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Sizing Up the S&P 500

  • S&P 500 stayed 3 points above August 2022 high so far this week
  • Momentum slowing but members above 20-day MAs still exceed members above 50-day MAs
  • Rotation under the surface as more companies under $100bln of market cap make new 52-week highs
  • S&P 500’s move is relatively extended with index up in 6 of last 7 weeks but no reversal patterns are evident
  • Transports gaining, potential “Dow Theory” signal
  • April 21, 2022, high of 4513 may remain in play
S&P 500, daily chart, with select indicators and patterns.

Key News

  • Carnival (CCL) earnings, revenue beat estimates
  • Consumer confidence jumps to 17-month high as views of current situation improves
  • Generac (GNRC) gains amid Texas grid worries
  • Nvidia (NVDA) drops as The Wall Street Journal reports on potential export restrictions
  • Micron Technology (MU) earnings, revenue beat
  • Crude-oil inventories -9.6mln barrels vs -1.757mln estimate
    • SPR lowest since July 1983

Mover of the Week: Zillow Group (Z & ZG)

  • Real-estate marketing stock jumps as housing comes to life
  • Earnings, revenue and guidance surprised to the upside on May 3
  • Z +63% YTD
  • Still down about 75% from 2021 high
    • Z= non-voting shares
    • ZG=voting shares
  • Discovered using last week’s “non-index runners” scan.
  • Similar companies: EXPI, RDFN

Upcoming Events

  • Friday (6/30): PCE inflation
  • Monday (7/3): ISM Manufacturing
  • Tuesday (7/4): Market losed
  • Wednesday (7/5): OPEC meeting
  • Thursday (7/6): ADP payrolls, initial jobless claims

A Floor Under Crude?

Crude oil futures (@CL), daily chart, with select patterns.

Leveraged Cyclicals in Focus

  • Interest costs are fixed, allowing potential leverage if operations improve.
  • Non-recessionary “soft landing” can support demand. That can help pricing and margins.
  • Eventual peaking of interest rates can reduce interest expense in coming years.
  • Investors see potential double-benefit of margins and credit
  • Recent examples:
    • Cruise ships: CCL, RCL, NCLH
    • Airlines: AAL, UAL, DAL
    • Rental cars: CAR, HTZ
  • Is the opposite process working on consumer staples like GIS?

Using the Platform

Find leveraged cyclicals:

  • EV/MktCap custom indicator: Higher values = more leverage. Results must be sorted by sector because banks have leveraged business model.
  • EV/MktCap can be used in RadarScreen (see “MT Main” workspace: “fundamentals” tab) and Scanner
  • Potential Scan Criteria:
    • Indicator → EV/MktCap > 2 (finds leveraged stocks)
    • Indicator → Sector <> “” (displays sector)
    • Price → Last > Indicator → MovAvg 1 Line (Length = 50) (finds stocks above 50-day MA)
    • Price → %Chg → %Chg (5 day) < 10 (hides stocks up 10%+ in last week)

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