EB Daily Market Report - Thursday, May 2, 2024

Tom Bowley - May 02, 2024

Executive Market Summary

Futures were higher overnight and gapped up
After initial selling, we've seen buyers step in throughout the session
Cryptocurrencies are rebounding with bitcoin ($BTCUSD, +3.10%) leading the way
Commodities are mixed as crude oil remains flat near $79 per barrel
The 10-year treasury yield ($TNX) is down 2 basis points to 4.57%, providing equities some relief
Technology (XLK, +1.25%) is showing leadership today, while materials (XLB, -0.64%) lag
Semiconductors ($DJUSSC, +2.36%) are bouncing back nicely, leading the XLK higher
Volatility ($VIX, -3.44%) has sunk back beneath 15, another bullish signal
After the bell, we'll hear the latest results from Apple, Inc. (AAPL)

Market Outlook

Take a look at how the IWM is positioned on its hourly chart vs. the SPY and QQQ:

It's beginning to look clearer that, since yesterday's FOMC announcement, the IWM is receiving more than its fair share of investment money. We'll see if it continues, but a breakout above the 200.50 level would be bullish, especially considering the intraday rotation that the IWM is seeing.....

Sector/Industry Focus

Let's take a quick look at the intraday performance of the IWM. This is a chart that I highlight every week in the EB Weekly Market Report, but I thought I'd update it and show you where we stand today:

The opening gaps are masking what's been taking place during the day. The 2nd panel (including gaps) has not come close to breaking out yet. However, the 1st panel excludes gaps and has broken out easily. This tells me that money is rotating away from large cap and into small cap. The obvious reason is that Wall Street is repositioning for a big advance ahead in small cap stocks.

ChartLists/Strategies

Apple (AAPL) reports its quarterly results tonight and while I can't tell you what they'll report, I do know that a TON of manipulation has taken place recently. Many gap downs were followed by intraday buying in the stock. So I don't the timing of the next uptrend and whether we've begun it or not, but I do know that AAPL LOVES May through August. Check out this seasonality chart:

If you add across the bottom, you'll find that AAPL "averages" outperforming the S&P 500 by 12% from May through August (last 12 years, or during the current secular bull market). During the other 8 months combined (Sept through April), AAPL "averages" outperforming the S&P 500 by 0.5%. Apple makes its hay the next 4 months. Does it start this year with tonight's earnings report? We'll know soon enough.

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, May 2:

AAPL, NVO, SHEL, LIN, COP, AMGN, BKNG, CI, REGN, CNQ, SO, EOG, MELI, ICE, ZTS, PH, TRI, BDX, MCO, PXD, APO, MSI, MNST, COIN, FTNT, SQ, DLR, D, MRNA, IQV, ARES, AME, CMI, PWER, IR, EXC, DKNG, VMC, ED, XYL, BCE, NET, CHT, HWM, OWL, CHD, TRGP, CAH, ZBH, RKT, TU, IRM, CTRA, LYV, BAX, MT, K, AEE, ILMN, APTV, EXPE, GMAB, ALNY, HOLX, GDDY, CNHI, SWK, AMH, RYAN,, LNT, AES, KIM, WRK, RGA, DVA, LAMR, FND, BRKR, HII, REG, CPT, TSRH, ITT, APG, CYBR, WTRG, OTEX, PCTY, SWN, X, OLED, MTSI, CGNX, ALTR, BILL, W, EXLS, LNC, SEE, LNTH, SHAK, FIVN, ITRI, HUN, WEN, KTB, IRTC, REZI, SPT, APPN, OUT, UTZ, IDCC, FTDR, TNSM, CRTO, SWI, INMD, OPEN, PTON

Friday, May 3:

HSY, LNG, TRP, CBRE, CBOE, CRBG, TRMB, MGA, XPO, PAA, NVT, FLR, GTLS

Economic Reports

Initial jobless claims: 208,000 (actual) vs. 211,000 (estimate)

Q1 productivity: +0.3% (actual) vs. +0.9% (estimate)

Q1 unit labor costs - annual rate: +4.7% (actual) vs. +3.3% (estimate)

March factory orders: +1.6% (actual) vs. +1.6% (estimate)

Happy trading!

Tom