Weekly Wisdom: Earnings Season Kicks Off

Greetings fellow traders and welcome to your October 17th edition of Weekly Wisdom: Levels to Know and Moves to Look For!

Now let’s get to what we’re currently seeing in these volatile markets and what we have our focus on going forward.

Taking a look back on this week, October 14 – October 18:

• Markets have again pushed to new all time highs this week with earnings season kicking off including the major banks reporting and $NFLX reporting Thursday for the first mega-cap tech name. 
• After data over the past two weeks, traders have further increased bets that the November Fed rate decision will be a 25bps rate cut.  
• This week started off a bit slower and was an overall lighter data week, with markets open on Monday but banks and the bond market were closed for Columbus Day / Indigenous Peoples’ Day.
• Data for the week began on Tuesday with the Empire State Manufacturing Index showing a miss at -11.9 vs 3.4 expected. 
• Wednesday brought updates for import prices m/m which was a miss at -0.4% vs -0.3% expected, as well as export prices m/m which also missed at -0.7% vs -0.4% expected. 
• Thursday delivered weekly unemployment claims which came in light at 241,000 vs 259,000 expected. We also got updates for retail sales m/m which were a slight beat at 0.4% vs 0.3% expected, as well as core retail sales m/m which also beat at 0.5% vs 0.1% expected. The Philly Fed Business Index was a beat at 10.3 vs 3 expected. Also, the ECB cut rates by 0.25%, bringing the ECB interest rate down to 3.4% from 3.65%. Later in the morning, we saw a miss for US industrial production m/m at -0.3% vs -0.2% expected. The US capacity utilization rate was 77.5% vs 77.8% expected. We also saw a beat for the NAHB Housing Market Index at 43 vs 42 expected. US business inventories m/m came in-line at 0.3%.  
• Friday ends the week with data updates for building permits and housing starts at 8:30 a.m. ET.  

Here’s what we are eyeing next week, October 21 – October 25:

Level Highlights:

• $SPX futures have printed yet another new all time high this week, trading up to 5926 on Thursday morning as markets continue to stay strong despite being in a typically seasonally weak period.
• Traders are eyeing the October options expiration as a potential inflection point for the market, bringing a potential loosening effect to markets after the expiration takes place this Friday.
• Traders are also looking to fully price in a 0.25% rate cut for the Fed’s upcoming November meeting which takes place right after the presidential election.
• Bulls are looking at 5850 to hold for momentum support, with 5800 being a bigger support level that bulls need to stay above.  
• Bears cannot get excited for a bigger sell off until at least a close below that 5800 level takes place.  

Upcoming News:

• Monday, October 21 starts the week off with the CB leading index m/m at 10:00 a.m. ET.  
• Tuesday, October 22 delivers the Richmond Manufacturing Index at 10:00 a.m. ET. We’ll also get commentary from Fed Member Harker.  
• Wednesday, October 23 brings us the latest update for existing home sales at 10:00 a.m. ET.  We’ll also see the Fed Beige Book in the afternoon at 2:00 p.m. ET.  
• Thursday, October 24 starts off with weekly unemployment claims at 8:30 a.m. ET. We’ll then see flash manufacturing PMI and flash services PMI at 9:45 a.m. ET. These are followed by new home sales at 10:00 a.m. ET.
• Friday, October 25 ends the week with durable goods orders m/m and core durable goods orders m/m at 8:30 a.m. ET. We’ll also receive the latest for revised University of Michigan consumer sentiment and inflation expectations at 10:00 a.m. ET.

Here’s Your Chart of the Week:

Via Bloomberg, Morgan Stanley Research

Source

SPY Daily Update:

$SPY daily chart has continued to push higher and make more all time highs, now finding some resistance at the 586 level. Bears cannot get excited until the 579 level is lost.

SPY Weekly Update:

$SPY weekly chart continues to stay strong after getting stuck sideways in the second half of September. There are about 2 more full weeks left until the presidential election and the Fed’s next rate decision.

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-Patrick Hawe

Disclosures

Patrick Hawe’s current positions:

*As of 2:45pm ET October 17, 2024

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