EB Daily Market Report - Thursday, February 22, 2024
Portfolios and Annual Special
Reminder: We will be entering all of our portfolio stocks as of Friday's close. Yesterday's close would have been much better, given NVDA's quarterly earnings report and today's market reaction. Unfortunately, we don't have a crystal ball. So we'll stick with our original plan and enter at tomorrow's close.
Also note that 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. This special will end tomorrow at midnight, so please hurry and take advantage of this deal while it lasts!
Executive Market Summary
- Futures were higher overnight as NVIDIA Corp (NVDA, +14.67%) soared following its quarterly earnings release
- All of our major indices gapped higher and the S&P 500 is trading at another all-time record high, eclipsing the 5048.39 intraday record set on February 12th
- Cryptocurrencies, especially bitcoin ($BTCUSD, -0.53%) has been unable to clear key price resistance at 52500
- Crude oil ($WTIC, +1.07%) is now nearing $79 as the rally in crude oil and energy (XLE, +0.20%) continues
- "Risk on" is back in a big way as technology (XLK, +3.09%), consumer discretionary (XLY, +1.83%), and communication services (XLC, +1.59%) easily are leading the market higher
- The 10-year treasury yield ($TNX) is up one basis point to 4.33%
- Outside of NVDA, leaders on the S&P 500 include Moderna (MRNA, +15.06%) and Advanced Micro Devices (AMD, +10.73%)
Market Outlook
There are a lot of analysts still clamoring for higher gold prices. Don't count me as one of those. If you've been a member of EarningsBeats.com for while, you know that I have maintained my "AVOID" position on gold in particular for YEARS - mostly. Historically, gold requires two tailwinds for it to outperform. The first is a weak dollar ($USD) and the second is a high AND rising Volatility Index ($VIX). When the dollar falls and fear is strong, gold outperforms the S&P 500. When these two ingredients are lacking, gold has little chance to outperform. Thus, a hedge in gold to me simply means giving away your money.
Let me illustrate this relationship:
$GOLD:
The blue circle shows that gold recently broke to new highs and continues to trade near those highs. So the gold bulls are rejoicing, feeling as though they've literally struck gold! The problem is in the relative price chart in the panel below the absolute price chart. Gold has been losing ground to the S&P 500 for more than 12 years now and it's nearing yet another 12+ year relative low. Do you know what this tells me? BUY THE S&P 500 and FORGET ABOUT GOLD.
The pink circles highlight the correlation between the VIX and the relative performance of gold. Gold crushes the S&P 500 when the VIX is above 20 and rising. This a very simple conclusion to draw. When the S&P 500 is above 20 and rising, gold is an excellent hedge. But when the VIX is below 20, and especially below 17, you do not want to weaken your portfolio's performance by owning gold. Period.
Sector/Industry Focus
Yesterday, prior to NVDA's quarterly earnings release, this is the semiconductor chart ($DJUSSC) I showed you:
Well, that was yesterday. Today is a new day with new information, so let's check that chart again:
Yes, we're overbought, but overbought can remain overbought. And we're back at all-time highs with that weekly PPO accelerating to the upside, meaning that momentum is very strong.
ChartLists/Strategies
I ran a scan of Raised Guidance ChartList (RGCL) stocks that hit a new 52-week high today, specifically looking for those that had SCTR scores below 75, which would suggest a stock that's likely been consolidating recently and isn't crazy overbought. Two that I found were Welltower (WELL) and Iqvia Holdings (IQV). Check these out:
WELL:
IQV:
The two industry groups are not strong, but these two stocks are showing leadership among their peers. I'd follow the price support levels provided. So long as these hold, I'd be okay with a long position. They're also in traditionally-defensive areas of the market, meaning they'd likely hold up better if the overall stock market were to pull back.
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, 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
Friday, February 23:
BRK/A, WBD, AER, RBA, LAMR, BLMN, HBM
Economic Reports
Initial jobless claims: 201,000 (actual) vs. 216,000 (estimate)
January existing home sales: 4,000,000 (actual) vs. 3,970,000 (estimate)
Happy trading!
Tom