EB Daily Market Report - Tuesday, July 16, 2024

Tom Bowley - July 16, 2024

ChartLists Updated:

I've just updated the following ChartLists:

Strong AD (SADCL)
Bullish Trifecta (BTCL)
Strong ETF (SETFCL)
Model ETF Portfolio (MODETF)
Short Squeeze (SSCL)

We're in the process of posting these to our website, so you should be able to view/download them very shortly, if not by the time you receive this DMR

Max Pain

Our July Max Pain event will be held at 5:00pm ET today. We've seen out room instructions and hope to see you there!

Remember, our webinars are recorded in the event you cannot make it live.

Executive Market Summary

Futures were up overnight and our major indices opened higher at the opening bell
Since that opening bell, however, small caps (IWM, +3.27%) have dominated, once again having a superb day both on an absolute and relative basis
Transports ($TRAN, +3.07%) have also caught fire, gaining more than 1200 points over the past 4 days
That's led to all-time highs on the Dow Jones ($INDU, +1.77%)
Among industry groups, banks ($DJUSBK, +3.22%), especially regional banks (KRE, 4.64%) have exploded
10 of 11 sectors are higher, led by industrials (XLI, +2.38%) and materials (XLB, +1.79%); meanwhile, technology (XLK, -0.47%) is the laggard
Airlines ($DJUSAR, +5.48%) and trucking ($DJUSTK, +4.17%) are pacing the transports
Home construction ($DJUSHB, +6.26%) is leading discretionary, moving quickly to an all-time high
June retail sales were flat, but better than expected; this is the 3rd consecutive month where we've seen weak retail sales
Commodities are mixed, though gold ($GOLD, +1.72%) and silver ($SILVER, +1.87%) remain quite strong
The 10-year treasury yield ($TNX) is down 6 basis points to 4.17%, a 4-month low
Charles Schwab (SCHW, -9.64%) is the worst performer on the S&P 500 after simply matching both revenue and earnings estimates

Market Outlook

I love to see the Dow Jones ($INDU) setting all-time highs, while being powered by transports ($TRAN), and that's exactly what we're seeing today:

Sector/Industry Focus

Here's a quick peek at the Dow Jones U.S Bank Index ($DJUSBK) and the regional bank ETF (KRE):

When I spoke earlier this year about banks doing well in 2024 and the IWM showing great relative strength, it was due to my expectation that the fed funds rate would decline. Right now, everything is screaming that rates will be lowered and you can see the impact that is having.

ChartLists/Strategies

Our Short Squeeze ChartList (SSCL) has been on fire of late and today's no exception. Check out the top performers in this ChartList Summary page:

Check out the far right hand column. Nearly every stock on the Short Squeeze ChartList (SSCL) is a small cap. So now that small caps are on the run higher, shorts are running for the exits (buying to cover) like their hair's on fire. These are the 20 performers on the SSCL today.

One stock that I like on the SSCL isn't even in today's Top 20, gaining a "measly" 7.44%. It's breaking out today above multiple tops with volume now well above average the past couple days. I could see a big gap higher tomorrow morning, but NOTHING is ever guaranteed. Taking a position in UPST is VERY RISKY, but could yield BIG RETURNS. Check out the chart:

The AD line is awful, suggesting to me this is a short-term trade ONLY. I'll be looking to take my money and run. And ANY failure to hold 30.00 on a closing basis and I'm OUT.

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, July 16:

BAC, UNH, PGR, MS, SCHW, PNC, STT, JBHT, IBKR, OMC

Wednesday, July 17:

ASML, JNJ, ELV, PLD, USB, CCI, KMI, DFS, EFX, STLD, SYF, NTRS, CFG, UAL, ALLY, REXR, FHN, AA, FR, WTFC, SNV, FNB, HOMB, OZK, SLG, LBRT

Economic Reports

June retail sales: +0.0% (actual) vs. -0.3% (estimate)

June retail sales less autos: +0.4% (actual) vs. +0.1% (estimate)

May business inventories: +0.5% (actual) vs. +0.4% (estimate)

July housing market index: 42 (actual) vs. 43 (estimate)

Happy trading!

Tom