EB Daily Market Report - Tuesday, June 11, 2024

Tom Bowley - June 11, 2024

Executive Market Summary

Futures were lower overnight and we saw our major indices gap down at the opening bell
Weakness was more concentrated once again on small (IWM, -0.44%) and mid caps (MDY, -0.48%), though both did close the gap somewhat during the day
Technology (XLK, +1.55%) is the only sector in positive territory today, but that's been enough to send the NASDAQ 100 ($NDX, +0.49%) to another record high
Computer hardware ($DJUSCR, +5.91%) is soaring as a result of Apple's (AAPL, +6.53%) AI plans
Renewable energy ($DWCREE, +4.33%) is having another excellent day, with First Solar (FSLR, +4.25%) again posting a solid gain
Other areas seem to be much more concerned about the Fed announcement and May CPI as 10 sectors have lost ground today
Commodities are mixed, with natural gas ($NATGAS, +7.54%) soaring, while silver ($SILVER, -1.97%) pulls back
The 10-year treasury yield ($TNX) is down 7 basis points ahead of the FOMC decision
Oracle Corp (ORCL, -0.26%) is down slightly ahead of its quarter earnings announcement after the bell today
All eyes are on the Fed and the May CPI; we'll potentially get a couple answers tomorrow - stay tuned!

Market Outlook

The 10-year treasury yield ($TNX) really isn't giving us much in the way of clues as we approach a critical day for traders. Tomorrow, the May CPI will be released at 8:30am ET. Then the Federal Reserve will wrap up their 2-day June meeting with its FOMC policy statement at 2pm ET. It appears the TNX is downtrending, but is it in a bullish wedge, needing a move higher to confirm a breakout?

It's certainly not what I consider to be a perfect bullish wedge, but we do see lower highs and lower lows that result in a squeezing "piece of pie". Which way do treasury yields move tomorrow with the policy decision? Higher with a potential test of 4.70% or lower to test a key yield support level of 4.28%?

This will likely have a significant impact on our major indices during the balance of June. What will Fed Chief Powell say about the next likely move in the fed funds rate? Will he lean to the dovish or hawkish side?

Buckle up.

Sector/Industry Focus

One of the worst-performing industry groups over the past 3 months has been trucking ($DJUSTK). However, the group is showing a positive divergence on its daily chart, suggesting we might see a quick move back to the upside:

It looks like we could see at least a short-term rebound here. The best SCTR among large cap truckers is TFII. YMM is the best mid cap trucker in terms of SCTR score. ODFL also shows a positive divergence and could be a solid trade to follow truckers higher.

ChartLists/Strategies

Last week I had mentioned that CrowdStrike Holdings (CRWD) looked good heading into earnings. CRWD reported beats on both its top and bottom lines and gapped up nicely. At that time, I also pointed out what looked like a possible bullish ascending triangle pattern. These patterns, however, require execution to establish a potential target. We also got the breakout and, in my opinion, CRWD's current price target is near 440. Check this out:

One stock on our Bullish Trifecta ChartList (BTCL) that appears to be at a solid reward-to-risk entry level is Zebra Technologies Corp (ZBRA). It's pulled back on mostly lesser volume the past few weeks and the AD line remains quite solid. I like Monday's reversal, so the low price on Monday could be used as an intraday stop to keep any loss minimal:

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, June 11:

ORCL, CASY, ASO

Wednesday, June 12:

AVGO, PLAY

Economic Reports

None

Happy trading!

Tom