EB Daily Market Report - Tuesday, January 2, 2024

Tom Bowley - January 02, 2024

A Few Notes

First, HAPPY NEW YEAR to everyone! I hope your holidays were spent and enjoyed with family and friends!

Second, I was able to get many things done over the holidays, including adding the S&P 400 Mid Cap Index to our Seasonality research. That will be part of our Monthly Seasonality reports in 2024. I was not able to update our ChartLists, however, and with MarketVision 2024 rapidly approaching, I doubt I'll be able to update the ChartLists until after MV2024. The good news, though, is that there haven't been a lot of companies reporting the past 2-3 weeks, so there's not a lot to update.

Also, today will be our regular Daily Market Report. I'll publish the next Weekly Market Report on Sunday/Monday of this upcoming week.

MarketVision 2024

MarketVision 2024 is scheduled for this Saturday, January 6th, 2024, beginning at 9:30am ET. I'll be providing my roadmap, or forecast, for the entirety of 2024 at this virtual conference. For more information, be sure to CLICK HERE.

All Annual Members will be invited at ZERO cost. If you're not currently an annual member, now would be a great time to become one - to save up to $697.

Executive Market Summary

Futures were lower overnight and we gapped down across all of our major indices to kick off 2024
Bitcoin ($BTCUSD, +2.94%) pushed above 45,000 for the first time since April 2022 (and nearly reached 46,000)
The 10-year treasury yield ($TNX) is up 9 basis points to 3.95%, but still below its declining 20-day EMA
Crude oil ($WTIC, -1.47%) was near $73 per barrel this morning, but has fallen back beneath $71
Sectors are mixed with 6 higher and 5 lower; clearly, however, money is rotating to value/defensive shares
Health care (XLV, +1.42%) and utilities (XLU, +1.15%) are the only 2 sectors gaining more than 1%
Meanwhile, technology (XLK, -3.02%) is easily the worst-performing sector
Computer hardware ($DJUSCR, -4.01%) and semiconductors ($DJUSSC, -3.76%) are taking the biggest hits in technology
The Dow Jones is definitely the relative winner among our major indices as stocks like Merck (MRK, +3.59%), Amgen (AMGN, +2.94%) are offsetting weakness in Intel (INTC, -5.40%) and Apple (AAPL, -4.14%)

Market Outlook

I'll take a DEEP DIVE into 2024 at MarketVision 2024 this Saturday, but it's interesting to look at the S&P 500 chart I laid out on Saturday, January 7th, 2023 at MarketVision 2023, about one year ago. Here was my forecast for 2023:

Keep in mind that essentially NO ONE was calling for the resumption of a bull market at that time. I was out on a ledge by myself. But as I always say, I stick to my rules and signals and absolutely do not follow the crowd if my signals tell me it's a mistake to do so.

And here's how 2023 unfolded:

Pretty darn close, if you ask me.

I'm looking forward to my encore this Saturday.

Sector/Industry Focus

I'm still a big fan of the small cap Russell 2000 (IWM), but it's in a short-term downtrend currently. We've been seeing lower highs and lower lows on a daily basis and this downtrend cannot end without a reversal of this pattern. So if you've been waiting patiently for a pullback, or if you've been waiting for an opportunity to swap to the leveraged TNA (triple the performance of the IWM), that time could be approaching. I really like the combination of the 20-day EMA and the top of gap support, as shown below on the daily chart:

But let's zero in further on the 5-day, 10-minute chart and it's easier to see a short-term down channel in play:

While the long-term is quite bright in my view, we are overbought and, at least in the very near-term, the bears have garnered a bit of control. One other piece of short-term bearish news is that our 9-week streak of higher weekly lows has ended on today's selling. Check this out:

While short-term support resides in the 195-196 area for the IWM, the longer-term support on the weekly chart is at the rising 20-week EMA, currently at 185 and rising.

ChartLists/Strategies

I'm not adding anything today, but I'm watching the internet space ($DJUSNS) very closely. This group LOVES January and it's been one of the best-performing industry groups during January since this secular bull market began in 2013:

Internet moves higher roughly 3 out of every 4 Januarys over the past dozen years or so. The only month that's been stronger for this group has been July. Weakness in stocks like META, NFLX, and GOOGL could create some nice opportunities heading into their earnings reports. We'll see.

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.

Tuesday, January 2:

None

Wednesday, January 3:

UNF, CALM

Economic Reports

December PMI manufacturing: 47.9 (actual) vs. 48.2 (estimate)

November construction spending: +0.4% (actual) vs. +0.6% (estimate)

Happy trading!

Tom