Here is My Lengthy-Time period Perspective on U.S. Shares | Buying and selling Locations with Tom Bowley

EB Weekly Market Recap Video

If you have not seen our newest weekend recording, it is now accessible HERE at YouTube.com.

Pattern – EB Weekly Market Report

This can be a pattern of our Weekly Market Report that’s despatched to EB members each Monday. We additionally present a Day by day Market Report (DMR) each Tuesday by way of Thursday and a fast market replace on Friday, however this Weekly Market Report is designed with the long-term in thoughts. I talk about many ideas on this report from week to week, and plenty of of them have been the indicators we have used to maintain our members on the best facet of the marketplace for the previous a number of years, together with our suggestion to get out of the market early in 2022, simply earlier than the 28% cyclical bear market decline.

We even have a BIG members-only occasion tomorrow, discussing the present state of the market and what to anticipate over the subsequent a number of months. Please think about signing up for our 30-day FREE trial and be a part of us for tomorrow night time’s occasion. You will get extra data and register for this free occasion by CLICKING HERE. Both means, get pleasure from this Weekly Market Report.

Weekly Market Recap

Main Indices

Small and mid caps confirmed management final week. In reality, the IWM is outperforming all of our different main indices over the previous month and is second solely to mid caps over the previous 3 months. If we’re beginning one other upside transfer now, it will be very attention-grabbing to see if small caps proceed to guide or if cash rotates again in the direction of these massive cap progress names.

Sectors

Communication providers (XLC) wasn’t the highest performer final week, however technically, the XLC does seem to have damaged its latest downtrend:

The value motion and PPO each look bullish and we noticed the RSI bounce off of the important thing 40 assist degree. The bears are hoping that (1) the XLC fails to interrupt above short-term value resistance close to 81, and (2) the RSI fails to interrupt again up above 60. I consider neither will happen, however now we have moved right into a extra cautious historic interval, so we have to stay goal.

Prime 10 Industries Final Week

Do not depend out financials simply but. The total line insurance coverage ($DJUSIF) group is breaking out of a cup with deal with at present:

Backside 10 Industries Final Week

Shopper finance ($DJUSSF) did not have an amazing week final week, however was it the completion of an A-B-C correction sample? If that’s the case, the 20-day EMA must be cleared to verify the potential begin of one other uptrend.:

The persistent damaging divergence indicated a potential lack of momentum, which suggests the elevated probability of a decline. We have seen that decline fairly clearly.

Prime 10 Shares – S&P 500/NASDAQ 100

Backside 10 Shares – S&P 500/NASDAQ 100

Massive Image

The month-to-month PPO continues to push larger and away from centerline assist. That is indicative and in line with how the S&P 500 behaves throughout secular bull markets. Additionally, notice that RSI 40 assist assessments have been profitable because the monetary disaster in 2008/2009. That is one other signal that the secular bull market stays alive and kicking.

Each our 10-year and 20-year charge of change (ROC) panels present that highs throughout this secular bull market haven’t come near earlier secular bull market highs. It is telling me we nonetheless have a lot additional to go.

Sentiment

Let’s revisit the 253-day SMA of the fairness solely put name ratio ($CPCE). I wish to refresh everybody’s reminiscence as to what occurs to the S&P 500 when this sentiment indicator tops with readings exhibiting EXTREME worry:

Wager in opposition to this chart at your personal threat. Personally, I consider that sentiment performs a a lot larger function in inventory market course than most folk give it credit score for. Each single main S&P 500 advance throughout this secular bull market has occurred with a major prime within the 253-day SMA of the CPCE. When this transferring common is falling, you wish to be on the lengthy facet…..PERIOD! This doesn’t suggest there aren’t pullbacks. There merely aren’t pullbacks that morph into bear markets.

