Weekly Wisdom: Traders Brace for NVDA Earnings

Greetings fellow traders and welcome to your November 14th 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, November 11 – November 15:

• Markets have stalled sideways this week following a very strong breakout last week which took place following our election results Tuesday night into Wednesday morning.
• $SPX futures continued to trade higher into the end of last week and went a bit too high too fast, needing a correction through price and/or time, which we are seeing take place this week mostly through time – aka sideways, choppy trading. 
• We also saw the FOMC cut interest rates again last Thursday by -0.25%, however markets were mostly still trading on the post-election momentum as the rate cut had been fully priced in leading up to the meeting.
• While equities were open on Monday, the bond market and banks were closed for Veterans Day.
• Data for the week began on Tuesday with a beat for the NFIB Small Business Index at 93.7 vs 91.9 expected. The Cleveland Fed inflation expectations were 3.8% vs 3.4% previously. 
• Wednesday brought us the latest CPI inflation data, inline across the board, with CPI y/y at 2.6% vs 2.6% expected, CPI m/m at 0.2% vs 0.2% expected, core CPI y/y at 3.3% vs 3.3% expected, and core CPI m/m at 0.3% vs 0.3% expected. Later in the afternoon, the Federal budget balance showed a miss at -257.5 billion vs -226.4 billion expected. 
• Thursday gave further inflation data with the latest PPI update. PPI was slightly hotter in some areas versus the prior day’s inline CPI report. PPI y/y came in at 2.4% vs 2.3% expected. PPI m/m was 0.2% vs 0.2% expected. Core PPI y/y was 3.1% vs 3% expected. Core PPI m/m was 0.3% vs 0.2% expected. We also saw a slight beat for weekly unemployment claims at 217,000 vs 220,000 expected. 
• Friday, November 15 ends the week with updates for retail sales and core retail sales m/m, the Empire State Manufacturing Index, and import / export prices m/m all at 8:30 a.m. ET. We’ll then see the capacity utilization rate and industrial production m/m at 9:15 a.m. ET. Data for the week ends with business inventories m/m at 0.2%.

Here’s what we are eyeing next week, November 18 – November 22:

Level Highlights:

• $SPX futures have spent the week chopping sideways, digesting the large gains seen last week following our US elections.
• The FOMC also cut interest rates by -0.25%; this move did not move markets much as the rate cut had been fully priced in by the futures, with participants eyeing an additional rate cut of -0.25% at the December meeting.
• Rate cuts priced in for next week were lowered a bit with the help of a continuous strong economy.
• $SPX futures broke out to new all time highs of 6053 made on Monday, breaking through the prior resistance of 5900 and the previous all time high. 
• Since that high was made on Monday, we have spent the rest of this week chopping sideways between 5975 and 6025.
• A break of this range gives us a measured move of either down to 5925 or up to 6075.
• Momentum bulls are looking for the 5950-5925 support zone to hold on any further weakness. 
• Bears can be short vs the 6025 range resistance but should be careful fighting the trend should we break back above.
• Bears are also eyeing the deteriorating $VIX for a coming bounce, which has faded all the way down to a big support level of 14. A bounce back to 16 would not be impossible should the market need a bit more cooling off.

Upcoming News:

• Monday, November 18 is a slower start to the week with an update for the NAHB Housing Market Index at 10:00 a.m. ET.  
• Tuesday, November 19 brings updates for building permits and housing starts at 8:30 a.m. ET. 
• Wednesday, November 20 does not bring any meaningful economic data to the docket. However, $NVDA is set to report earnings after the close.
• Thursday, November 21 kicks off with weekly unemployment claims and the Philly Fed Manufacturing Index at 8:30 a.m. ET. We’ll then see existing home sales and the CB Leading Index m/m update at 10:00 a.m. ET.
• Friday, November 22 ends the week with flash manufacturing PMI and flash services PMI at 9:45 a.m. ET. The final data for the week gives us revised University of Michigan consumer sentiment and inflation expectations at 10:00 a.m. ET.

Here’s Your Chart of the Week:

Via GS, Bloomberg, Birinyi Associates:  GS DESK ON #BUYBACKS: “95% of corporates are in the open window… the best seasonal period of the year (Nov corporate demand is strongest of the year, and November/December is the strongest two-month period of the year). GS corporate execution desk estimates $960 billion worth of executed buybacks in 2024 or +$100 billion worth of share repurchases in November. We now estimate the next blackout window will begin 12/23. On the authorization front, 2024 YTD authorizations stand at $1.105 trillion – up ~17% vs 2023 YTD”

Source

SPY Daily Update:

$SPY daily chart spending the week chopping sideways after last week’s election breakout. 592 and 586 are support levels below, with bulls looking for 586 to hold in a worst case pull back.

SPY Weekly Update:

$SPY weekly chart with a powerful candle last week; this may need another week or so before making a real leg higher.

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-Patrick Hawe

Disclosures

Patrick Hawe’s current positions:

*As of 2:38pm ET November 14, 2024

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