EB Daily Market Report - Monday, June 5, 2023

Tom Bowley - June 05, 2023

June Seasonality Report

I apologize for the delay as I really wanted to get all of our ChartLists updated first. I've written most of Seasonality Report, but still have to add the 20 bullish stocks for June. I should have this out to everyone no later than tomorrow. Erin did include some key seasonal information in our free monthly report that was sent out on Saturday.

Executive Market Summary

Futures were relatively flat to start the week
We initially saw morning strength on the NASDAQ, but all of our key indices are now lower, with small caps showing the most weakness
I'd like to see the IWM (Russell 2000 ETF) hold the 179-180 support area, though a 20-day EMA test is possible at any time
Cryptocurrencies are very weak as bitcoin ($BTCUSD, -6.31%) drops to 25500; litecoin ($LTCUSD, -9.06%) is particularly weak
Commodities are mostly higher as crude oil ($WTIC, +0.29%) is near $72 per barrel; gains were much higher earlier in the session
Meanwhile, gold ($GOLD, +0.54%) is approaching $2000 again, just 1% shy at this time
The 10-year treasury yield ($TNX) has been volatile, up 7 basis points early, then down 3 basis points, now flat
Weak April factory orders may have spooked some traders, as defensive stocks show some leadership; utilities (XLU, +0.46%) and health care (XLV, +0.36%) are today's leading sectors
Technology (XLK, -0.52%) is our weakest sector on the session
Intel (INTC, -4.55%) has dipped back below 30 as its latest rally attempt is foiled, at least temporarily

Market Outlook

I updated my INTRADAY XLY:XLP and QQQ:SPY ratios over the weekend and wanted to show them to you.

XLY:XLP -

QQQ:SPY -

Both continue to track quite bullishly and lend support to the theory that the stock market will maintain its strength in the foreseeable future. We will ALWAYS have pullbacks, so I'm not looking for the market to move STRAIGHT UP, but it does tell me that future pullbacks are very likely to be temporary and buyable.

Sector/Industry Focus

Keep an eye on travel & tourism ($DJUSTT). It was a very strong industry group earlier in the year and we've seen a lot of consolidation since. Currently, it's on the cusp of a breakout. If that materializes, I could see another jump above 800:

The PPO is just coming off its centerline, the AD line is strong, and relative strength has simply been sideways during the recent consolidation period. Should we see this breakout, the DJUSTT could be poised to resume its leadership role from early 2023.

ChartLists/Strategies

Some stocks show mostly hollow candlesticks, where closes are generally above opens. One such stock is CRM, which is part of the very strong software group ($DJUSSW). Check out CRM's chart as it tests its 20-day EMA:

CRM has bounced well off of its earlier lows and is back above its 20-day EMA. Because of mostly strong afternoons, CRM is sporting a very healthy AD line. This is a stock that I believe would be an excellent day trade on morning weakness. 200-205 is the support zone that I'd watch. Buying within this zone would represent solid reward-to-risk entry.

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, June 5:

GTLB, SAIC, HQY

Tuesday, June 6:

SJM, CASY, CIEN, THO, ASO, ABM, CBRL, MOMO, PLAY, YEXT

Economic Reports

April factory orders: +0.4% (actual) vs. +0.8% (estimate)

May ISM services: 50.3 (actual) vs. 52.0 (estimate)

Happy trading!

Tom