Market Action Summary: 10/8/18


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S&P 500 overview

  • S&P 500 holding January high, 50DMA
  • Bond selloff not bearish for stocks over longer term.
  • Bad news of higher rates now priced in. Earnings less priced in than before. Calendar is therefore potentially bullish.
  • New leadership emerging in industrials, financials.
  • Odds may favor continued uptrend given momentum, technical patterns, economy, earnings calendar.

China Problems Increasingly Known:

  • 10/4: Bloomberg reports possible espionage chips in iPhones, AWS.
  • 10/4: JPMorgan cuts China to neutral (after going bullish on emerging 7/30)
  • 10/4: VP Mike Pence accuses China of election meddling
  • 10/5: IPG Photonics (IPGP) craters on weak China business.
  • 10/7: China PBOC cuts RRR to spur growth
  • 10/8: Stocks crash as market smells blood in water, Caixin says manufacturing weakest in a year.
  • Much of this was covered in July on Market Insights.

Troubles in Tech:

  • 10/1: SIA’s monthly chip sales for August show smallest gain since Jan 2017.
  • 10/3: Tim Cook of AAPL bashes FB/GOOGL on privacy
  • 10/4: Bloomberg reports possible chip espionage in iPhones, AWS.
  • 10/4: Deutsche Bank warns of cyclical weakness in semiconductors
  • 10/8: Raymond James sees chips slowing.
  • 10/8: WSJ says GOOGL concealed security breach, fearing regulation.
  • On top of these issues, interest rates are rising and other sectors offering growth.

Selected Posts from Market Insights:

Don’s Earnings Watch List:

  • 10/11: Delta Air Lines (DAL): Nice pullback in cyclical name w/ strong earnings track record. Support / Resistance @ $51 / $58
  • 10/11: Walgreen Boots (WBA): Hit by Amazon/Pillpack fears, yet lifted by buybacks, dividends. Attention to focus on guidance.
  • 10/12: JPMorgan Chase (JPM): Will be closely watched as economy gains.
    Support / Resistance @ $112 / $118
  • 10/12: Wells Fargo (WFC): Should benefit from steepening curve.
    Support / Resistance @ $52 / $55.50
  • 10/12: Citigroup (C) still negative for year, with strong earnings history.
    Support / Resistance @ $69 / $75
  • 10/12: PNC Financial (PNC): Rally potential on strong results, higher rates.

Russell’s Watch List:

  • RRC, CHK may gain from natural-gas build.
  • PRU, MET breaking 200DMA as curve steepens.
  • XPO pullback w/continuation potential
  • JWN coming off 50DMA after strong quarter.
  • NKE, AMZN at bottom of ranges.
  • JEC/FLR: Industrials w/continuation potential.
  • Techs pullbacks to consider: SQ, CRM, TWLO, ETSY, OKTA
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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.