EB Daily Market Report - Thursday, March 21, 2024
Executive Market Summary
- Futures were up this morning and we've seen mostly positive action throughout the day
- The Dow Jones is up 300 points and nearing 40000, another huge psychological resistance level
- Small caps are providing leadership today after a solid performance on Wednesday afternoon
- Industrials (XLI, +1.01%) and financials (XLF, +0.87%) are the top-performing sectors, though all 11 sectors are higher today
- Heavy construction ($DJUSHV, +2.26%) is providing strength in the XLI, while asset managers ($DJUSAG, +2.52%) are showing the most strength in the XLF
- Commodities are mixed with gold ($GOLD, +1.07%) higher, while crude oil prices ($WTIC, -0.32%) are lower
- Reddit (RDDT, +46.00%) is up considerably from its IPO price of $34 per share, though it's been a volatile session
- Micron Technology (MU, +14.84%) is the top performer in the S&P 500 after a blowout quarterly earnings report yesterday after the bell
Market Outlook
Well, the Fed is now behind us again for awhile. The good news is that this time, Fed Chief Powell didn't say anything that alarmed market participants. The Fed stuck with their prior forecast of 3 rate cuts, and changed almost nothing in their wording from the prior Fed meeting, other than acknowledging that jobs are quite strong.
The response has been interesting. The 10-year treasury yield ($TNX) has dropped a bit down to 4.27%, but is relatively unchanged from 2pm yesterday, at the time of the Fed announcement. Rotation has continued to favor industrials and financials, and small caps are threatening a significant short-term breakout:
Sector/Industry Focus
I mentioned the strength in heavy construction ($DJUSHV) earlier, but another group that's strong today and appears to be well into another uptrend is industrial suppliers ($DJUSDS):
The blue directional line and green arrow perfectly demonstrate how technical analysis works at its core. Prior highs are resistance until you break above them (blue directional lines). Then they become support (green arrow). So we should look for the recent breakout above 820 to be support on the next wave of selling. That will likely occur AFTER a top and possibly a reversing candle prints.
ChartLists/Strategies
Yesterday, in our Live Trading Room, I bought several stocks into the Fed announcement. Fortunately, the market moved in our favor and triggered some nice winners, including Western Digital (WDC):
The green arrows show us that WDC has consistently been a great trade when its price pulls back close to the 50-day SMA. This time turned out to be no different as WDC got a big boost to the upside today in sympathy with Micron Technology's (MU) big earnings report. As I mentioned at the end of my Trading Places LIVE show this morning, I was taking profits at the open, because WDC did not clear candle body resistance with its opening gap up. That usually spells short-term trouble, so I'd rather take my profits than risk them.
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, March 21:
ACN, NKE, FDX, LULU, DRI, FDS, CMC, ASO, WGO
Friday, March 22:
None
Economic Reports
Initial jobless claims: 210,000 (actual) vs. 209,000 (estimate)
March Philadelphia Fed index: 3.2 (actual) vs. -5.0 (estimate)
March composite flash: 52.2 (actual) vs. 51.5 (estimate)
February existing home sales: 4,380,000 (actual) vs. 3,920,000 (estimate)
February leading indicators: +0.1% (actual) vs. -0.3% (estimate)
Happy trading!
Tom