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Sizing Up the S&P 500

  • S&P 500 probes late-May levels following bearish outside week.
  • Prices under 200-day MA for first time since March.
  • 100-day MA turns negative for first time since April.
  • Calendar potentially challenging with Fed (11/1), payrolls (11/3) next week.
  • Little clear support above mid-May low around 4100.
  • S&P 500 fails to hold 50% retracement of 2023’s rally.
  • Earnings estimates dipping again:
    • Refinitiv estimate for S&P 500 EPS for 2023 now $219.74 on 10/23, versus $220.84 on 10/2.
    • Potential prices based on different multiples:
      • 18x = 3955 on SPX
      • 17x = 3736 on SPX
      • 16x = 3515 on SPX
S&P 500, daily chart, with key patterns and indicators.

Key News

  • Bill Ackman covers short position against Treasuries, citing global risks.
  • More clean-energy contraction:
    • General Motors (GM), Honda Motors (HMC) drop development of affordable EVs
    • Reuters: Shell cutting low-carbon jobs, focusing on natural gas
  • Reuters: iPhone 15 not selling well in China
  • Chris Williamson of S&P Global Market Intelligence: Soft landing odds grow as demand boosts output and prices rise at slowest pace in 3+ years. Firms passing along cost savings.
  • September new home sales beat estimates
  • Weekly crude-oil inventories rise more than expected
  • Microsoft (MSFT) beats estimates as AI adds to Azure growth
  • Alphabet (GOOGL) misses on key cloud growth. Advertising and search beat but margins disappoint amid higher spending.
  • Meta Platforms (META) earnings, revenue beat. Middle East violence may hurt ads.
  • Russia jostles nerves with nuclear drill

Sector Watch

  • Energy leads to the downside in the last week
  • Solar stocks keep falling
  • Banks, semiconductors under pressure
  • Consumer staples, utilities decline the least amid bearish sentiment
  • Gold, silver hold their ground amid geopolitical worries.

Signals Scan

  • Roblox (RBLX) stalls near bearish gap.
  • Snowflake (SNOW): Potential triangle breakdown
  • Starbucks (SBUX) potentially bearish at 50-day MA.
  • JPMorgan Chase (JPM) tries to hold early 2023 highs.
  • Walt Disney (DIS) follows 50-day MA lower.
  • Micron Technology (MU) potential triangle reversal.
  • Dollar General (DG) potential bearish bounce.
  • Block (SQ) continues lower following consolidation.
  • DexCom stalls at falling 20-day MA

Mover of the Week: Verizon Communications

  • Telecom raises cash-flow guidance amid strong subscriber growth.
  • CEO Vestburg: “momentum will continue.”
  • VZ bouncing from 3-year low.

Upcoming Events

  • Tomorrow (10/27): PCE inflation
    • Earnings: XOM, CVX
  • Monday (10/30)
    • Earnings: MCD, ANET
  • Tuesday (10/31)
    • Earnings: AMGN, PFE, AMD
  • Wednesday (11/1): ADP Payrolls, ISM manufacturing, *Fed meeting*
    • Earnings: QCOM, PYPL
  • Thursday (11/2): Jobless claims

Security futures are not suitable for all investors. To obtain a copy of the security futures risk disclosure statement Investment and Trading Disclosures Booklet – Futures. Exchange Traded Funds (“ETFs”) are subject to management fees and other expenses. Before making investment decisions, investors should carefully read information found in the prospectus or summary prospectus, if available, including investment objectives, risks, charges, and expenses. Click here to find the prospectus.

Options trading is not suitable for all investors. Your TradeStation Securities’ account application to trade options will be considered and approved or disapproved based on all relevant factors, including your trading experience. See Characteristics and Risks of Standardized Options.

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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on 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 apprised 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.