EB Daily Market Report - Wednesday, July 10, 2024
Executive Market Summary
- Futures were slightly higher and we saw our major indices gain ground at the opening bell
- Our major indices have climbed throughout much of the trading day
- Leadership comes in the form of the NASDAQ 100 ($NDX, +0.92%), though all of our key indices are up from 0.6% to 1.0%
- The 10-year treasury yield ($TNX) is down 2 basis points to 2.28%, as all 11 sectors gain ground today
- Technology (XLK, +1.20%) is the leading sector once again, lifted by an equally-impressive semiconductor space ($DJUSSC, +2.20%)
- Financials (XLF, +0.13%), the weakest sector, was down early, but has strengthened this afternoon as big banks get set to report earnings on Friday
- Home construction ($DJUSHB, +2.37%) is having a nice day after bordering on the edge of a big breakdown - see more below
- The June CPI report will be out tomorrow morning and could have a very big impact on both the stock and bond markets
- Deckers Outdoor Corp (DECK, -5.33%), a once high-flying footwear stock ($DJUSFT, -1.33%), cannot seem to catch a bid and is today's worst-performing S&P 500 stock
Market Outlook
The short-term negative divergences that I discussed yesterday remain in play as prices have crept higher once again today. It's going to be really interesting in the near-term as we have two key inflation reports coming out tomorrow and Friday. The first is the really important one, in my opinion, as we'll get the latest on the June CPI. If the June Core CPI comes in below the +0.2% level expected, I'd argue the Fed should cut rates later this month. They are letting this drag on WAAAAY too long, in my view. And the economy may soon pay the price.
Let's assume we see good news. Let's assume that inflation reports once again are flat, or no worse than expectations. Let's also assume the stock market's reaction is positive. Guess what would be next? Max pain as July monthly options expire next week! I know the Volatility Index ($VIX) is low and I know that's very bullish for equities. However, market makers will soon have a lot of incentive to keep prices in check, if not lower them. That could ignite some fireworks late this week and into next week.
Sector/Industry Focus
Are we seeing the start of a kick save in the home construction area ($DJUSHB):
One solid piece of technical news has been the AD line rising during the most recent downtrend in price. Also, today's advance comes off another test of price support between 2270-2340. The next step, technically, for the DJUSHB is to clear the declining 20-day EMA, which has been quite the challenge since mid-May.
ChartLists/Strategies
The stock market is definitely fickle. One day after CrowdStrike Holdings (CRWD) threatened a breakout and failed, it's threatening a breakdown - and failing once again, though we haven't closed yet:
Would the real CRWD please stand up?
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, July 10:
WDFC, PSMT, AZZ
Thursday, July 11:
PEP, PDAL, CAG, VIST
Economic Reports
May wholesale inventories: +0.6% (actual) vs. +0.6% (estimate)
Happy trading!
Tom