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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
Key News
- Carnival (CCL) earnings, revenue beat estimates
- Vertical call spread followed the report
- 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?
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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