EB Daily Market Report - Wednesday, November 13, 2024

Executive Market Summary

• Futures were mixed at the opening bell and we've seen a roller coaster ride in U.S. equity most of the day
• Small caps (IWM, -0.55%) have been the weakest group throughout the day after starting with the most relative strength
• Most sectors are fractionally higher, though real estate (XLRE, +1.09%) and energy (XLE, +1.00%) are the leaders
• Meanwhile, technology (XLK, -0.08%) and health care (XLV, -0.08%) have been trying to dig themselves out of a hole all day
• Software ($DJUSSW, +0.64%) has remained strong, while semiconductors ($DJUSSC, -1.21%) remain weak
• The 10-year treasury yield ($TNX) dropped 7 basis points this morning after CPI was reported in line with expectations; it has since reversed higher and ended up 2 basis points to 4.45%
• Bitcoin ($BTCUSD, +1.38%) has moved above 90000 for the first time in history, a signal and a beneficiary of a "risk on" market environment
• Most commodities are down, though crude oil ($WTIC, -0.07%) remains near the flat line around $68 per barrel

Market Outlook

Two things that help to drive up gold ($GOLD) are (1) high and rising volatility ($VIX), and (2) a falling dollar. Both of these have favored gold throughout much of the year, but that's no longer the case and we're seeing erosion in gold's relative strength:

Beginning in July, gold performed exceptionally well, but note that the VIX started an uptrend and the dollar was falling precipitously. That combination led to strong performance in gold. We don't have that any longer. The VIX has essentially collapsed and the dollar is attempting to take the roof off its chart.

I have said that as long as gold remains in an uptrend, feel free to trade it. But when it rolls over, GET OUT. Now you see why. While gold will bounce from time to time, the trend is now DOWN, in my opinion, especially on a relative basis to the S&P 500.

Sector/Industry Focus

Check out these two industry groups in the communications services sector (XLC):

Internet:

Watch for this breakout! In the near-term, perhaps we see a bit more selling. However, I would not take a breakout lightly. Also, note what appears to be a bullish inverse head & shoulders pattern on the DJUSNS relative strength chart. A relative strength breakout to a 4-month high would add to this already very bullish Q4.

Broadcasting & Entertainment:

Another key industry group testing very important price resistance AND another one just waiting for its relative strength breakout as well. I love the PPOs on both of these charts as it signals that bullish momentum is accelerating.

ChartLists/Strategies

Well, we've seen at least one of the hourly negative divergences play out. The IWM literally just hit its 50-day SMA:

Note the PPO also nearing centerline support. I've begun buying back my IWM shares, leaving open the possibility of adding more if the 234 level is tested.

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 13 - after market close (AMC):

CSCO, NU, EC, TTEK, SARO, CSAN, ALVO, HP, JJSF, KLIC, DLO, HI, IBTA, TARS, AFYA, SONO, OCUL, HROW, NN, BV, ORLA, AGRO, KBDC, DGII

Thursday, November 14 - before market open (BMO):

DIS, BN, JD, MFG, NTES, TLN, BILI, BNT, VIPS, ZK, DDS, NOMD, INTR, VEON, AAP, SBH, AZUL

Economic Reports

October CPI: +0.2% (actual) vs. +0.2% (estimate)

October Core CPI: +0.3% (actual) vs. +0.3% (estimate)

Happy trading!

Tom