EB Daily Market Report - Tuesday, January 23, 2024
ChartList Updated
I finally (!!!) updated the MarketVision 2024 ChartList and it's now available on our website. It's on the Annual Member Exclusives page under "Webinar Resources", so feel free to check it out at your leisure.
Executive Market Summary
- Futures were slightly down overnight on the Dow Jones, but higher across our other major indices
- The small cap Russell 2000 (IWM) got off to the best start, but quickly faded; at last check, all of our major indices were moving higher, with the S&P 500 closing in on another all-time high
- Consumer staples (XLP, +1.21%) lead all sectors today, while real estate (XLRE, -0.44%) is the primary laggard
- Home construction ($DJUSHB, -6.40%) is putting pressure on consumer discretionary (XLY, -0.37%) after DR Horton (DHI, -9.00%) fell short of its quarterly EPS consensus estimate
- Bitcoin ($BTCUSD, -2.17%) continues its rapid 2024 descent, as it's now dropped 10000 (from 48000+ to 38000+) over the past 12 days
- Commodities are mixed with crude oil ($WTIC, -0.36%) lower, while gold ($GOLD, +0.41%) and silver ($SILVER, +1.18%) are both higher
- The 10-year treasury yield ($TNX) is up 4 basis points to 4.14%
- Verizon (VZ, +6.48%) leads all components in the S&P 500 after releasing its quarterly results, which showed EPS came in at 1.08, slightly above the consensus estimate of 1.07
Market Outlook
On Saturday, January 6th, I discussed the "average" Presidential Election year performance (PEYP) Here's a chart from a User-Defined Index (UDI) that I created at StockCharts.com that tracks Presidential Election year performance throughout the entire year. The "typical" PEYP looks something like this:
Q1 tends to be flat and somewhat choppy with a key low printing during the month of March. From that low through deep into summer, we usually see a very solid advance in the S&P 500. From there, uncertainties surrounding the election may be the root cause of late summer selloffs. But as we approach the election itself, the S&P 500 usually takes off into year end.
There's no guarantee that 2024 shapes up like the normal Presidential Election year cycle, but it's worth at least keeping it nearby to review throughout the year.
Sector/Industry Focus
I've discussed the problems that home construction stocks ($DJUSHB) normally face after the strong November-January seasonal period ends. If you're not aware of it, check out this 20-year seasonality chart:
It's pretty clear to me. The average gain from November through January totals 11.5%. If we add up the other 9 months, we get an average return of -0.4%. So, for the past two decades, ALL of the gains in home construction have come during 25% of the calendar year - the three months, November, December, and January.
ChartLists/Strategies
Don't forget that we keep daily Upcoming Earnings ChartLists that you can quickly review to check out leaders and laggards after new fundamental information - quarterly earnings results - is released. Here's a quick summary of companies that reported Monday AMC (after market close) or Tuesday BMO (before market open) and Wall Street's initial reaction:
Unfortunately for our Aggressive Portfolio, the worst reaction was Logitech (LOGI), which is one of our Aggressive Portfolio holdings. Earnings releases can go either way and this one certainly went against us. It's a simple reminder how risky it is to hold ANY stock into its earnings report. LOGI, by the way, beat Wall Street consensus estimates as to both revenues and EPS. I'll be watching to see if important gap support holds at 81.58 on LOGI, if we see further short-term weakness.
DHI is a stock that we hold in our Income Portfolio. It actually missed its EPS estimate and only performed slightly better than LOGI. These reactions are hit or miss and we missed twice today.
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 23:
JNJ, PG, NFLX, VZ, TXN, GE, ISRG, RTX, LMT, CNI, MMM, DHI, PCAR, BKR, HAL, ERIC, STLD, SYF, EWBC, WBS, IVZ, MMYT, LRN
Wednesday, January 24:
TSLA, ASML, ABT, SAP, IBM, NOW, T, ELV, LRCX, CSX, GD, APH, FCX, CCI, KMB, TEL, URI, AMP, LVS, RMD, RJF, TDY, WRB, STX, TXT, PKG, EDU, KNX, CACI, HXL, SLG
Economic Reports
None
Happy trading!
Tom