EB Daily Market Report - Tuesday, June 13, 2023
ChartLists Updated
I've updated several ChartLists and they've been updated on our website as well. Here are those that were updated:
- Strong Earnings ChartList (SECL)
- Strong Future Earnings ChartList (SFECL)
- Short Squeeze ChartList (SSCL)
- June Seasonality ChartList (SEASCL)
I apologize for not getting the June Seasonality ChartList out sooner. I did provide the stocks over a week ago, but I hadn't annotated the charts until this morning. Again, I apologize as it was completely my fault.
Executive Market Summary
- Futures were mixed overnight, but strengthened this morning after the May CPI report was released
- Inflation appears to be contained at the consumer level, a continuing development that will not be lost on the Fed as they meet and get set to provide their latest policy statement at 2:00pm ET on Wednesday
- Strength is seen across all 11 sectors, but materials (XLB, +2.19%) is clearly the strongest sector
- Industrials (XLI, +1.21%) is strengthening all-time highs and providing a big lift to the S&P 500, which is adding to its gains since its breakout above 4305 yesterday
- The 10-year treasury yield ($TNX) tested its rising 20-day EMA earlier, but has since surged 13 basis points higher to 3.81%
- Gold ($GOLD, -0.72%) has fallen back to $1955 per ounce; a move beneath $1940 would be very bearish
- Most other commodities are higher, especially crude oil ($WTIC, +3.71%), which is nearing $70 per barrel
- Caterpillar (CAT, +3.51%) is leading the Dow Jones higher and providing a big lift for the industrials
Market Outlook
One potential hurdle has come and gone. The May CPI report was released this morning and came in close to expectations. There was actually slightly positive news as the headline number rose just 0.1%, less than the 0.2% expected. Core CPI, however, was +0.4%, exactly as expected. So what will the Fed do? And what will these growth stocks do that have been on an absolute tear to the upside? Semiconductors ($DJUSSC) have shown little in the way of selling, despite key short-term overhead resistance being tested and a TON of net in-the-money call premium:
Recent history says most gains have been made by the time the $DJUSSC PPO reaches the 4-5 level. There's also a very hard price resistance at about 9750. Will the semiconductors bust through this key overhead resistance with BILLIONS of net in-the-money call premium on the table? I'd say the odds are stacked solidly against it, but secular bull market advances sometimes pay little attention to historical tendencies.
Sector/Industry Focus
Industrials (XLI) are having another very nice day, trailing only materials (XLB) and energy (XLE). The move higher in the XLI, however, is much more important technically as we're seeing the potential of a MAJOR breakout:
Breaking above 103.50 is bullish, but the really big level resides near 105.00. A push above that level sends industrial stocks to an all-time high close.
ChartLists/Strategies
Last week, I featured 2 stocks on our Strong Earnings ChartList (SECL) - LFST (cup with handle) and JWN (challenging resistance and also on our Short Squeeze ChartList). Both stocks have performed well as LFST is today making its breakout:
Increasing volume this afternoon to support and confirm this breakout would be especially bullish.
I just updated our Short Squeeze ChartList (SSCL) this morning, and thought I'd check out all 44 stocks on the list, looking for those with short-term upside potential. Here are six that are interesting:
CVNA:
It's been on fire and short sellers are feeling more and more pressure to cover (buy). These are incredibly risky stocks, but have the potential to deliver very strong short-term returns. It's simply whether or not you can handle the massive risk. The key to most short squeezes, though, is VOLUME. You want to see soaring volume as that indicates PANIC buying.
BYND:
Volume is accelerating again today. A strong close could lead to additional panic and further buying this week.
AI:
Do we break out again? The volume is certainly there. Crazy volatility on this one, so do NOT consider unless you're ready for the ride of a lifetime - in potentially either direction!
VUZI:
Volume is starting to pick up. I like this one with more volume and clearing 6.00 resistance. That could lead to a very big squeeze and move higher.
KSS:
KSS is worth watching. If it can clear 24.00, look for suddenly surging volume. That would be my confirmation that a squeeze could be underway.
GME:
One of the most famous short squeezes ever is BACK! GME is trying to make a key breakout. Volume is definitely increasing, but do we confirm the breakout on today's close? That'll be key short-term.
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.
Tuesday, June 13:
None
Wednesday, June 14:
LEN
Economic Reports
May CPI: +0.1% (actual) vs. +0.2% (estimate)
May Core CPI: +0.4% (actual) vs. +0.4% (estimate)
Happy trading!
Tom