EB Daily Market Report - Wednesday, September 11, 2024
Executive Market Summary
- Futures were relatively flat when the August CPI report was released at 8:30am ET
- After the Core CPI came in above expectations, futures dropped quickly, then rebounded into the open
- There was bifurcation at the opening bell, followed by a steep morning selloff, but there's no doubt that the bulls have been in charge the balance of today's session
- Growth (IWF, +1.60% is swamping value (IWD, -0.43%) one day after I pointed out how growth had been lagging badly - this is a bullish development
- Quite honestly, this has been a day of recovery for technology (XLK, +2.77%) and semiconductors ($DJUSSC, +5.81%)
- Renewable energy ($DWCREE, +13.70%) has soared on the heels of First Solar's (FSLR, +13.85%) huge advance
- Perhaps today's biggest surprise is the 10-year treasury yield ($TNX), which has only budged 1 basis point higher to 3.65%, despite a higher than expected Core CPI number
- NVIDIA Corp (NVDA, +7.44%) has rebounded strongly today to lead those semiconductor stocks higher
Market Outlook
This is a HUGE day of accumulation - at least in technology (XLK) - which is bullish without a doubt. It certainly does NOT mean we're out of the woods from a September/October correction standpoint. However, bottoms have typically formed when moves lower result from gap downs and intraday selling - until the 10am-11am ET period - and are followed by huge rebounds. In my view, today's action is one of the most bullish days since the S&P 500's top in July. The NASDAQ 100's (QQQ) rebound is even more impressive, because much of the strength is concentrated in technology:
The QQQ has recovered more than $15 from its intraday low of 451.28. Its relative strength vs. the S&P 500 (in the lower panel) is also turning up strongly.
I view this as clear accumulation. Technology may have been wounded, but it is by no means dead.
Sector/Industry Focus
I know it's September 11th and I don't typically look for important lows to form at this time of the month, but I won't avoid passing along bullish developments when I see them. Today, broadline retail appears to be breaking above the neckline on an inverse head & shoulders pattern, so there has been some meaningful strength outside of technology too. Check it out:
The Fibonacci Retracement tool shows the inverse head forming at the 50% level. This inverse head & shoulders pattern measures to 4500. I'd want to see the DJUSRB remain above the rising 20-day EMA on any upcoming pullback to keep this pattern in play, however.
ChartLists/Strategies
After the selling in September and this morning's big move lower to retest the low from a few days ago, the S&P 500 has exploded higher over the past 4 hours. It's been an impressive reversal, led by technology and growth stocks, so it seemed like a good day to run our Downtrend Reversal scan and limit it to those stocks with SCTRs over 90 (best relative strength stocks). Here are the results to that scan:
AFRM was a very hot technology stock after earnings, sold off, and now appears to be resuming its prior uptrend:
This scan helps to identify solid, leading stocks as soon as a bout of profit taking reverses.
There were 9 stocks that met our scan criteria, but only 3 came from technology. It's important to note that more than half our sectors are lower today, but we do have 6 other stocks on this scan result from sectors other than technology.
Earnings Reports
Here are the key earnings reports for the next two days. I include all companies with market caps of $10 billion or more and 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, September 11:
None
Thursday, September 12:
ADBE, KR, RH, SIG, CAL
Economic Reports
August CPI: +0.2% (actual) vs. +0.2% (estimate)
August Core CPI: +0.3% (actual) vs. +0.2% (estimate)
Happy trading!
Tom