Rotation/Intermarket Evaluation

Here is the most recent have a look at our key intraday ratios as we observe the place the cash is touring on an INTRADAY foundation (ignoring gaps):

QQQ:SPY

First, a fast reminder. Whereas this chart is known as “@SPYQQQ”, it is truly the QQQ divided by the SPY. When this line is rising, it means the QQQ is outperforming the SPY (“threat on” setting). When it is falling, it means the SPY is outperforming the QQQ (“threat off” setting). We have clearly been in a downtrend as cash has rotated in the direction of defensive- and value-oriented shares. The previous few days, this has modified and you may see the traces turning larger. The important thing to a sustainable upside transfer would be the continuation of this ratio to the upside.

IWM:QQQ

On an intraday foundation, small caps (IWM) have carried out nicely over the previous a number of months. However gaps haven’t labored of their favor, which is why small caps have trailed the QQQ and SPY year-to-date and over the previous 6 months. In my view, the gaps are disguising the underlying strengthening of the IWM. Time will inform if I am appropriate or not.

XLY:XLP

The XLY hasn’t carried out nice vs. the XLP, however opening gaps are masking the true image, which I consider is that discretionary shares are secure relative to staples shares – at the very least in 2024 so far.

Key Sector/Business Charts

Maybe the largest business group chart to indicate you proper now could be semiconductors ($DJUSSC). We all know this group can gentle a hearth below a secular bull market rally and we’re seeing a breakout of the latest downtrend/consolidation:

Nothing ensures us larger costs forward, but when I had my choose of 1 business group to interrupt out, it might be this one. The PPO is now testing its centerline from beneath, which could be a problem. However we have already seen a transfer above key trendline resistance and each transferring averages. Technical enchancment is evident.

Commerce Setup

Since starting this Weekly Market Report in early September, I’ve mentioned the long-term commerce candidates beneath that I actually like. Usually, these shares have wonderful long-term monitor information and plenty of pay good dividends that principally develop yearly. Solely in very particular circumstances (exceptions) would I think about a long-term entry right into a inventory that has a poor or restricted long-term monitor report:

• JPM
• BA
• FFIV
• MA
• GS
• FDX
• AAPL
• CHRW
• JBHT
• STX
• HSY
• DIS
• MSCI
• SBUX
• KRE
• ED
• AJG

Needless to say our Weekly Market Experiences favor these extra within the long-term market image. Subsequently, the listing of shares above are shares that we consider are safer (however nothing is ever 100% protected) to personal with the long-term in thoughts. Almost all the things else we do at EarningsBeats.com favors short-term momentum buying and selling, so I wished to supply an evidence of what we’re doing with this listing.

I haven’t got any additions to listing “long-term” listing at the moment.

Wanting Forward

Upcoming Earnings:

Q1 earnings are underway and accelerating. I’ve recognized what I consider are key corporations that can report this week, with their respective market caps in parenthesis. That is NOT an inventory of ALL corporations reporting this week, so please you’ll want to verify for earnings of any corporations that you just personal or add. Any corporations in BOLD symbolize shares in one in every of our Portfolios:

• Monday: VRTX ($103 billion), PLTR ($50 billion), MCHP ($48 billion)
• Tuesday: DIS ($207 billion), ANET ($82 billion), TDG ($71 billion)
• Wednesday: UBER ($143 billion), ABNB ($102 billion), SHOP ($93 billion)
• Thursday: RBLX ($24 billion), AKAM ($15 billion)
• Friday: ENB ($77 billion)

Key Financial Experiences:

• Monday: None
• Tuesday: None
• Wednesday: None
• Thursday: Preliminary jobless claims
• Friday: Might shopper sentiment

Historic Information

I am a real inventory market historian. I’m completely PASSIONATE about finding out inventory market historical past to supply us extra clues about doubtless inventory market course and potential sectors/industries/shares to commerce. Whereas I do not use historical past as a main indicator, I am at all times very conscious of it as a secondary indicator. I adore it when historical past traces up with my technical indicators, offering me far more confidence to make explicit trades.

