EB Daily Market Report - Thursday, August 8, 2024

Quick Reminder

Our Webinar Special provides a bonus month for all new annual members or for any existing monthly or annual members wishing to extend for a year. CLICK HERE for more information. This Special ends tonight at midnight ET, so please take advantage!

New YouTube Video Released

My weekly market recap on StockCharts for Thursdays was just recorded and published at YouTube. You can find today's episode, "CAUTION! Growth Stocks Say "Don't Trust This Rebound!" on YouTube now. Simply click and follow the link.

Executive Market Summary

• Futures soared after initial jobless claims were reported well below expectations
• Our major indices gapped higher and, except for a bit of early morning weakness, they've continued to push higher throughout the session
• The 10-year treasury yield ($TNX) is up 3 basis points to 4.00%, likely rising because of lower claims as well
• The Volatility Index ($VIX, -12.75%) has traded strangely all day, but continues to fall
• Cryptocurrencies are seeing a MASSIVE rally today with etherium ($ETHUSD, +10.02%) and bitcoin ($BTCUSD, +8.88%) both performing very well
• Commodities are higher across the board, with crude oil ($WTIC, +1.12%) jumping above $76 per barrel
• Technology (XLK, +3.33%) is having an outstanding day as the better-than-expected claims number helped to fuel buyers
• All 11 sectors are higher in a wide-participation move back to the upside
• Eli Lilly (LLY, +9.45%) is off its earlier high, but still sits atop the S&P 500 leaderboard after reporting better-than-expected quarterly results and raising its revenue outlook

Market Outlook

What a difference a day makes! Initial jobless claims, which I don't tend to follow all that closely most of the time, have become a very important economic report each week now. Given that the Fed has admitted they're seeing economic deterioration, every report dealing with the economy and/or inflation will be heavily scrutinized, just as initial claims were this morning. Despite the very nice day, which should be expected in a volatile market environment, here's a chart showing that XLK's big rally is about to challenge serious overhead resistance:

The potential downside is ominous and based on the most recent head & shoulders breakdown. It highlights the recent price support and also a potential H&S measurement all the way down to 185. Still, rallies can be enjoyed. We just cannot ignore other signs of short-term weakness ahead.

Sector/Industry Focus

In the Live Trading Room on Wednesday, I suggested that trading areas other than aggressive growth on the long side could still make sense. If an area of the stock market remains in a bullish pattern or clears major resistance, I'd absolutely consider trading stocks within that space on the long side. I might trade smaller positions and/or keep tight stops, but I wouldn't necessarily avoid trading altogether. One area to keep on your radar is defense stocks ($DJUSDN). I've mentioned this area previously and, despite all the volatility and overall weakness we've seen the past month or so, check out the DJUSDN:

The DJUSDN seems to be advancing no matter what the overall market is doing. Clearly, its chart is healthier than just about any other industry group out there. Its AD line just set a new 52-week high last week to put an exclamation point on the chart.

ChartLists/Strategies

Like I just said above, you can find areas to trade if you'd like. For me, however, the crazy volatility is enough to keep me on the sidelines. That's just a personal preference of mine. I'll post individual charts from time to time here that you can consider, but I'll likely remain in cash for the near-term and until I feel the risks have shifted and support being back on the long side. Right now, I still believe it's a 50/50 deal with many short-term signs pointing lower.

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, August 8:

LLY, GILD, BN, PH, CRH, TTD, LNG, DDOG, MLM, TTWO, VST, QSR, PBA, EDR, TKO, GMAB, RPRX, EXPE, NWSA, NRG, AKAM, VTRS, PODD, USFD, SUZ, WMS, NTRA, EPAM, LAMR, INSM, SBS, CYBR, SN, ELF, ONTO, DBX, CHH, U, MUR, NXST, FOUR, NVMI, SEE, DOCS, VRRM, HAE, RDNT, CPRI, YETI, FIVN, DIOD, SYNA, REZI, SG, UA, CLSK, PRFT, DOCN, EVH, TGLS, CARG, YELP, TXG, KSS, HBI, PLUG, DNUT, NVAX, SOUN, TASK

Friday, August 9:

EVRG, LEGN, SATS

Economic Reports

Initial jobless claims: 233,000 (actual) vs. 240,000 (estimate)

Happy trading!

Tom