Register for Market Trends here.
Sizing Up the S&P 500
- S&P 500 rises 7 straight sessions, longest positive streak since November 2021
- Nasdaq-100 up 8 straight sessions, longest positive streak since October 2021
- S&P 500 holds monthly channel similar to mid-1990s soft landing.
- Resistance near October high of 4393 and 50-day MA
- Potential for consolidation into CPI on 11/14
- Potential support at 4330, low from late June, mid-August
- Intermarket: Potential support from weakening U.S. Dollar
Sector Watch
- Growth stocks outperform value more than 2:1 in the last 5 sessions.
- Housing jumps in past week as rates fall
- Energy leads to the downside as demand worries hit crude
- Materials, Industrials lag amid economic worries
- Latin American stocks outperform as U.S. dollar weakens
- Transports under pressure as weaker economy hits shipping rates
Potential Takeaways
- Conditions more like 2020 as economy and inflation slow.
- Recent data suggest a final “return to normal” post-Covid, with labor and energy shortages easing.
- A “soft landing” is potentially at hand.
- High-beta growth stocks and housing could benefit.
Key News
- Apple (AAPL): Bloomberg reports tech executives to meet with Xi of China in effort to smooth tensions.
- Deutsche Bank: Loan officer survey shows tighter lending standards and weaker demand potentially indicates a recession in the next 12 months.
- FedSpeak:
- Chris Waller: Labor Supply normalizing to pre-pandemic levels.
- Austan Goolsbee: Fed might slow inflation without a recession.
- Last week’s “Goldilocks” news mix:
- Q3 productivity beats as wage growth misses
- Unemployment and wages lower than expected
- Initial jobless claims ticking higher, surpassing estimates
- October ISM Services show faster deliveries as demand slows.
- Powell “now asking” whether to hike more.
- FactSet: Analysts cutting earnings forecasts at fastest pace since Q2 of 2020.
Housing in Focus
- D.R. Horton (DHI) jumps after earnings, revenue and guidance beat.
- CEO Donald Horton: “The supply of both new and existing homes at affordable price points remains limited and demographics supporting housing demand remain favorable.”
- Upcoming catalysts:
- 11/14: Home Depot (HD) earnings
- 11/16: NAHB homebuilder sentiment
- 11/17: Housing starts & building permits
- 11/21: Lowe’s (LOW) earnings, existing home sales
Cyclicals Reveal Slowdown
- Emerson Electric (EMR): Biggest drop since the pandemic after earnings, revenue and revenue guidance miss.
- Air Products (APD): Biggest drop since the pandemic as revenue misses.
- Expeditors of Washington (EXPD): Earnings, revenue miss.
- CEO Jefferey Musser: “Deceleration of demand continues… rates generally remained soft while capacity exceeded demand in most lanes. The shipping industry has been undergoing a great unwinding of so many of the drivers that led up to the massive mismatch of supply and demand that occurred during the pandemic.”
- CNH Industrial (CNHI) hits 3-year low after earnings, revenue miss.
- This is the opposite of conditions in early 2022 when cyclicals rallied and inflation spiked.
High Beta Growth Rallies
- Datadog (DDOG) earnings, revenue beat
- MongoDB (MDB), Snowflake (SNOW) follow MDB higher
- Snap (SNAP) inching toward July price gap after results beat.
- Palantir (PLTR) holds gains after results beat.
- Arista Networks (ANET), Palo Alto (PANW): Smaller tech stocks in S&P 500 that may gain prominence.
- Dell Technologies (DELL), Intel (INTC): 1990s comebacks amid PC recovery.
- CrowdStrike (CRWD), Synopsys (SNPS) and Cadence Design (CDNS) may have yearend momentum.
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.
