Weekly Wisdom: Markets Spooked on Halloween

Greetings fellow traders and welcome to your October 31st 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 28 – November 1:

• Markets stalled out in front of new all time highs this week and were hit lower on Thursday following negative earnings reaction from $META and $MSFT which reported numbers Wednesday evening. 
• Traders are now gearing up for the rest of the big tech earnings this week, the presidential election and congressional elections on Tuesday, and the FOMC rate decision and press conference on Thursday. 
• Data for the week began on Tuesday with a miss for the goods trade balance at -108.2 billion vs -95.9 billion expected. Prelim wholesale inventories m/m was a slight beat at -0.1% vs 0.1% expected. Later in the morning, we saw a miss for JOLTS job openings at 7.44 million vs 7.98 million expected. CB consumer confidence was a beat at 108.7 vs 99.5 expected.  
• Wednesday started off with a big beat for ADP non-farm employment change coming in at 233,000 vs 110,000 expected. We then saw a miss for advance GDP q/q at 2.8% vs 3.0% expected. The advance GDP price index q/q was also a slight miss at 1.8% vs 1.9% expected. Later in the morning, pending home sales m/m was a solid beat at 7.4% vs 1.9% expected.
• Thursday morning was full of data, beginning with weekly unemployment claims coming in with a beat at 216,000 vs 229,000 expected. PCE price index m/m was inline at 0.2%. PCE price index y/y was also inline at 2.1%. Core PCE price index m/m was 0.3% vs 0.27% expected. Core PCE price index y/y was 2.7% vs 2.6% expected. Personal income m/m was inline at 0.3%. Personal spending m/m was a beat at 0.5% vs 0.4% expected. Later in the morning, Chicago PMI was a miss at 41.6 vs 46.9 expected. After the close, $AMZN and $AAPL are set to report their earnings numbers.
• Friday, November 1 ends the week with average hourly earnings m/m, the non-farm employment change number, and the unemployment rate at 8:30 a.m. ET. We’ll then see final manufacturing PMI at 9:45 a.m. ET. This is followed by ISM manufacturing PMI, ISM manufacturing prices, and construction spending m/m at 10:00 a.m. ET.

Here’s what we are eyeing next week, November 4 – November 8:

Level Highlights:

• $SPX futures were hit lower on Thursday, breaking down the range and support levels highlighted last week with the 5800 support level lost on Thursday morning. 
• The gap down on Thursday morning came from negative reactions to $META and $MSFT earnings, which both had decent reports but were not “special” enough to send the names higher after both traded up into their reports.
• $SPX futures have a measured move down to 5725 on the breakdown, with Thursday’s intraday low coming in at 5750, just below the daily 50 SMA at 5755.
• Traders are now bracing for further upcoming events including $AMZN and $AAPL earnings,  the presidential election and congressional elections on Tuesday, and the FOMC rate decision/ statement and press conference on Thursday.
• Technically the bears have gained control now after Thursday’s breakdown.
• Bulls will now need a close back over at least 5800 but more preferred is 5850 to attempt to take back control.
• Bears still have their measured move down to 5725 which is the first support below 5750 for the bulls to watch for.
• Support below for $SPX futures can be found at 5700, 5650, 5600, and 5550.  

Upcoming News:

• Monday, November 4 kicks off a very busy week with a slow start, delivering the update for factory orders m/m.
• Tuesday, November 5 is election day in the US with the presidential election and congressional elections taking place throughout the day into the night. Data for the day kicks off with the trade balance update at 8:30 a.m. ET. We’ll then see ISM services PMI at 10:00 a.m. ET. There is a 10-year bond auction taking place just after 1:00 p.m. ET.
• Wednesday, November 6 brings the update for final services PMI at 9:45 a.m. ET. There is also a 30-year bond auction taking place after 1:00 p.m. ET.
• Thursday, November 7 is the other big day of the week with the FOMC statement / rate decision and press conference taking place at 2:00 p.m. and 2:30 p.m. ET, respectfully. Markets are currently pricing in a 0.25% rate cut. In the morning we’ll see weekly unemployment claims, prelim nonfarm productivity q/q, and prelim unit labor costs q/q all at 8:30 a.m. ET. Also, final wholesale inventories m/m is released at 10:00 a.m. ET.
• Friday, November 8 ends the big week with prelim University of Michigan consumer sentiment and inflation expectations at 10:00 a.m. ET.

Here’s Your Chart of the Week:

Via: Goldman Sachs Global Investment Research:  With Mag7 so heavily weighted, many traders think better upside yield can be found elsewhere going forward.

Source

SPY Daily Update:

$SPY daily chart breaking down the range / wedge created last week with a gap and go to the downside on Thursday, losing 574 support which is now going to be resistance. Further support below can be found at 568, 564, and 560.

SPY Weekly Update:

$SPY weekly chart giving a second red weekly candle in a row this week with Thursday’s breakdown. 564 is a vital support level that bulls need to hold to keep this weekly trend intact.

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-Patrick Hawe

Disclosures

Patrick Hawe’s current positions:

*As of 2:05pm ET October 31, 2024

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