EB Daily Market Report - Friday, June 16, 2023
Executive Market Summary
- Futures were up again, despite the growing amount of net in-the-money call premium; perhaps it'll matter into the close and next week
- Bitcoin ($BTCUSD, +3.45%) is bouncing back nicely after its recent struggles
- The 10-year treasury yield ($TNX) has ticked up 4 basis points to 3.77%
- Commodities are mixed, but crude oil ($WTIC, +1.54%) is back near $72 per barrel
- The sector leaderboard tells us that MAYBE we could begin to see some profit taking as utilities (XLU, +0.66%) and consumer staples (XLP, +0.20%) is leading today's action
- Meanwhile, technology (XLK, -0.60%) is the worst-performing sector
- Semiconductors ($DJUSSC, -0.18%) are still hanging near 10000; a bigger drop in this group could trigger more short-term selling in technology and the S&P 500
- Intel (INTC, +2.32%) is further strengthening and the volume is HUGE; this is helping to keep the DJUSSC up near the 10000 level and also keeping the Dow's losses to a minimum thus far today
Market Outlook
Today is the one-year anniversary of my "market bottom call" on Trading Places Live. I think it's been a very solid year since then, despite the slightly lower low that printed in October 2022. I have confidence that our research at EarningsBeats.com is the best in the business. While we do pay attention to traditional technical signals, I believe it's our proprietary research that sets us apart and enables us to have conviction about tops and bottoms, while others waffle. I do NOT believe we will catch every single top and bottom, because no one does. But I do believe that our signals give us much better odds of being on the right side of the market.
Two of our signals, the intermarket QQQ:SPY and XLY:XLP, continue to support the sustainability of this market advance:
QQQ:SPY
XLY:XLP
Notice that the bottom panel (including gaps) is showing a bit more strength. Would you like to know my interpretation of this? Wall Street firms have lined their coffers with all the stocks they want. There's no further "need" to see lower morning prices to accumulate shares. Haven't you noticed that there's been little in the way of big gaps lower in the mornings? This isn't coincidence. It's the way Wall Street works.
Listen, while these two charts remain quite bullish, they are NOT going to call every single short-term turn in the market. They both continue to be very strong, but I fully expect to have some profit taking kick in any time.
Sector/Industry Focus
I continue to like the industrials (XLI), and am watching each industry group within to help find short-term advances and profit opportunities. Today, I want to point out the business services group ($DJUSIV):
Price action is bullish, the AD line is bullish, and relative strength is bullish. Weakness in this group and its individual stocks could present excellent trading opportunities in the days and weeks ahead.
ChartLists/Strategies
I believe it's becoming safer to trade individual stocks as the rising tide has begun to lift all boats. Obviously, there's still (and always is) a lot of risk any time you trade an individual stock. But I'm hopeful, at this point, that the crazy and wild rotation that we've experienced the past couple years is finally coming to an end.
There are areas of the market that are just beginning to see strength. At some point, we'll see some profit taking in technology (XLK) and when we do, we should expect other areas of the market to emerge as leaders. Industrials (XLI) has just broken out to an all-time high and transports ($TRAN) have been helping the cause there. So how do we find individual stocks that could perform well from here? Well, I've seen business support services ($DJUSIV) scream higher - see Sector/Industry Focus section above - and just recently clear the August 2022 high. So I ran a scan of DJUSIV stocks and of any stock in the Strong Earnings ChartList (SECL), SFECL, SADCL, and RGCL from this industry group. 13 stocks were returned. In SCTR order, here they are:
MARA, CNM, FIX, LZ, VRSK, EFX, BR, MMS, BAH, ASUR, CSGP, ALLE, CTAS
That's a very quick way to narrow down to a list of stocks in a piping hot industry. I looked at the 13 stocks and these are the 3 that I found most interesting:
BR:
Love the breakout here. While we could see profit taking at some point, the current price down to 155 seems to be solid entry for a longer-term hold.
MMS:
Another breakout here. I like this one from the current price down to the rising 20-day EMA.
ASUR:
While volume has been light on the selling, a bullish sign, we've seen the AD line absolutely crater. Given the latter, I'd keep a fairly tight stop. There is another bullish development, though. I like the positive divergence on this latest price low. A reversing candle over the next few days would add to the bullishness.
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, June 16:
None
Monday, June 19:
None
Economic Reports
June consumer sentiment: 63.9 (actual) vs. 60.0 (estimate)
Happy trading!
Tom