Good morning,
In the next two weeks, the market faces 3 major catalysts that will likely combine to determine near-term market direction:
Earnings this week, with giants including 5 of the Mag 7 set to report
The jobs report on Friday
The election next Tuesday
How any of those go, much less how all three combine to react, is anyone’s guess.
What I can tell you, is the setup for more upside into year-end is absolutely there.
The technology sector (33% of SPX) is just below all-time highs ahead of Microsoft and Apple’s earnings reports this week.
Meta Platforms and Alphabet (Facebook and Google to normal people) are consolidating above key support, and Amazon (which has the most uninspiring chart of them all) has a chance to end a 7-month trading range.
Just those 5 stocks account for 23% of the S&P 500.
We’ll see if they can deliver the goods this week, but the charts and trends suggest staying the course and betting on upside.
Where the charts and trends are getting less clear is rates.
I’m still of the belief that the path of least resistance is lower for rates.
But we have to respect the technical progress being made. The 10-year continues to work higher, retesting resistance and turning it into support along the way. And the trend (as measured by the 200-DMA) isn’t as clearly down as we might want it to be.
Correlated with rates and the diminished prospects for Fed rates cuts (and brightened prospects for the economy) is the dollar. The S&P 500 was able to shrug of dollar strength up until last week, but the greenback’s strong hold of support near 100 and move above its 200-DMA is technically significant.
Tactically, the chart suggests a pullback is likely but a continued move higher could definitely be a candidate for the “bearish” side of the scale we discussed last week.
This week’s report will review:
Technicals for the US dollar
Key moves from last week
Mega-cap setups going into earnings
November seasonality
Rates
Risk ratios
and more!
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