EB Daily Market Report - Thursday, October 5, 2023
ChartLists Updated
The following ChartLists have been updated and will be available for viewing/downloading later today:
- Strong Earnings (SECL)
- Strong Future Earnings (SFECL)
- Strong AD (SADCL)
- Raised Guidance (RGCL)
- Bullish Trifecta (BTCL)
- Short Squeeze (SSCL)
Executive Market Summary
- Futures were modestly lower overnight and our major indices gapped slightly lower at the opening bell
- Action quickly turned negative, especially on the NASDAQ, which led yesterday on a relative basis
- The 10-year treasury yield ($TNX) is down slightly to 4.73%
- Crude oil prices ($WTIC, -1.44%) are slumping again and down to just under $83 per barrel
- Other commodities are weak as well, with copper ($COPPER, -0.71%) threatening a very significant triangle breakdown - see Sector/Industry Focus below
- All 11 sectors are lower with materials (XLB, -1.42%) and consumer staples (XLP, -1.27%) the primary laggards
- Real estate (XLRE, -0.06%) is the best-performing sector, but still slightly lower
- Renewable energy stocks ($DWCREE, -4.08%) are again struggling and setting fresh new lows
Market Outlook
I want to share a very interesting chart of growth stocks vs. value stocks (or aggressive vs. defensive) since the Fed meeting two weeks ago. I believe this chart needs little narrating:
Higher interest rates for longer should mean lower valuations ahead for growth stocks. But the market's reaction has been absolutely the opposite. That tells me this selling is not going to last and that there are much brighter days ahead.
Sector/Industry Focus
Commodities continue to fall and copper ($COPPER) is a fairly solid proxy of global economic conditions. That's a bit unsettling as copper threatens a significant breakdown of what normally is a bullish continuation pattern. Check it out:
The blue-dotted directional line shows what would be expected from this pattern. Instead, it's at least on the verge of breaking in the other direction. In my opinion, copper much below $3.55 would constitute a rather significant breakdown. Today, copper is down 0.63% to $3.57.
ChartLists/Strategies
I would do nothing in terms of trading individual stocks ahead of tomorrow's September nonfarm payrolls report. This report has the capability of sending the stock market significantly higher or lower at the open. I prefer to avoid those risks, if at all possible.
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.
Thursday, October 5:
STZ, LW, CAG, LEVI, AEHR
Friday, October 6:
None
Economic Reports
Initial jobless claims: 207,000 (actual) vs. 210,000 (estimate)
Happy trading!
Tom