EB Daily Market Report - Quick Update - Tuesday, July 25, 2023

One more fairly quick update, then I'll return to my normal DMR format tomorrow. Currently, I'm prepping for today's Model ETF Portfolio Draft. Also, I'll be recording The Final Bar at 4pm ET, subbing for David Keller, which will air later today. If you're not familiar with The Final Bar, it's StockCharts.com's market recap show. Prior to ending StockCharts TV, their 24/7 streaming platform, The Final Bar aired every day, Monday through Friday, at 4:00pm ET. (Yes, I'm a glutton for punishment.)

I want to just point out a few things quickly.

Model ETF Portfolio Draft:

Our quarterly Model ETF Portfolio Draft will begin at 5:30pm ET. Room instructions will be mailed out separately and the event will be recorded for those unable to attend this afternoon.

FOMC Meeting

Today marks the beginning of the Fed's two-day meeting in which they'll very likely announce another 25 basis point rate hike tomorrow afternoon. I'm not sure how much impact this will have as both the bond market and stock market have braced for this for weeks now. The more important part of the announcement will be how many more times the Fed is likely to raise. Do they begin to talk more dovishly, signaling that the end of the rate hikes is at hand? Or do they leave the door open for further rate hikes in 2023?

Sustainability Ratios

I will show you a repeat of the chart I provided yesterday, only this time my key sustainability ratios show that they're turning higher with S&P 500 price action, which is a solid start to a possible reversal:

Only the transports ($TRAN) remain weak. Other aggressive vs. defensive ratios are turning higher again.

Earnings This Afternoon

This could be THE MOST INTERESTING day of earnings season. Of the 7 largest market cap companies reporting quarterly results this afternoon, how many do I feel comfortable about? Exactly ZERO of them. I have mixed feelings on Microsoft (MSFT), but the other 6 show horrible relative strength. The following chart shows all 7 companies vs. their respective industry group:

How do these relative charts make you feel about this afternoon's earnings? I know how they make me feel - very uneasy. The NASDAQ will be impacted primarily by MSFT, GOOGL, and TXN. They report in 3 key areas of the market - software, internet, and semiconductors.

Caution remains the word. That could mean different things to different members. I do like the QQQ a lot, but simply realize there's more risk in the air.

Happy trading!

Tom