EB Daily Market Report - Wednesday, November 6, 2024

Tom Bowley - November 06, 2024

Correction

Yesterday, in the ChartLists/Strategies section, I wrote a paragraph about why I love PLTR's chart, then provided everyone a chart of XLP. Obviously, it was a mistake. Or was it just old age? Either way, here is the PLTR chart I meant to send:

Executive Market Summary

Futures jumped strongly yesterday after the bell and strengthened overnight as news of a Trump victory became clear
Cryptocurrencies exploded higher with etherium ($ETHUSD, +10.08%) and bitcoin ($BTCUSD, +9.11%) leading the charge; BTCUSD is nearing 76000, though ETHUSD still remains below key resistance of 2800
Gold ($GOLD, -2.93%) is leading most commodities lower
Copper ($COPPER, -5.52%) has fallen to 4.23, having a very disappointing day
Crude oil ($WTIC, -0.08%) is roughly flat just below $72 per barrel
The 10-year treasury yield ($TNX) has surged 15 basis points higher to 4.44% in anticipation of a stronger economy ahead
U.S. equities are being fueled by that expectation of a strong economy with small caps soaring (IWM, 5.74%) and mid caps not too far behind (MDY, 4.13%); the Dow Jones has spiked 1500 points to set a new all-time high
The S&P 500, NASDAQ 100, and Russell 2000 are at all-time highs as well
The bulls are completely in charge today, with only defensive sectors lagging in negative territory

Market Outlook

The Presidential Election has ended for another 4 years, but the "Trump Trade" may have just started. The 10-year treasury yield ($TNX) jumped due to expectations that Trump's economic plans are likely to trigger economic strength ahead. That, in turn, has strengthened the U.S. dollar (UUP) and sent the Volatility Index ($VIX) plummeting. Of course, all of those things are bad for gold (GLD). Take a look at a chart summarizing all of this:

This combination of intermarket developments CRUSHED gold today, relative to the benchmark S&P 500. As bad as gold is today, U.S. stocks are blistering higher. Clearly, the relative ratio gets hit hard under this scenario.

Sector/Industry Focus

Which sectors are benefiting the most from Trump's victory in the 2024 Presidential Election?

This strength is consistent with what we typically see based on historical performance. Any time we see money rotating strongly INTO aggressive sectors and strongly OUT of defensive sectors, it's a bullish signal. Accordingly, I do not see anything here in which to be bearish about. The message this sends is that Wall Street is anticipating a strengthening economy ahead.

ChartLists/Strategies

I think it's really important to understand what is in favor and what isn't after Trump's Presidential Election victory over Harris. There are a number of ways to do it, but the first for me would be to see which sectors are leading and lagging. I provided that in the sector/industry focus area above. The second would be looking at industry group strength/weakness. Let's start with what's strong today:

I see strength in financials, infrastructure, transportation, the same things we discussed in our November seasonality report over the weekend.

Now for the worst-performing industry groups:

Most of this list represent defensive areas of the market, so it's rather clear that Wall Street's reaction is one consistent with history. For example, during this secular bull market (past 12 years), consumer staples's worst month has been May, followed by November:

This tells me that trading more aggressive stocks, particularly in financials (XLF) and industrials (XLI), makes a ton of sense right now.

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, November 6 - after market close (AMC):

QCOM, ARM, GILD, MELI, MCK, WMB, APP, ET, MFC, FICO, CTVA, HUBS, ANSS, TTWO, FNV, TPL, NTR, AEE, PTC, STE, ATO, TKO, TS, FNF, SUI, GFL, CHOR, EBR, MRO, WES, UHAL, RNR, ZG, DUOL, SRPT, HST, ALB, PR, KVYO, FBIN, RGLD, QGEN, MTCH, PRI, AGI, APA, RVMD, LTM, CHRD, JSN, MKSI, COTY, ELF, LYFT, HL, SITM, POWI, CORZ, ACLS, GNW, GH, MEOH, VCYT, RPD, TRIP, TNDM, WOLF, UPWK, VECO, RAMP, AMC, XHR, KRUS, SBGI, FSLY

Thursday, November 7 - before market open (BMO):

DUK, TDG, APD, BDX, CRH, PCG, TRP, KVUE, VST, DDOG, HSY, GOLD, ROK, BCE, HAL, CCJ, MRNA, EDR, MT, WBD, CG, DT, USFD, BSY, SRAD, VTRS, EVRG, RL, AU, TAP, TPR, EPAM, MTSI, TPX, COLD, PLNT, ELAN, IBP, MDU, NVMI, NXST, ACIW, SEE, YOU, ESGR, TIGO, XRAY, RXO, MUR, PRMW, CCOI, HGV, OSCR, GOLF, WD, HAE, AQN, PBH, HGTY, SHOO, TGLS, PRKS, PENN, YETI, LCII, PLTK, MPW, TGNA, HBI, APPN, GDRX, PCT, LSPD, VCEL, PRVA, DNUT, PZZA, WRBY, COMM, OLPX, WWW, DNOW, ACMR, XPEL, CARS

Economic Reports

FOMC meeting begins

Happy trading!

Tom