EB Daily Market Report - Brief Update - Tuesday, July 23, 2024

Tom Bowley - July 23, 2024

I want to provide you a quick market update. Before I get started, please be sure to check out an article that I just published at StockCharts.com, "Have We Bottomed? Here Are 3 Charts To Watch." This is primarily a discussion of technology (XLK), along with semiconductors ($DJUSSC), and the biggest semi of all, NVIDIA Corp (NVDA). We need to be prepared for the possibility that this short-term period of selling/weakness morphs into something much bigger. That's one of the main reasons why we decided to hold our Saturday, July 27th event, "Why The S&P 500 May Tumble." If you cannot make the event live, you should try to watch the recording at your leisure. I don't expect this to morph into a cyclical bear market (20%+ drop), but I could absolutely see a drop of more than 10%. Much will depend on upcoming Fed action (or inaction) and economic reports, which are already showing signs of deterioration.

Upcoming Earnings ChartLists

I apologize for not getting these updated earlier, but here are the individual ChartLists for each day this week, followed by the all-encompassing relative strength ChartList that includes all stocks reporting this week. We'll get our website updated, but in the meantime, you can view/download these 6 ChartLists below by clicking on the link provided AND using the ChartList-specific password provided when prompted:

Monday, 7/22 BMO (pw: EARN7121)
Monday, 7/22 AMC - Tuesday, 7/23 BMO (pw: EARN7121)
Tuesday, 7/23 AMC - Wednesday, 7/24 BMO (pw: EARN5833)

I'll provide the rest on the website later this evening.

Market Update

For the most part, prices are higher across our major indices, though recent themes remain present. Technology (XLK, -0.30%) and semiconductors ($DJUSSC, -0.80%) both remain quite weak on an absolute and relative basis. Meanwhile, financials (XLF, +0.53%) are leading today's action, supported by mortgage finance ($DJUSMF, +1.04%) and investment services ($DJUSSB, +1.03%).

Internet stocks ($DJUSNS, +0.71%) are having a nice day, ahead of a HUGE quarterly earnings report from Alphabet (GOOGL, +0.64%). It's a bit of an educated guess whether a stock will move higher or lower with respect to its quarterly earnings, but GOOGL has been a fairly solid relative performer within the DJUSNS, so I'd expect a nice report and reaction. An open above 189.15 at tomorrow's opening bell would signal a further rally, while anything beneath 89.15 at tomorrow's open would suggest to me that it's not quite ready to break out.

Automobiles ($DJUSAU, -1.77%) are the worst-performing industry group in the consumer discretionary (XLY, +0.04%) sector and are outperforming only 3 other industry groups today. Here are the 3 worst:

Delivery services ($DJUSAF, -7.37%) - United Parcel Service (UPS, -13.26%) is weighing on the group after missing both quarterly revenue and EPS estimates.
Commercial vehicles & trucks ($DJUSHR, -2.37%) - like UPS, PACCAR, Inc. (PCAR, -10.86%) was a thorn in the side of the DJUSHR after missing quarterly revenue and EPS estimates.
Aluminum ($DJUSAL, -2.09%) - this index is now testing a very important support level at 115.

It's important to note that Tesla (TSLA, -1.37%) will be reporting its latest quarterly results after the closing bell today. Both GOOGL and TSLA have nice relative strength heading into their reports. If I had to choose, I'd give the nod to TSLA having a slightly better chart and relative strength.

Happy trading!

Tom