EB Daily Market Report - Wednesday, January 15, 2025
Executive Summary
- Our major indices were higher overnight, then further supported by a fairly benign Core CPI (+0.2% vs. +0.3%) report this morning
- Key indices have been higher throughout the day, led by aggressive areas of the market, namely financials (XLF, +2.68%) and consumer discretionary (XLY, +2.42%)
- Consumer staples (XLP, -0.17%), the defensive side of consumer stocks, is the only sector down today
- Banks ($DJUSBK, +3.48%) have been very strong today as several large money center banks reported excellent results
- The fundamental outlook is incredibly bullish for banks and we're seeing that play out in terms of earnings
- JP Morgan (JPM, +2.26%) is breaking to an all-time high close today after reporting quarterly EPS of $4.81, crushing its $4.03 estimate
- Goldman Sachs (GS, +6.13%) also crushed its EPS estimate, $11.95 vs. $8.07, and is powering the Dow Jones higher by 800 points
- The lower inflation number resulted in a ton of treasury buying, with the 10-year treasury yield ($TNX) falling by 14 basis points to 4.65%
- Home construction stocks ($DJUSHB, +2.36%) have benefited this week from the falling TNX
- Cryptocurrencies are enjoying an excellent day as well, with XRP ($XRPUSD, +10.79%) soaring to an all-time high
- Commodities are surging as well, with crude oil ($WTIC, +4.08%) above $80 per barrel and at its highest level since mid-August
- Intuitive Surgical (ISRG, +8.13%) is today's top-performing S&P 500 stock after releasing preliminary quarterly results
Market Outlook
Given the better-than-expected inflation news this morning, the small cap IWM gapped above its declining 20-day EMA, then proceeded to drop below it on an intraday basis. I do like the recovery this afternoon, however, as it hangs onto that support level (green arrow) - at least for now:
The AD line maybe (?) is starting to trend higher again. But we're definitely seeing improvement in the PPO and the holding of 20-day EMA support provides an opportunity for the IWM to sustain this rally above key price support at 226-227.
Sectors/Industries
Here's a quick look at the best-performing industry groups today after the better-than-expected CPI data:
I love to see areas like autos, asset managers, internet, banks, and investment services among today's leading groups. Banks and investment services are being buoyed higher by excellent earnings results. TSLA is very strong today, leading the autos, and internet stocks historically do well in January, so those historical tailwinds could be kicking in.
ChartLists and Trading Strategies
Below is the Top 10 performing stocks in our Strong AD ChartList:
If you like to trade mostly on an intraday basis, I'd follow this ChartList closely. The Strong AD ChartList features companies that have shown a tendency to perform much better during their afternoon sessions, providing potential opportunities to trade these stocks in the morning, when they're perhaps seeing a bit of downside action.
I will be updating this ChartList this weekend. We try to update this ChartList once a month so that it contains companies showing positive accumulation by Wall Street firms.
Upcoming Earnings
The following are expected earnings reports after today's close and before tomorrow's open. Stocks highlighted in BOLD represent stocks included in one of our portfolios.
Wednesday, January 15 (after market close):
SNV, HOMB, FUL, CNXC
Thursday, January 16 (before market open):
UNH, BAC, MS, INFY, PNC, USB, MTB, FHN
Economic Reports
December CPI: +0.4% (actual) vs. +0.3% (estimate)
December Core CPI: +0.2% (actual) vs. +0.3% (estimate)
December empire manufacturing index: -12.6 (actual) vs. 1.0 (estimate)
Beige book released at 2:00pm ET
Happy trading!
Tom