To The Moon

Stocks edged lower on Tuesday (23 July) after a choppy session, major indices ended slightly lower, while small caps outperformed once again as investors parsed a mixed bag of earnings reports and prepared for the release of mega-cap results from Alphabet (GOOGL) and Tesla (TSLA) after the close.

Small caps out performed, with the Russell 2000 (RUT) up about 1%, while the broad S&P 500 Index (SPX) and blue-chip Dow Jones Industrial Average gave up on a mid-session rally to end slightly lower.

The S&P 500 also managed 0.16%) to close at 5,555.69; the Dow Jones Industrial Average gain 0.14% to close at 40,358.09; the NASDAQ ended slightly higher at 0.06% to close at 17,997.35.

This show that market is back to possible rotation after a brief mega-cap resurgence on Monday (22 July). Small-cap shares have soared the last two weeks after going nowhere most of the year thanks in part to growing expectations for a rate cut as inflation has slowed. 

Tuesday (23 July) Big Earning Report

Before the market open, we have Coca-Cola (KO), Lockheed Martin (LMT), and Spotify (SPOT) all go up higher after reporting better-than-expected results. Whereas General Motors (GM) and United Parcel Service (UPS) were both sharply lower after their quarterly updates disappointed.

Upcoming Economic Data

Later this week we are expecting the first estimate of second-quarter gross domestic product (GDP) on 25 July (Thursday) morning followed by Personal Consumption Expenditure (PCE) prices for June on 26 July (Friday) morning.

The focus would be PCE report as this has been known to move the market when market participants look at continued signs of progress against inflation following a constructive Consumer Price Index (CPI) report earlier this month.

8 Out Of 11 S&P 500 Sectors Ended Lower. Materials Sector At The Lead

Though the major indices ended slightly lower, yet we saw eight out of 11 S&P 500 sectors ended lower, with Health Care decline by -0.03% to Energy losing -1.55%.

The only sectors which has show strength is Materials with +0.38%, Financials with +0.08% and Consumer Discretionary also managed a +0.02% gain.

Note Yield Mixed

The 10-year Treasury note yield (TNX) was up six basis points to 4.261%. The 2-year Treasury note yield was down by 38 basis point to 4.462%

Cboe Volatility Index® (VIX) decreased

The Cboe Volatility Index® (VIX) decreased about 1.27% to 14.72. This show that market is optimistic and we should be seeing some volatilty amidst some improvement.

Stocks To Watch

$Alphabet(GOOGL)$ was little changed ahead of its earnings report but was down -2.19% after Alphabet beat second-quarter revenue and profit estimates on Tuesday, driven by a rise in digital advertising sales and healthy demand for its cloud computing services, but flagged that capital expenses would remain high for the year.

$Coca-Cola(KO)$ rose 0.2% after raising its full-year revenue and profit and delivering better-than-expected second-quarter results. 

Technical on MACD is showing an upside trend, suggesting KO could give investors potential bullish movement, but KDJ is showing that it is forming a potential downside.

If we looked at the overall market sentiment, looks like rotation is still there, and we might see KO trading with weak strength or sideway.

$CrowdStrike Holdings, Inc.(CRWD)$ gained about 1.9% after plunging in recent days. The cybersecurity company's update release last week caused widespread computer outages, leading to canceled flights and other disruptions. Its shares are still down more than 20% since Friday. 

General Motors (GM) was 6.4% lower after announcing delays to some of its EV offerings. Investors looked past the automaker's improved profit forecast for 2024 and better-than-expected quarterly results.

$Spotify Technology S.A.(SPOT)$ surged about 12% after posting record profit, gross margin, and free cash flow for the second quarter. 

If we looked at the technical we could see that SPOT has a buy signal formed from MACD and KDJ on Monday (22 July), it looked like we could see SPOT coming out from its rather flat trading in coming days or weeks.

I would be monitoring SPOT trading today (24 July) and price action to check out an entry price.

$Tesla Motors(TSLA)$ was down more than 7% after it reported on 23 July(Tuesday) after the market close its lowest profit margin in more than five years and missed Wall Street earnings targets in the second quarter, as the electric vehicle maker cut prices to revive demand while it increased spending on AI projects.

Summary

We might still see mixed trading today (24 July) when market open after we saw Alphabet has difference earnings behavior from Tesla, and market would still be looking forward to the other mega cap stocks earnings in upcoming days and weeks.

I would think we exercise cautious and look at price action for opportunity.

Appreciate if you could share your thoughts in the comment section whether you think market would be in a mixed trading mode following two of the Mag 7 members earnings report.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.