Beneath you may discover the subsequent two weeks of historic information and tendencies throughout the three key indices that I observe most carefully:

S&P 500 (since 1950)

• Might 6: -35.12%
• Might 7: -37.30%
• Might 8: +58.06%
• Might 9: -41.62%
• Might 10: -13.57%
• Might 11: -50.36%
• Might 12: +18.78%
• Might 13: -7.49%
• Might 14: -20.15%
• Might 15: +9.23%
• Might 16: +11.47%
• Might 17: -18.79%
• Might 18: -13.84%
• Might 19: -25.73%

NASDAQ (since 1971)

• Might 6: -57.65%
• Might 7: -58.48%
• Might 8: +76.53%
• Might 9: -53.65%
• Might 10: -17.03%
• Might 11: -19.11%
• Might 12: +33.12%
• Might 13: -16.95%
• Might 14: +13.42%
• Might 15: +35.21%
• Might 16: +52.22%
• Might 17: -36.99%
• Might 18: -9.09%
• Might 19: -42.21%

Russell 2000 (since 1987)

• Might 6: -85.09%
• Might 7: -95.97%
• Might 8: +77.52%
• Might 9: -36.57%
• Might 10: +1.29%
• Might 11: -50.24%
• Might 12: +0.46%
• Might 13: -84.43%
• Might 14: +10.37%
• Might 15: +29.02%
• Might 16: +20.18%
• Might 17: -23.07%
• Might 18: +82.33%
• Might 19: -41.25%

The S&P 500 information dates again to 1950, whereas the NASDAQ and Russell 2000 data date again to 1971 and 1987, respectively.

Here is a fast historic evaluation of the S&P 500 throughout Might since 1950:

• Might 1-5: +29.94%
• Might 6-25: -12.10%
• Might 26-31: +37.27%

Last Ideas

The bulls took benefit of a bullish historic week (Might 1-5) and we noticed a pleasant rally to shut out the week. We’re now a lot better positioned to deal with any short-term promoting and, fairly actually, aren’t removed from breaking out on a few main indices/sectors/business teams. I really like the VIX falling again down beneath 14 after bouncing over 16 on Wednesday and Thursday. In fact, the VIX topped above 19.50 in April, remaining just under what I think about to be a key degree of 20.

Listed below are a number of issues to contemplate within the week forward:

1. Financial Experiences. There are solely two significant financial reviews out all week – preliminary jobless claims and shopper sentiment and each of these might be out within the second half of the week.
2. Earnings. There are fewer and fewer market-moving earnings reviews out this week. ABNB and UBER are massive caps and can give us a glance into the well being of the buyer, however in any other case we’ll be getting a lot of small cap and mid cap corporations quarterly reviews.
3. Curiosity Charges: The ten-year treasury yield ($TNX) seemingly topped final week. It had an opportunity to interrupt above a key space of yield resistance from 4.65%-4.70%. It did make one shut barely above 4.70%, however that now seems to have been a false breakout. The query this week, after dropping 20-day EMA assist final week, is can the TNX grasp onto key yield assist from 4.39% all the way down to 4.30%. If the TNX continues falling, it could be good news for the small cap IWM.
4. Semiconductors ($DJUSSC): In my view, that is a very powerful business group throughout a secular bull market and it seems the group is breaking above a 2-month downtrend line. Let’s have a look at if we affirm this breakout, or if it seems to be a head faux.
5. Commodities. Can power (XLE) maintain 50-day SMA assist? Can gold ($GOLD) bounce again above its 20-day EMA? Can supplies (XLB) get previous final Wednesday’s excessive and shut there?
6. Development vs. Worth. Development shares have been downtrending vs. worth shares for a lot of the previous 2-3 months, however Might by way of August is traditionally the perfect 4-month interval of the complete 12 months for progress shares relative to worth.
7. Historical past. We actually have simply began at present a difficult historic interval for shares, from Might sixth by way of Might twenty fifth.

Suggestions

If you would like to share your ideas on our Weekly Market Report, constructive or damaging, you’ll be able to attain us at “assist@earningsbeats.com”.

Pleased buying and selling!

Tom