Market Action Summary: 11/5/18


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S&P Overview: Upside Bias as Volatility Abates

  • 10DMA poised for turn-up after 23-session slide.
  • 8-day EMA rising for first time since October began.
  • Multiple reversal patterns since 10/26: doji, outside day, inside day, etc.
  • Eyeing 2800 as target for S&P 500 in next 1-2 weeks.
  • Calendar more bullish as tech earnings end, holidays approaches.
  • S&P 500 just had best week since March.
  • 50-hour MA on @ES once again shows direction.

Politics in Focus:

  • TradeStation analytics: No clear market impact of midterms.
  • Click here for Don’s Market preview.
  • G-20 may be more important than mid-terms for sentiment.
  • Mid-term importance potentially muted by Trump reliance on executive actions (tariffs, anti-trust.)

Economic Review:

  • Strong secular phase for employment?
  • Wages gain as oil crumbles.
  • U.S. Consumer Confidence rises more than expected to 18-year high.
  • China still ailing: Caixin PMI at 28-month low as orders weaken.
  • Taiwan, S. Korea GDP misses confirm China-zone slowing.
  • Bottom line: Careful of oil, materials, emerging markets.

Rotation Could Be the New Normal

  • Tech has several problems: Slowing growth, increased competition, legal/antitrust, higher rates.
  • Retailers performing well, have potential catalyst into holidays.
  • Homebuilders, financials may have value appeal.
  • Airlines, auto makers have value appeal, plus cheaper oil and positive economic backdrop.
  • Old-fashioned blue chips on the rise: KO, PG, JNJ, MCD, VZ, WMT. Good for options.
  • REITs, Utilities are surprisingly strong.

Don’s Watch List:

  • CVS Health (CVS): Earnings in the pre-market.
  • Becton Dickinson (BDX): Earnings in the pre-market.
  • Ralph Lauren (RL): Earnings in the pre-market.
  • Papa John’s (PZZA): Earnings in the post-market tomorrow.
  • TripAdvisor (TRIP): Earnings in the post-market tomorrow.

Russell’s Watch List:

  • Oil: Can @CL hold $63? $66 retest?
  • SMH: Old support at $95 now resistance?
  • LULU, TGT holding 100-day MAs. JWN breaking out?
  • M, KSS bear hunting (short squeeze) into EPS?
  • AAPL may need to test $190 before stabilizing. Long-term trend line.

Forward Calendar:

  • This week: Media, tech earnings, Fed meeting (no press conference)
  • This weekend: USMC birthday, Singles Day in China
  • Next Week: Veterans Day shifts events, Retail sales. Tech, retail earnings.
  • Don’t forget about G-20 meeting Nov. 30-Dec. 1.
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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.