EB Daily Market Report - Thursday, June 15, 2023

Executive Market Summary

• Futures were lower overnight, but it didn't take long this morning for the bulls to jump right back in
• Cryptocurrencies were down significantly overnight and etherium ($ETHUSD) is down more than 5%; however, most cryptos look to me to be in confirmed uptrends
• Gold ($GOLD, +0.11%) is slightly higher, but remains stuck beneath its downward-sloping 20-day EMA
• Crude oil ($WTIC, +3.02%) is having a nice day, climbing back above $70 per barrel
• Energy (XLE, +1.39%), boosted by higher crude prices, is leading all sectors; only real estate (XLRE, -0.16%) is in negative territory
• Industrials (XLI, +1.02%) is strengthening and has cleared key 105 resistance - at least intraday
• Consumer discretionary (XLY, +0.08%) is struggling to participate as hotels ($DJUSLG, -2.35%) are weak
• The 10-year treasury yield ($TNX) is down a notable 7 basis points after challenging recent highs earlier
• Unitedhealth Group (UNH, +2.83%) is bouncing back today and Microsoft (MSFT, +2.62%) continues to soar, leading the Dow Jones to a 400-point gain on today's session

Market Outlook

There is just no let up in this secular bull market advance. As we've seen breakout after breakout, I believe the continuing strength has been led by short covering. The S&P 500 price resistance from August 2022 was at 4305 and, since we've cleared that level, it's been an "all-systems-go" kind of advance. If you look at volume, it's been steadily increasing all week, making it much more difficult for market makers to get control of the action. Check out the S&P 500 chart:

I know that max pain is screaming for a pullback, but I've seen prior bull markets take no prisoners as they move higher and higher. And this certainly appears to be a "melt up" in price right now.

Sector/Industry Focus

The QQQ keeps powering forward and there's no denying the reason why. Its two largest component stocks are Apple (AAPL) and Microsoft (MSFT), and they're strength, pushing to new all-time highs, is incredible:

AAPL:

MSFT:

I find it very difficult to buy into ANY secular bear market theories when the two largest market cap companies in the world are breaking to new all-time highs.

ChartLists/Strategies

Let's revisit individual stock trades another day. The overall market is very, very stretched (though it could keep driving higher) and max pain remains an issue through perhaps the middle part of next week. So far, the May CPI report and the Fed meeting has done little to slow down the bulls, but that could certainly change. At this point, if you've been fortunate enough to remain long given all the short-term warning signals, maybe simply keep a trailing stop beneath current price action. Perhaps a 2% trailing stop would work, but that's completely up to each individual. I can say, though, that this unbelievable rise, despite very overbought conditions and max pain, is EXACTLY the reason why I DO NOT short bull markets.

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, June 15:

ADBE, KR, JBL

Friday, June 16:

None

Economic Reports

Initial jobless claims: 262,000 (actual) vs. 248,000 (estimate)

June Philadelphia Fed manufacturing index: -13.7 (actual) vs. -14.5 (estimate)

May retail sales: +0.3% (actual) vs. -0.1% (estimate)

May retail sales less autos: +0.1% (actual) vs. +0.1% (estimate)

June empire state manufacturing index: 6.6 (actual) vs. -15.1 (estimate)

May industrial production: -0.2% (actual) vs. +0.1% (estimate)

May capacity utilization: 79.6% (actual) vs. 79.7% (estimate)

April business inventories: +0.2% (actual) vs. +0.2% (estimate)

Happy trading!

Tom