHD, CBRE, HIG, NET, CNP, LUV, PINS, PFG, CMS, FICO, TW, CINF, DGX, SNAP, LPLA, LKQ, RS, SIRI, IPG, SSNC, TXT, ESS, GLPI, IP, GFL, DPZ, KIM, PEAK, CPT, CSL, CUBE, AOS, CROX, LII, PNR, AAL, LEA, SKX, OLN, HAS, FCN, CFR, MHK, X, SWN, HOG, HGV, OSK, HTZ, APPF, FCFS, ALSN, CC, VC, SRCL, AYX, PFSI, DQ, ROG, HUBG, TPH, ITGR, CRS, SKT, COUR, LVWR, SWI, ACCD, IMAX
Friday, April 28:
XOM, CVX, SONY, AON, CL, CHTR, TRP, IMO, LYB, ARES, WPC, AVTR, CCJ, SAIA, NVT, GNTX, GTLS, NWL, POR, LAZ, CRI, JKS, DAN, BLMN
Economic Reports
Q1 GDP (initial estimate): +1.1% (actual) vs. +2.6% (estimate)
Q1 PCE (annual rate): +3.7% (actual) vs. +1.0% (estimate)
Initial jobless claims: 230,000 (actual) vs. 249,000 (estimate)
March pending home sales: -5.2% (actual) vs. +0.4% (estimate)
Happy trading!
Tom