EB Daily Market Report - Wednesday, August 23, 2023

ChartList Update

I'm currently working to update all of our key ChartLists prior to our Portfolio Draft tomorrow, Thursday, August 24th at 5:30pm ET. I'm hoping to have the following complete by Thursday:

• Strong Earnings (SECL)
• Strong Future Earnings (SFECL)
• Raised Guidance (RGCL)
• Strong AD (SADCL)
• Bullish Trifecta (BTCL)
• Earnings AD (EADCL)

I'll keep you posted, but expect the updated ChartLists to be ready on Thursday morning.

Portfolio Update

Our Portfolios were scheduled to be sold at the close last Friday. However, given the extreme reading (.85) in the 5-day moving average of the equity only put call ratio, which suggested an imminent rally at hand, we decided to hold our portfolios another week.

We are HOLDING all portfolio stocks through this Friday, August 25th, unless discussed otherwise. We will do our "DRAFT" of new portfolio stocks on Thursday, August 24th and enter them at the close on Friday, August 25th.

Executive Market Summary

• Futures were higher overnight and that strength carried over into the opening bell
• The NASDAQ 100 ($NDX, +1.49%) is leading the action again today as technology (XLK, +1.72%) and communication services (XLC, +1.62%) power forward
• Renewable energy ($DWCREE, +2.86%) and internet ($DJUSNS, +2.50%) are keying that sector strength
• Cryptocurrencies are staging a little comeback with etherium ($ETHUSD, +3.04%) showing strength
• Silver ($SILVER, +3.97%) is higher for a 5th consecutive session as most commodities rise
• Crude oil ($WTIC, -0.50%) is an exception, however, and that's weighing on energy shares (XLE, -0.63%), today's worst-performing sector
• The 10-year treasury yield ($TNX) is no doubt buoying stocks as it's fallen 11 basis points to 4.22%, despite a stronger-than-expected new home sales report this morning
• Netflix (NFLX, +4.71%) is leading internet stocks higher, as well as outperforming every other stock on the S&P 500
• NVIDIA Corp (NVDA, +2.25%) will report its latest quarterly results after the bell today, and surely will impact the performance of semiconductors ($DJUSSC, +1.89%) and the NASDAQ on Thursday

Market Outlook

The weekly charts of both the S&P 500 and NASDAQ 100 are showing recoveries from just above their respective rising 20-week EMAs. Check these out:

S&P 500:

The growth ratios are turning higher as well. This chart fully supports the notion that we're reversing back to the upside in a meaningful way.

NASDAQ 100:

During uptrends, the weekly RSI can drop as low as 40 and a chart still remain in an uptrend. So don't rule out further consolidation in the NDX. But the current rally from just above the 20-week EMA is certainly a positive development. But do we hold onto this strength through NVIDIA Corp's (NVDA) earnings this afternoon and Fed Chief Powell's Jackson Hole speech? Those are the really big questions.

Sector/Industry Focus

Retailers have been dodging earnings bullets all week as several notable retailers have been absolutely crushed, including Dick's Sporting Goods (DKS), Macy's (M), and today, Foot Locker (FL). The latter is down 33.64% today (one-third of its market cap!) and its market cap is down nearly two-thirds since its earnings report that was released in May. While these 3 have certainly been bludgeoned, the widely-diversified XRT has been downtrending, but clearly holding up better. Still, there's plenty of technical work to do in this group:

Intraday, we have a hammer in place, but price can change a lot between now and the closing bell. But it's important to note that retail has been a very weak area of the market, so any reversal here would be a big help to our major indices - especially the small cap Russell 2000 (IWM).

ChartLists/Strategies

I provided 6 setups yesterday as possible reversal candidates, today I'll just add one:

RCL:

Note that the RSI on RCL dipped back perfectly to 40 support. Also, nearly all of the selling the past few weeks has been on below-average volume. The PPO has reset. One negative is a POSSIBLE head & shoulders top. Therefore, any close beneath 97.50 and I'd exit. But if this secular bull market resumes, RCL could push higher from here very quickly.

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 23:

NVDA, ADI, SNOW, ADSK, SPLK, NTAP, GRAB, WSM BBWI, AAP, KSS, DY, PTON, FL, ANF, ZUO, GES

Thursday, August 24:

INTU, RY, TD, NTES, WDAY, MRVL, DLTR, ULTA, HTHT, BURL, AFRM, GPS, JWN, WB

Economic Reports

July new home sales: 714,000 (actual) vs. 705,000 (estimate)

Happy trading!

Tom