EB Daily Market Report - Wednesday, February 21, 2024

Tom Bowley - February 21, 2024

Portfolios and Annual Special

We selected the Top 10 Stock Picks in each of our 3 portfolios - Model, Aggressive, and Income. We announced that we would be entering these portfolio stocks as of the CLOSING PRICE on Friday, February 23, 2024. That means that we will purchase, for our accounting purposes, on Friday afternoon, NOT Monday morning. Members are welcome to completely ignore our portfolio stock selections, trade them occasionally, buy and hold them for 90 days (our strategy for our portfolios), wait for better entry prices, whatever. We are NOT Registered Investment Advisors (RIA) and do not recommend or advise the buying or selling of ANY securities. We are not licensed to do so. You should consider these portfolios as another piece of the education we provide at EarningsBeats.com. Please check with your own personal investment advisor before buying or selling any securities.

I also want to make sure our entire membership is aware of a very brief Annual Special that we are offering in connection with our Portfolio Draft event. You can CLICK HERE for more information about the special.

As always, thank you for your loyalty and support!

Executive Market Summary

Futures were down overnight and the recent selling continued into the opening bell
It's been a "risk off" environment of late, as technology (XLK, -1.54%) and communication services (XLC, -0.62%) lead today's selling
Meanwhile, energy (XLE, +1.53%) and utilities (XLU, +1.08%) are the primary beneficiaries of the current flight to safety
Cryptocurrencies have also weakened as bitcoin ($BTCUSD, -2.12%) has found resistance at 52500
Commodities are mixed, but higher crude oil prices ($WTIC, +1.16%) are no doubt helping energy stocks
The 10-year treasury yield ($TNX) surged to test its recent high after FOMC minutes were released at 2pm ET; the minutes showed the Fed was cautious about lowering rates too fast
Renewable energy ($DWCREE, -2.83%), semiconductors ($DJUSSC, -2.61%), and software ($DJUSSW, -2.14%) are the primary reasons the stock market is lower today
NVIDIA Corp (NVDA, -4.34%) is down ahead of its quarterly earnings report, which will be released just after today's closing bell

Market Outlook

I want to give you this reminder. The NASDAQ, since 1971, has produced annualized returns as follows for the two halves of Q1:

Q1 first half (Jan 1 - Feb 15): +31.15%
Q1 second half (Feb 16 - Mar 31): -0.11%

That is quite the disparity and something we need to at least be aware of. Yes, there has been plenty of bullish action during the second half of Q1, but we're talking TENDENCIES here. We'e already seen some selling since the Q1 first half ended, and NVDA's earnings results this afternoon could be a catalyst to further short-term selling.

This particular time in February is historically bearish. The period from February 16th through 23rd (this Friday) has produced annual returns of -43.40% since 1971 on the NASDAQ. I believe we're going to see a BLOWOUT report by NVDA in an hour or so. But the key question is....."has NVDA's stock price already built in such strength??" Stay tuned...

Sector/Industry Focus

Let's take a quick look at semiconductors ($DJUSSC). Last week's doji may have marked a top as this week's candle (thus far) is the most bearish of any we've seen on the DJUSSC since October. Check out this weekly chart:

The black circles show an overbought RSI beginning to weaken and a weekly candle that's suggesting there's a lot of net selling this week. Of course, this candle doesn't finalize until Friday's close and we know almost anything can happen with NVDA's earnings report coming out. But if NVDA can't forge a change in sentiment for semiconductors, we should probably expect further selling.

ChartLists/Strategies

There's way too much risk for me to consider trading individual stocks today. Let's get through NVDA's big earnings report and get past the current historically-cautious period before taking on more risk.

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, February 21:

NVDA, HSBC, ADI, RIO, SNPS, SU, VRSK, EXC, VTMX, ANSS, TCOM, NTR, VRT, ICLR, GRMN, TS, RIVN, NDSN, FNF, HST, MRO, AGR, RGEN, TPL, WES, EXAS, DINO, NI, CLH, UTHR, MOS, APA, WING, ETSY, LCID, WIX, GIL, FIVN, GKOS, RUN, DOCN, RELY, ZD, LIVN, PLAB, UCTT, CAKE, SSTK, TNDM, JACK

Thursday, February 22:

INTU, BKNG, MELI, EOG, VALE, PXD, NU, CPRT, KDP, PCG, SQ, D, LNG, LYG, MRNA, PWR, VICI, NEM, EIX, BLDR, RKT, TEF, LYV, ETR, TECK, IRM, PBA, CTRA, AEE, BMRN, POOL, NICE, LKQ, PODD, GRAB, AMH, GFI, FND, TFX, MORN, CVNA, PEN, OLED, ALTR, W, PLNT, SFM, LNTH, EVH, IRTC, ALRM, FOXF, ENV, NTLA, GVA, VCYT, UPBD, DVAX, ZIP, CARS, PLYA, FVRR

Economic Reports

FOMC minutes released at 2:00pm ET

Happy trading!

Tom