EB Daily Market Report - Wednesday, August 9, 2023
Executive Market Summary
- Futures were up overnight, but quickly fell into negative territory again once the opening bell rang
- Gold ($GOLD, -0.45%) is down ahead of the key July CPI report, which will be released Thursday morning before the opening bell
- The 10-year treasury yield ($TNX) is down 3 basis points to 3.99%; treasuries could be highly impacted tomorrow and in the near-term by the CPI report
- Crude oil prices ($WTIC, +0.30%) were above $84 per barrel for the first time in 2023, though they've backed down to $83.15 at last check
- Energy (XLE, +1.09%) leads all sectors today as technology (XLK, -1.27%) once again trails the field
- The Dow Jones is holding up best on a relative basis with 9 of its 30 component stocks higher on the day
- The short-term key for the bond and stock market, however, will be the inflation reports out the next two days
Market Outlook
I watch my proprietary ratios very closely and currently the INTRADAY IWM:QQQ chart looks as bullish as it has at any point over the past few months. While morning weakness has occurred regularly for the IWM, its relative strength vs. the QQQ is undeniable based on the following chart:
The IWM is moving lower on an absolute basis, but during the trading session, money is rotating heavily from the QQQ to the IWM, a signal of further IWM strength ahead, in my opinion.
Sector/Industry Focus
Are the airlines ($DJUSAR) ready to "fly" again? The group has pulled back to test key price support, started to rebound, but are down again today. I'd watch the price support zone highlighted in green below:
The AD line is very strong and price support should be found from 170-175. I suspect this group is ready to "take off" again.
ChartLists/Strategies
It's difficult to get aggressive ahead of a very important July CPI report, which will be released at 8:30am ET tomorrow morning. In our LIVE trading room earlier, I took a small position in Republic Services (RSG) as it neared a key price support zone. I've been making additions to our Raised Guidance ChartList (RGCL) and RSG is one of them. The RGCL will be updated and made available to members this weekend. Here's the RSG chart:
Selloff on light volume with RSI reaching 40 and PPO back to centerline support suggest a reasonable trade here. Also, RSG is part of the industrials (XLI), which is beginning to strengthen again. The big thing for me is the ability to keep my risk very low on this trade. I bought at 147.74 and will add at 146.00, keeping a closing stop beneath 145.50.
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 notable 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 that you own or are considering owning.
Wednesday, August 9:
DIS, SONY, TTD, MFC, ILMN, RBLX, SRAD, BAM, WYNN, APP, UHAL, VST, CRL, TTEK, BERY, CAE, PLUG, REYN, WEN, VSH, PENN, GDRX, BCO, NOMD, VRRM, ALRM, XPEL, VSAT, SONO, MGNI, JACK, RAMP, ARHS, BLDP, WRBY, EVRI, AVID, TASK, SSYS, DDD, SKIN, CLNE
Thursday, August 10:
BABA, BN, WPM, BAP, NWS, USFD, RL, CYBR, ONTO, DDS, CPRI, YETI, CCOI, DNUT, VIAV, UTZ, SIX, HBI, ARLO
Economic Reports
None
Happy trading!
Tom