News:
On Friday, the market closed a turbulent week with a decisive win for the bulls.
All four major indexes added more than 2% each.
- Dow Jones +2.5%
- Nasdaq +2.3%
- S&P 500 +2.4%
- Russell 2000 +2.2%
Notably, Friday’s green candle was the first positive end to a trading week in six weeks.
Why does that matter?
A quote from the Stock Trader’s Almanac to clarify…
“Friday is the day for squaring positions—trimming longs or cover shorts before taking off for the weekend. Traders want to limit their exposure since there could be unfavorable developments before trading resumes” on Monday.
Helping to drive Friday’s gains…
Dove at The Fed
A Wall Street Journal article stated that while a 0.75% rate hike likely at the November FOMC meeting…
The Fed is “likely to debate… a smaller increase in December.”
Sector Round-Up
It was tough to find a loser on Friday. All 11 sectors were green. The leaders…
- Materials (XLB) +3.5%
- Financials (XLF) +3.0%
- Consumer Discretionary (XLY) +2.9%
- Energy (XLE) +2.9%
The only 2 sectors that gained less than 1% were…
- Real Estate (XLRE) +0.7%
- Communications (XLC) +0.6%
China Stock Tumble
Over the weekend, Xi Jinping claimed a third 5-year term as President of the world’s largest nation. Since then…
- He’s packed committees with loyalists.
- The nation announced 3.9% GDP growth in Q3, beating expectations
Xi’s win was expected. And economic growth is typically bullish. But the Hang Seng index is off more than 6% at writing.
And the situation is worst for individual Chinese stocks. That includes:
- Alibaba Group (BABA) -12%
- NIO Inc. (NIO) -13%
- XPeng Inc. (XPEV) -13%
- JD.com, Inc. (JD) -15%
Snapchat is Dead
Snap Inc (SNAP), the parent of Snapchat, fell 30% on Friday.
Blame *another* lousy earnings.
Competition from TikTok has proved too much for the social media platform.
- The stock lost more than 90% of its value since peaking in September 2020.
- More than $100 billion in market cap has vanished.
Technicals:
Look at the S&P 500’s performance over the past three years.
Remember, when we talk about support and resistance, these are often “zones” rather than solid lines.
Resistance becomes support.
Markets have reached a clear long-term support level.
We believe only a black swan event could cause the marked zone to fail.
- The VIX broke its uptrend, favoring the bulls
- RSI levels are neutral
- The Put-to-Call Ratio is neutral
We remain buyers and are over 60% investing in our seasonal position.
Timing:
It’s another big week of earnings.
Here are the top stocks to watch…
- UPS (UPS) premarket on Tuesday
- Alphabet (GOOG, GOOGL) after the close on Tuesday.
- Microsoft (MSFT) after the close on Tuesday.
- Ford (F) after the close on Wednesday
- Apple (AAPL) after the close on Thursday
- Amazon (AMZN) after the close on Thursday
- Exxon Mobile (XOM) premarket on Friday
Watchlist:
*Low Float
^Open Position*
KLXE support at $11
*^RELL support at $21
*NINE support at $4
*RVPH support at $3
IMRA support at $4
AEHR resistance at $19
ETNB support at $8
^IMVT support $10
PARR support at $20 or $21
VIST support at $12
WVE support at $4.50
ADEA support at $10
HLIT support at $14
NFLX^ support at $250 or $280